The Market for Crypto--A Curmudgeon's View

[tcmay@netcom.com (Timothy C. May)]

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I have to apologize for the length of this piece. It's almost 3 in the
morning, and I've spent far too much time writing it.

It's just that my "rant buttons" are pushed by an argument I'll call
the "crypto isn't being used by enough people, so we'll have to make
our own lives harder to set an example" argument. Some would call it
the Self Flagellation Argument.

There's a larger issue, of why crypto is not being used in the way
some of us think it _should_ be being used. Why no digital cash? Why
no common use of digital signatures in the business world? Why isn't
everybody (or anybody?) time-stamping their lab notebooks and song
lyrics? Why, why, why?

I've developed some views on this. Some have come from watching my
nanotechnology friends exhorting the world to develop nanotech, some
have come from my 20 years in high tech, watching the "gotta succeed"
technologies get bypassed (remember holographic memories? Integrated
Injection Logic? laser pantography? aptical foddering? artificial
intelligence?). And on the "self-flagellation" front, I participated
in well-intentioned experiments on other mailing lists, in which it
was hoped that certain desired evolutionary outcomes be "facillitated"
by list rules and regulations....how they failed is another topic.

And of course I've devoted several hours a day to this list for more
than two years. A lot of stuff to draw some conclusions from.

So, here it is. Not a polished essay, but as polished as it's likely
to ever get.

Lucky Green wrote:

> I don't want to restart the "If the output wont work on a stack of
> Hollister cards the system sucks" thread, but Tim is here, as he is most of
> the time, right. After two years, we still have not made it much simpler to
> integrate PGP/whatever into a mixed OS environment.

The issue that keeps coming up is a familiar one to economists: is the
success of a product determined by the "push" of customer demands for
such products or by the "pull" of available technology? Did customers
demand the microprocessor or did companies like Intel demonstrate a
technology and thus pull customers in?

(The possible subject of much debate. Examples on both sides. An
exercise: which model does the Web/Mosaic combination fit?

As it relates here, there seem to be two main camps:

1. The Pushers. Those who believe that encryption and related
technologies (digital cash being the most obvious) will "succeed"
(become popular, profitable, etc.) when there is *customer demand* for
it. Some purpose, some economic gain, or some recreational benefit.

2. The Pullers. Those who believe that these technologies will success
because they are so compelling as to pull customers in.

Orthogonal to these are the camps regarding how to *proselytize*
crypto:

A. The Preachers. Spread the word, educate the masses. Make crypto
necessary to access information. (Whether for the Pushers or the
Pullers, the Preachers believe that the key to the success of crypto
lies in _convincing_ others to use it.)

B. The Pragmatists. Whether pushed or pulled, crypto will happen when
it happens. When the time is right--technologically, economically, and
socially, perhaps--crypto will find its uses.

(I could, as as my wont, write more on each of these. But I'll resist
the urge.)

The graphically-oriented may imagine this as a map. With ranges of
beliefs.

Various of you fall into various places on this map. Some argue that
lawyers should relocate to the Caribbean tax havens to "service"
Cypherpunk needs (no insult intended to the proposer of this scheme,
but this a classic "2A"--the Preacher-Puller. Also known as the "If
you build it, they will come" view.).

Others argue that Cypherpunks should "practice what they preach" at
all times (not surprisingly, a trait of the Preacher). 

Well, I think you can see where I'm headed.

I happen to believe that strong crypto, of the sort I am interested in
(though not necessarily using/advocating/proselytizing for), will
become common at some time in the next decade or so:

- when markets have arisen which can make use of, for example, digital
cash. (This could be next year, with NetCash or VisaBits...it's always
hard to predict exact markets.)

- when the current protocol problems which make all of this crypto
stuff so _complicated_ to use ("To spend a DigiDime, first create a
client on a 4.3BSD-compliant server....").

- when other interesting technical problems well known to us--such as
issues about double spending, revocation, etc.--are better solved.
(Yes, I am saying that we are probably a couple of years too
early...the Crypto conferences are still generating new results.
Perhaps someone will pull it off, but it is by no means obvious that
all the pieces are ready to go.)

- and of course when everyone is just a little bit better
net-connected, when e-mail is more robust, when agent technology is
more mature, etc.

So, I guess this makes me a "Pragmatist." No point in preaching. (And
before a smart aleck claims that my presence on the list, and my
posts, and my FAQ, etc., makes me a "Preacher," think about it. Once
can be interested in an area, want to see it become a reality, without
being a Preacher. The microprocessor happened for a variety of
reasons...proselytizing was not one of the main reasons.)

As to Pusher or Puller, I'm in both camps. Certain market needs--in
areas like online commerce, Web publishing, even money
laundering--will push the existing technology "from the bottom up."
Thus, brain-damaged "electronic purse" schemes will be broken, will
need to be fixed, and so folks like Chaum and Brands will license
their results, consult, etc. This is how most products evolve, kind of
haphazardly (in the sense that previous history exerts a strong
influence...the reptilian brain in us, etc.).

At the same time, the purer technologies--such as DC-Nets and other
abstract ideas--will pull from the top. (It can be argued that the two
are really the same, displaced in time. Thus, yesterday's exotic
technology that "pulled" is today's "pusher" tool. Digital signatures,
for example.)

I'm all for exploring, for folks going off and doing their thing, and
for trying to commercialize ideas. (The joke that the only people
who've made money on crypto are the book publishers is not far from
the truth. RSA Data has, despite its obvious situation, never paid a
dime to its early investors (so says Alan Alcorn, inventor of "Pong"
and an early investor in RSADSI). Zimmermann sure hasn't. I assume
Cylink, Crypto AG, and some of the others have some profits, or at
least not continuing losses, but none of them are powerhouses.)

The Glorious Crypto Revolution may happen. In fact, I'll bet on it.
But the precise form is unknown. And it won't happen because a bunch
of people decided to "prove the technology" by sending DigiFranques to
each other in a toy market. (The HEx market on Extropians showed the
failure of this...as have some experiments here.)

And it won't happen because we all sign our messages, any more than
wearing secret decoder rings ushers in a new political regime.

(I'm much more interested in ensuring that signing of messages, or
encryption of them, cannot practicably be outlawed than I am in
"spreading the word." If having lots of folks using crypto makes a ban
less likely or less enforceable, then of course I hope more people use
crypto. But this is not the same as saying we should all be "setting
an example" and thereby _cause_ this widespread use. Or so it seems to me.)


> We are stuck: No need -> no development of tools -> no spreading of crypto
> beyond the "hard core" -> no public resitance when crypto becomes illegal.

Push and Pull, Preachers and Pragmatism.

Find the "Killer App" that people want, and there you are. Web/Mosaic
is the current killer app. (And ironic that so many people preached
the wonders of hypertext and Xanadu...including several people on this
list (and I agreed with them, by the way)...but nothing of
significance happened until the WWW and browsers ignited the
phenomenal explosion of the past two years.)

And if you can't just "think up" the killer app, find an area of deep
interest and focus on that _for the pleasure of it_ (and for the
profit of it). Somebody who, as an example, can apply agent technology
to crypto, may find himself in the thick of things in 1998.

I guess I'm reacting to the pervasive mood of "We've got to *do*
something!!" that keeps coming up. I'm skeptical, because of the
push/pull points, and because a bunch of scattered, part-time workers
who rarely meet, who are all going in different directions, etc., is
not exactly a team likely to build a new product. (In nearly every
case I can think of where a significant technology or product was
developed, some kind of focus was needed. Usually geographic, and
usually economic ("Finish this or you're fired," to put it bluntly).

(Some may cite the PGP 2.x effort as a good example of Net
collaboration. I wasn't in on it, but in talking to some of those
who've worked on it, my impression is that the focus was still there.
Provided by Phil, and by the _existence_ of PGP 1.0, an examplar that
could then be added to, worked on, etc. Remailers are a kind of
equivalent.)

In any case, the notion that a bunch of us--students, dabblers,
activists, engineers, etc.--can somehow create a finished product, or
a company, as some folks periodically try to argue for ("Let's do a
company!"), is not too likely. (I was going to say "is crazy," but
some may think I'm already being insulting enough. Believe me, my
intent is not to insult any of us.)

Crypto is happening. In bits and pieces. As is to be expected. But
then, I'm a pragmatist.

--Tim May

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..........................................................................
Timothy C. May         | Crypto Anarchy: encryption, digital money,  
tcmay@netcom.com       | anonymous networks, digital pseudonyms, zero
408-688-5409           | knowledge, reputations, information markets, 
W.A.S.T.E.: Aptos, CA  | black markets, collapse of governments.
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