Re: DBS, Privacy, Money Laundering nonsense.

[Robert Hettinga <rah@shipwright.com>]

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Date: Sat, 14 Nov 1998 15:55:00 -0400
To: tboyle@rosehill.net
Cc: dbs@philodox.com
Subject: Re: DBS, Privacy, Money Laundering nonsense.
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Also Sprach Todd Boyle (tboyle@rosehill.net):

>
>  * If thieves could hide the money they stole, there would be substantial
>     increase in frequency and severity of theft;

I think this is definitely true.  Particularly if it is *easy* to hide
the money stolen, as criminals may be expert in a particular field of
crime that is *not* financial -- it's already easy for a white-collar
criminal to hide money, using the same skills used in white-collar crimes
of other sorts, but not so easy for an armed robber.

>  * Reducing trackability of money increases the severity and frequency
>     of collusive crimes.

Reducing trackability and improving the velocity of money *does*
do this, but it's a side effect of the more important (and wider spread)
effect of useful forms of money: increasing the severity and frequency
of all kinds of collusion and cooperation!  This is what money is
for -- exchange.  That criminal exchange uses DBS is just saying that
criminal exchange is a form of exchange.
>
> In mean time, managing the out-of-control government sector is your civic
> duty, to your less intelligent wives,

Heh...I'd be afraid of saying this if I were married or ever planning to
be :)  On an archived list, no less... :)

>
> You need a coherent argument on this problem.  You need measures within
> the DBS technology itself, to address the need.  Opponents of DBS will
> raise all these demagogic arguments.  You'll be hooted off the podium.

This technology is layered (ooh, bad word to use in relation to money and
payment systems :).

I think you will agree with me that the
correct place for financial restraints (particularly voluntary ones,
for auditing purposes, which IMO are the most important -- it allows you
to say you are doing something, specify how it can be measured, and then
have it measured, rather than just having some vague after-the-fact threat
of enforcement if they catch you) on digital token money is not at
the following layers:

* Sub-atomic layer
* Atomic layer
* Hardware layer
* Network connection layer

and you seem to be making the case that it doesn't belong at the human/legal
layer.  However, there are two layers in the middle:

* application (core DBS protocols, etc.)
and
* presentation (graphical clients, etc.)

I believe the correct place for any voluntary restraints on DBS money is
not at the DBS protocol layer, but at a higher level.  This can be
built into the clients people choose to use for managing their money,
generate auditing reports, etc.  This provides people with the freedom
to use clients tailored to their legal requirements -- a corporation's
internal financial system should be far more complicated and constrained
than my personal wallet -- and makes it relatively easy for everything
to interoperate.

You can even design things at the levels higher than the DBS level to
escrow parts of coins with third parties, this requiring their participation
or approval for any transaction -- sort of a "registered DBS system".  If
you believe taxes are a worthwhile thing, a government could mandage the
use of such a system where the IRS was a party to each and every transaction.
This would work perfectly well technically, and would not compromise the
integrity of the protocols -- it's just a business decision on the part of
an issuer of electronic cash.  It's easy to see how this could work with
insurance schemes, split control of coins, etc.

--- end forwarded text


-----------------
Robert A. Hettinga <mailto: rah@philodox.com>
Philodox Financial Technology Evangelism <http://www.philodox.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'