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Some (Pseudo)Random Thoughts

Some thoughts on the recent meetings and what we're doing:

1. The importance of trading physical goods in the Crypto Anarchy

This, in my view, has been given undue and misleading importance.
Physical goods are inherently easy to trace through remailers (via
sniffers, radioactive tracers, weight of packages, and many other
physical cues), are hard to store physically (imagine getting 100
parcels for later remailing), and, most importantly, have none of the
"envelope within envelope within...." protection accorded to the bits
of a cryptographic remailing, or DC-Net, system! The elegance of
cryptographic protocols is lost with physical goods.

Furthermore, physical delivery of any good, whether drugs, stolen
missile components, antiquities and art items, whatever, is
fundamentally a hard problem to solve...smugglers and thieves have
been dealing this since the beginning of time. Stings can be easily
arranged, delivery is not anonymous (one merely watches who takes
delivery, or who opens a train station locker, etc....this is all SOP
for narcs and counterespionage types), and a raid on a remailing
entity will result in confiscation of the physical goods and (likely)
prosecution of those caught holding the stuff. (Raiding a bit
remailing entity produces only random-appearing bits...granted, the
authorities may well outlaw bit remailing, or use the RICO and
conspiracy/sedition laws to prosecute, but that's another topic.)

Our recent emphasis on physical goods, and all the ideas pouring in on
what other kinds of "contraband" besides drugs can be used, is
misleading. None of the richness of the cryptographic world is
faithfully preserved. I urge we get back to our roots and deal only
with things that can be expressed purely in bit form. 

2. The "colonization of cyberspace" does not mean there is no
interaction with the physical world, of course. But that interaction
can be mediated with money made by converting information or digital
money into physical money. Several methods for this conversion path
can be considered:

-Alice sells information in the cyberspace domain for the equivalent
of, say, $30,000. She converts this to "real" dollars by using an
escrow entity which hold both sides of the transaction until it's
completed. They then mail the information to the purchaser and send an
ordinary check "for services rendered" to Alice for $30K. She reports
it on her taxes, probably as a "consulting fee" (for which essentially
no government supervision currently exists, nor is likely to....), and
the conversion has taken place.  (Note: there are still elements of
trust involved, notably involving the escrow agent, but trust works
pretty well for many things, especially when reputations are at
stake. Understanding how real businesses depend on reputations is a
missing part of modern cryptology analyses of transactions...the
protocol analyzers and number theorists almost never take into account
how reputations work in the real world, But I digress.)

-Alice and Bob trade information such that Bob gets the information
worth about $30K, as above, and Alice gets another piece of
information she can use in the "real world" that is worth about $30K.
This might be stock tips, or, better, information she can turn around
and sell in the "open market" of a service like AMIX!  There are lots
of wrinkles, inefficiencies, etc., to be worked out.

-And then there is digital money. You all know about this, or should.
David Chaum, DigiCash, blinded notes, credentials, etc. The handout
for the first meeting had a glossary of terms. (IMHO, we should be
spending more of our time at our meeting discussing this, and less in
playing more interations of the Game.)

The fascinating novel "Snow Crash," by Neil Stephenson, makes a
mistake in having Hiro Protagonist a very wealthy man in the Metaverse
(Stephenson's term for the virtual reality cyberspace) but a very poor
man in the Real World. Information _is_ money. Information is liquid,
flows across borders, and is generally convertible into real money.
(One simple conversion strategy, alluded to above, is for Alice to
sell her information for, say, $500K, and then to receive a
"consulting contract," perhaps called a "retainer," of $50K a year for
the next 20 years. Her retainer is fully legal, is perhaps handled
through cut-outs who specialize in this kind of thing, and is a
low-risk way to "launder" money from cyberspace into the real world. I
have a lot more to say on these schemes, perhaps later.)

3. Are we emphasizing "The Game" too much?

If the goal is to produce a paper-based game, similar to "Monopoly" or
fantasy role-playing games, then I suppose more practice is needed.
But I'm not sure how worthwhile it is to try to design such a game.
(Those who wish to should do so, then commercialize it, and become the
Avalon Hill of crypto games!)

If the goal is educational, for newly interested folks, then I also
question how much more effort should be put into it. The ideas of
anonymous remailers, of digital money, etc., are, I think, gotten
across in the first 60 minutes of the game, especially if some of the
formalism is first explained (as it was at the first game, where
digital mixes, tamper-resistand modules for implementing mixes, the
"Dining Cryptographers Protocol," and digital money had all been
freshly covered, so participants were putting the theory to test).

I found the first game was instructive, the second much less so (and
_not_ because of the focus on drug selling...that was a relatively
minor issue). My impression is that many of the newcomers--and they
should jump in here with their own reactions (too bad we don't have
hypertext links!)--didn't really know how remailing mixes work, how
digital psueodnyms can protect privacy in transactions, and how the
"Game" was intended to exercise these concepts.

4. We need to talk about the charter or purpose of the "Cypherpunks"
or "Cryptology Amateurs for Social Irresponsibility" (CASI--Eric
Hughes's term) group.

-Is it mostly educational?
-Is it a lobbying group, as are EFF, CPSR, and the like?
-Is it to produce remailers, digital money, and other programming?
-Is it subversive?

Now clearly we can't say it's subversive (any bets on who's gatewaying
these messages to Other Listeners?). But we also don't want to skew
things toward "YALG" (Yet Another Lobbying Group), nor do we want to
be a spoon-feeding educational group for people with a casual (and
transient) interest in crypto stuff.

5. There have have been several messages so far about worries about
the legal implications of these topics, about how some
corporate-affiliated subscribers will desubscribe "real fast" if
certain discussion trends continue, and so on. Now we can't please
everybody, but maybe we ought to talk about this sensitive issue soon,
and _in person_.

Since it relates to our charter, Point 4 above, I recommend we do this
at our next meeting. I'd favor that over another iteration of the

In conclusion, we are in at the beginning of Something Big. While I'm
somewhat skeptical about the claims for things like nanotech, I see
this whole cyberspace/cryptology/digital money/transnationalism ball of
wax being _much_ easier to implement. Networks are multiplying beyond
any hope of government control, bandwidths are skyrocketing, CPUs are
putting awesome power on our desktops, PGP is generating incredible
interest, and social trends are making the time right for crypto

I look forward to hearing your views.

Timothy C. May | Crypto Anarchy: encryption, digital money,
[email protected] | anonymous networks, digital pseudonyms, zero
408-688-5409 | knowledge, reputations, information markets,
W.A.S.T.E.: Aptos, CA | black markets, collapse of governments.
Higher Power: 2^756839 | PGP 2.0 and MailSafe keys by arrangement.