November 1992 - cypherpunks-legacy

thoughts on digital cash
by Marc Horowitz 01 Dec '92

01 Dec '92

I've thought a bit about digital cash since the thread started here, and I have a bunch of thoughts. I hope I'll be coherent. ** For production use, you want a real, live bank or other entity to issue the "money". Assuming the digital cash is backed by gold, or securities, or something else tangible, you don't want the bank to go away with all your money. Or, if you read in the newspaper "Feds seize First National Bank", you want to know if they've just seized *your* bank, and therefore will be able to watch your deposits and withdrawals. If you don't know who your bank really is, you won't know. ** All of the above applies to your escrow agent (who may be your bank) for similar reasons. Public key systems provide non-repudiability, but knowing provably that a pseudonym just stole money or goods from you doesn't help you get it back. Sure, it tarnishes their reputation, but if they steal a whole lot of money all at once, they won't care. ** Anonymity in banking is a well-known concept. If I transfer money from my numbered swiss bank account to your numbered swiss bank account, nobody knows anything, except who the bank is. And I don't see Switzerland giving up their enviable position in the international banking community willingly. All we need to do is convince a swiss bank to do some digital cash banking. Easier said than done. ** Legality of starting our own anonymous electronic bank: what do the laws say, anyway? As long as I pay taxes on any profit, I can form a sole proprietorship to freely buy and sell purple widgets with very little government interaction. Would it still be legal if I got a whole lot of people to accept purple widgets instead of cash? Would it be legal if we called it "digital purple widgets" instead of "digital cash"? I'd really like to see some sort of digital cash system set up. My feeling is that there would be a stronger demand than most people think for such a thing, even if it weren't anonymous and untraceable and all that. But if it has those features, too, and we do it first, it will get used. And de facto standards are hard to get rid of. Marc

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Re: Unlabelled PGP messages
by wcs＠anchor.ho.att.com 01 Dec '92

01 Dec '92

Hal Finney points out some problems with unlabelled messages, where the headers don't identify the public key by keyid - remailers include your email address, while newsgroups / broadcasts might have a LOT of articles, such that decrypting them to see if they're for you would be impractically slow. Some techniques that may help: - a remailer-to-newsgroup anonymous poster, which lets you send the remailer articles (presumably with unlabelled keys) to be posted to the alt.whatever group -- should be an easy combination of existing tools. - include an optional non-address label along with the unlabelled message. If you're having an ongoing secret conversation with somebody, you can secretly tell them the label to include, Subject: Unlabelled PGP message label: fnord If you don't see the fnords, you don't have to decrypt them. You don't want to use anything that can be traced to you, and you probably don't want to use labels in a sequence, or use the same label throughout a conversation, but it could help. You could also, if you're only mildly paranoid, use something like a 4-bit checksum of the PGP key or the key length as a label - it's not enough to identify which key it is, but it's enough to cut down on your decryption by a factor of 16. A longer checksum is too revealing - even 8 bits identifies 1/256th of the crypto community, which isn't very anonymous. With all these methods, if you're concerned about traffic analysis, you've still got to download the messages you don't care about to your machine before discarding them. - The Conventional Data Encryption (DEK) packet includes a checksum, which lets you know if you've successfully decrypted it using the RSA key, so you can tell quickly enough whether a message is for you, without decrypting the message itself. The RSA step probably takes most of the time for short messages, but it's still a win. (PGP does lose some security this way, since the Bad Guys can also tell if their exhaustive search of PGP keys has gotten the right one, and now they can go beat up the Key-Certifier to find out who the key really belongs to, but it's a start. If you want heavier anonymity, you have to do without the checksum. There's also an extremely small chance of an incorrect PGP key producing a correct checksum, but it's about 2**-26, and it still gives an incorrect session key.) Bill Stewart, somewhere in New Jersey

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Offshore banking..
by mark＠coombs.anu.edu.au 30 Nov '92

30 Nov '92

With respect to offshore banking, what about the legislation governing the export of money from the coutry? Here in Australia if we send an amount of money overseas then we have to pay a tax/levy of an amount based on the size of the funds being sent offshore. If we start snailmailing certified envelopes full of money overseas then someone will want to know about it so they can tax us. Im fairly sure there wouldnt be a problem (from the governemnt) with shuffling your funds from offshore bank to offshore bank. If encrypted money was going in and out all the time from a (legal) onshore bank that accepted digital transactions to an offshore one, then you would face the same export laws. How do the banks handle this when they send fifteen trillion overseas to have their money working for them while we all sleep at night....? Mark mark(a)coombs.anu.edu.au

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cypherpunks mailing list structure
by wcs＠anchor.ho.att.com 30 Nov '92

30 Nov '92

It's nice to have cypherpunks-announce existing. A couple questions: - will all the cypherpunks-announce traffic be gatewayed to cypherpunks? (alternatively, have all the cypherpunks subscribers been added to -announce?) - will the new list be announced to sci.crypt, etc.? - we've already lost a number of subscribers from cypherpunks due to volume, so folks may have missed the announcement. I've been getting swamped by the number of postings coming in through the day, and we seem to have been losing a lot of people. It's getting hard to find my "real" mail in the clutter. An alternative structure, which libernet uses, is to have both batch and reflection subscriptions - batch folks get one digest a day, (produced automatically rather than by-hand as with some digest), which has the articles in alphabetic-by-Subject order to provide some continuity. Would it be possible for cypherpunks to do the same? Thanks; Bill Stewart, somewhere over New Jersey.

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Re: Electronic Banking
by ghsvax!hal＠uunet.UU.NET 30 Nov '92

30 Nov '92

Eric Hughes points out that the blind signatures used to provide anonymity in Chaum's digital cash schemes are patented (by Chaum himself). This is a problem for an official, legal, profit-making business which wants to engage in electronic banking. However, such a business would face many other problems. Chaum's digital cash system could be construed as using the RSA algorithms, since it is in effect an RSA signature which makes the cash unforgeable. So a license for RSA would have to be obtained as well. (RSA licensing would also be needed for secure communication between the bank and its customers.) In addition, the acceptable use policies of NSFNET, which would probably have to be involved in most communications with the bank, are inconsistent with this kind of commercial activity, from what I understand. I believe new policies are in the works to allow commercial activities on the net, but these again will involve licensing costs. There is also the question of the legality of private cash in any form, electronic or otherwise. Nobody seems to have hard evidence on this. On the one hand, people can legally exchange certain types of securities, and they could perform services for each other in return for such exchanges. This is legal, but they are supposed to report the income on their tax returns. Our digital cash would seem to fit this model. (But are such securities transfers as untraceable as digital cash? Perhaps not.) On the other hand, I read several years ago that casino chips in Las Vegas were starting to be used as cash substitutes, but that the government cracked down on this practice. Perhaps this was too conducive to money laundering, especially with the reputed underworld activity in that city. I do think, though, that an informal digital cash system, presented as a research project or an educational game, would be able to slip between the cracks of the legal system, much as PGP has done. And I think this presentation would be legitimate. Digital cash is new (actually, nonexistant, as far as I know), and any use of it would by its very nature be research and be educational. I would suggest that anyone who proposes to implement such a game might want to consider releasing it anonymously (actually, pseudonymously). Sign the release with a PGP or RIPEM key, and let that be your pseudonym. Let people post messages to alt.security.pgp or some other newsgroup to discuss it, so that you can read them without revealing yourself, as proposed by Yanek. Post your replies anonymously using our remailers. This way there won't be a single-point target for anyone wishing to punish users of the game. Hal 74076.1041(a)compuserve.com

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credibility and banking
by Richard Childers 30 Nov '92

30 Nov '92

"If the operators of an escrow service are anonymous, then either their accessible assets had better be enough that you can recover losses if they walk with your goods, or their opportunity cost of defecting on their clients had better be high enough (in terms of lost revenue, lost opportunity on outstanding customer goodwill, name recognition, channels, etc.) that they are sufficiently unlikely to that you will take the risk." It seems to me that there are many parallels between this state of affairs and that which prevailed in the American West of the 1800s, with respect to banking .... there were no agencies insuring deposits, and only the rep- -utation of the bank's president - usually a leader of the community - was guarantee upon the funds. Bank robberies were not uncommon, depositors were few, runs on the bank, I speculate, may not have been unknown in those cir- -cumstances where the community of bank depositors lost confidence in the bank or its officers. Another parallel which occurs to me is that of the computerized trading that occurred when programs controlled trading in, um, was it October of 1987 that the stock market shuddered ? 1989 ? ... it suggests the inevitability of software shuttling funds around at cyberspace speeds to take advantage of ebbs and flows in the economic tides of the human race, around the world ... It would be interesting to further study the origins of banking, as I expect such a study would provide many such parallels by which the case for digi- -tized banking could be made stronger ... -- richard

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USSC Cases Available
by tom.jennings＠f111.n125.z1.FIDONET.ORG 30 Nov '92

30 Nov '92

Cross posted from a local net 125 echo... net access not availble for this system. ----------------------------------------------- | To All Sysops -- You might want to leave an | | announcement advising your users of the | | following. -={lsg}=- | ----------------------------------------------- USSC CASES & Selected Other Legal Decisions Available The PC GFX Exchange BBS in San Francisco has begun building a collection of US Supreme Court and selected legal decisions (eg., Cubby v. CompuServe). The files are PKZIPed and, after their initial upload, will eventually be moved into the board's file directory #64 (Legal & USSC Case Files). The BBS can be reached at the following numbers. 415-337-5416 HST144/v.32bis (public line) 415-337-5599 HST168/v.32bis (downloading for subscribers only) 415-337-6846 HST144 (public line) 415-337-6849 HST168/v.32bis (public line) While the board is an RBBSNet node, regretfully, FREQs are not currently available. PC GFX also carries the FidoNet LAW Echo as well as the LEGAL echos from SmartNet and ILink. A special note of deep appreciation to Mike Riddle and Alec Grynspan for their generous contributions to the file base. -=<Lester Garrett, PC GFX Co-SysOp>=- --- msgedsq 2.1 * Origin: -={The Lyceum}=- San Francisco, CA (1:125/101) -- tom jennings - via FidoNet node 1:125/555 UUCP - ...!uunet!hoptoad!kumr!fidogate!111!tom.jennings INTERNET - tom.jennings(a)f111.n125.z1.FIDONET.ORG

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tutorial needed
by deboni＠diego.llnl.gov 30 Nov '92

30 Nov '92

Howdy! I'm in need of a tutorial text that will bring me up to date on the current methods and terminology in the crypto arena. Any and all suggetions are welcome, and since this is probably an old and tired topic on this list, feel free to mail them to me directly. Thanks! Tom deBoni deboni(a)diego.llnl.gov

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Re: remailers
by fen＠genmagic.com 30 Nov '92

30 Nov '92

[ Marc Horowitz <marc(a)MIT.EDU> writes: ] >People who want to use remailers don't necessarily have the access to >turn their site into one. Far more people use email than are >sysadmins, or friendly with one. [ mark(a)coombs.anu.edu.au (Mark) agrees: ] >What if for instance the user is sending from a student account or some >other limited system (such as a PC) and they either arent allowed to run >nohupped unattended processes or are unable to. Will you deny them the use >of your remailer simply because they cant, or havent the technical knowledge >on how to, install their own remailer? That sounds a bit odd to me.... First, things are changing. More and more people are owning their own machines and setting up their own mail. Heck, I'm planning on having my own internet node at home! Second, we need to proliferate remailers. Get the students running the system to install the code (perhaps for credit!). Or, if you're at a company, explain to the sysadmin that you need to have access to information that is only availble from sources on the other side of remailers, or, perhaps more generally, just indicate that you need connectivity and that not being a remailer cuts down on the number of sites that you can connect to. Finally, perhaps a "student" rating can be added (in addition to "free" and "reputation-based"). Keeping track of the reputations of remailers is a first step to being able to keep track of the reputations of signatures (whether real or pseudonymous). The next step is the active filtering based on such info. Fen

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Re: Secure Key exchange
by pfarrell＠cs.gmu.edu 30 Nov '92

30 Nov '92

Bob Stratton suggests we hash out ideas on key signing prorocols. Ok, here is what I do: I sign keys only when I am certian that the key belongs to the human who claims to have the name on the key. There are not a lot of keys signed by me floating arround, maybe six total. My sig does not mean that the key is not owned by a cop or NSA/CIA/KGB agent (Unlike Edgar's service) because I can't tell. So if you care about that stuff, start your own web of trust with "higher" standards. My sign doesn't mean that the person is really who they claim to be, I can't tell that either. I've signed the key of a guy claiming to be "Ray Kaplan" because I believe that he uses that name reegularly. But I don't know that his name isn't really Boris Badinov. You won't find my sig on Phil Zimmermann's key, even tho that is a popular activity. Phil is a Net/Ether person to me. My sig means that there is a real person with that name. I was at NCSC and exchanged keys there. I'll be at CFP-3 and exchange keys there too. And if you are in my area, (suburban Wash DC) we can meet and exchange keys. I see no reason to hurry. A slowly growing web of trust that is strong is far more useful than an exploding web of trash. Pat Pat Farrell, Grad Student pfarrell(a)cs.gmu.edu Department of Computer Science, George Mason University, Fairfax, VA PGP key available via finger or request #include standard.disclaimer Write PKP. Offer money for a personal use license for RSA.

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