January 1993 - cypherpunks-legacy

17 Jan '93

Giving a little more thought to the idea of buying and selling digital cash, I thought of a way to present it. We're buying and selling "cryptographic trading cards". Fans of cryptography will love these fascinating examples of the cryptographic arts. Notice the fine way the bit patterns fit together - a mix of one-way functions and digital signatures, along with random blinding. What a perfect conversation piece to be treasured and shown to your friends and family. Plus, your friends will undoubtedly love these cryptographic trading cards just as much. They'll be eager to trade for them. Collect a whole set! They come in all kinds of varieties, from the common 1's, to the rarer 50's, all the way up to the seldom-seen 1000's. Hours of fun can be had for all. Your friendly cryptographic trading card dealer wants to join the fun, too. He'll be as interested in buying your trading cards back as in selling them. Try this fascinating and timely new hobby today! Hal

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Poor Man's Cash.
by Hal 17 Jan '93

17 Jan '93

Tim May's message about remailers mentioned the possibility of a simple way of handling digital postage. This can be extended to be a replacement for digital cash which doesn't use any cryptography. As in Tim's suggestion, the "banker" (or "money changer" in the model I described yesterday) simply creates 50-bit numbers, each of which is a "piece of digital cash". The banker keeps a list of the specific numbers that are circulating. When someone presents one for payment, he checks to see if the number is on the list. If so, he honors it and then removes it from the list. As with regular digital cash, withdrawers keep the numeric values secret. Nobody can forge the cash because no one can create numbers which are on the banker's (secret) list. There are two problems with this system. The first is that there is no way for the seller in a seller/buyer transaction to verify that the random 50-bit numbers the buyer is offering him are actually valid pieces of digital cash. The only thing he could do is to send them to the bank and have the bank report back as to whether they are valid or not. But in at least the simpler cryptographic protocols, the same problem exists. In those protocols, it may be possible to use digital signatures to recognize that a particular piece of cash originally came from the bank, but you still have the problem that this cash may have been "spent" before. Digital cash can be reproduced trivially, so any seller must again check with the bank to make sure that the cash he is offered is still valid. (More complex schemes are intended to allow "incrimination" of a buyer who reuses cash, but I feel that they have problems as well.) So this problem is no worse than at least the simpler cryptographic schemes. The other problem is that this cash is not anonymous. When a seller sends in some cash he received from a buyer, the banker can recognize which buyer that cash came from. But there are several reasons why this might not be as bad as it seems. First, the buyer and seller may themselves be anonymous to the bank. The bank may know them only through an anonymous address of the type we have been discussing here. So, at best, the banker could deduce things like "account 1234 seems to be buying a lot from account 5678." This is not a direct loss of anonymity. Second, our own paper cash already has this problem, through the serial numbers printed on each bill. Although this is used occasionally by law enforcement to track criminals, it is not considered in general to be a threat to anonymity. And third, the banker could have a policy of not remembering which buyer received each outgoing digital cash number. This could be done by having the banker publicize the software which he is running, so that people can see that these records are not being kept, along with occasional audits by some third party to verify that the banker is actually running that software. There would still be an element of trust involved, but trust will always be a part of such relationships, and reputations will be important. This "poor man's digital cash" is not that interesting technically, because no cryptography is involved. But it does provide most of the features of crypto-cash, and it does so in a manner which is easy to understand and explain. It also violates no one's patents, so it would be that much easier to start experimenting with it safely. Hal

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No Subject
by k.campbell14＠genie.geis.com 17 Jan '93

17 Jan '93

i want to join the revolution. return to bablon. appreciated...

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Digital cash legality...
by Hal 17 Jan '93

17 Jan '93

I've continued to try to learn about what laws might restrict the issuing of electronic money. Banking is controlled at both the state and the federal level. One question was whether one could engage in bank-like activities without calling yourself a bank. Denning's California Codes, Financial, has this definition: ------ Section 102. "Bank" The word "bank" as used in this division means any incorporated banking institution which shall have been incorporated to engage in commercial banking business or trust business. The soliciting, receiv- ing, or accepting of money or its equivalent on deposit as a regular business shall be deemed to be doing a commercial banking business whether such deposit is made subject to check or is evidenced by a certificate of deposit, a passbook, a note, a receipt, or other writing; provided, that nothing herein shall apply to or include money or its equivalent left in escrow, or left with an agent pending investment in real estate or securities for or on account of his principal. It shall be unlawful for any corporation, partnership, firm, or individual to engage in or transact a banking business within this state except by means of a corporation duly organized for such purpose. ------ This seems to say that it's illegal to do these bank-like activities unless you either are a corporation specifically chartered to be a bank (in which case the many banking laws apply to you), or unless you are an escrow agent or a real estate or securities agent (in which case many other laws apply to you). The California financial codes are three volumes long, so there is a considerable body of law that one would have to be familiar with to consider engaging in such activies. Another approach I have thought of would be to buy and sell digital cash, calling it something else. It's legal to buy and sell other bit patterns, such as computer-readable pictures and software, so it should be legal to buy and sell these cryptographic items. The idea would be that for $1.00 you will sell someone a #1.00 crypto- cash file, either through email or over the counter if you wanted (on a floppy). Then, if someone comes to you with one of these #1.00 digital cash files, you will buy it back for $1.00. At one level you are simply buying and selling items just like the local dealer in baseball cards, but at another level you are a "money changer", converting between U.S. dollars and crypto-credits. The credits thus receive backing through your willingness to redeem them for dollars at any time. One issue is how certain people can be that you actually will buy back this crypto-cash for its "face value". Given that you're not actually a bank, not actually a money dealer, and therefore not bound by any regulations, there is nothing to compel you to continue to accept the crypto money. You could arbitrarily decide at any time not to buy it back any more, just like the local baseball card dealer. This, I think, is what makes this whole activity legal - you're not making any promises to "depositers" that they can get their money back. But, by the same token, it may prevent the digicash from being accepted. It would basically come down to your reputation for being trustworthy and committed. Another problem is the issue of sales tax. Using this "seller of bit patterns" model, you will have to collect sales tax from your customers who are within the state. From my experience selling software, you don't have to collect it for out-of-state customers. I don't know whether the state would also expect another "cut" when you buy the bit patterns back. But it sounds like there will be at least a 7% transaction cost to turn dollars into digital cash, which is probably prohibitive. One solution might be to do this from a state which doesn't collect sales tax. (Coin dealers here in California have some exemptions from the sales tax requirements, but I doubt whether these exemptions could be stretched to cover what I am proposing here. In other respects, though, that business is rather similar to what I am talking about, in that they do a lot of selling and buying back.) A related issue is whether this should be thought of as a business at all, or whether it could be a hobby. The fact is, you could actually make a lot of money at this, even though you buy and sell at the same price, by investing the dollars you are paid until you have to use them to buy the digital cash back. Still, given the apparent need to infringe or license both RSA's and Chaum's patents, I think running it on a "non-commercial" basis would be more acceptable, if that could be done. I suppose if you were careful to segregate the dollars used to purchase crypto-cash into a non-interest-bearing account, so you didn't make any money on them, you could call it non- commercial. (Actually, it's not 100% clear to me that RSA's patents would apply to a digital cash implementation, since their patent is for a communications machine, even though the algorithm is the same.) I'll let people know as I continue to learn more. Hal

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more on security/obscurity/reality
by Hal 16 Jan '93

16 Jan '93

I can understand Daniel Ray's proposing to keep a low profile in running remailers, using encryption and such. Pax was probably the highest profile service, at least in the Usenet groups I use, and look what happened to it. The problem is, how can a remailing service be secret? Its address has to be known in order for it to be used! The only way it could be secret that I can see would be for it to have only a small, select group of "clients" who use it, and who keep the address to themselves. But there is no such group; it's not like there's some kind of ring of privacy lovers out there who will want to use such services but who will be willing to keep the servers secret. If remailers are going to be useful, they _have_ to be public. People have to know how to reach them in order to use them. The real task, it seems to me, is to justify anonymous mail to the Internet public, so that people will not support these shutdowns, and, even better, so that people will routinely use encryption and even remailing when they communicate. Eric Hughes made the point here some time back that we should aim for a society where sending non-encrypted remail is considered rather eccentric: "What? You send your mail _exposed_? You don't mind if everyone reads it?" In the same way, sending mail in such a way that everyone can see who you are communicating with, and that everyone you send to can see your true address automatically, could become equally unusual. One other point I'd make regards the use of pseudonyms for replying. The Pax service created a pseudonym for each person who used the service which was put into the "From:" line of outgoing mail. Then people could reply to that pseudonym and it would go back to the original sender. The problem with this approach, as far as spreading remailers, is that you have to have privileges on your machine in order to create new user ID's. An individual user who doesn't own or run a machine is generally not able to create such pseudonyms. This means that the number of people who can run remailers which use such features is much smaller than the number who can run the simpler Cypherpunks remailers in their current versions. The Cypherpunks remailers do allow for anonymous return addresses, but they are quite cumbersome to use, not automatic like the Pax type. But they do have the advantage that anyone who has access to Unix, PGP and Perl can run them. This is probably a much larger population. Hal

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Released GSA Docs Slam FBI Wiretap Proposal
by Dave Banisar 16 Jan '93

16 Jan '93

"GSA Memos Reveal that FBI Wiretap Plan was Opposed by Government's Top Telecomm Purchaser" The New York Times reported today on a document obtained by CPSR through the Freedom of Information Act. ("FBI's Proposal on Wiretaps Draws Criticism from G.S.A.," New York Times, January 15, 1993, p. A12) The document, an internal memo prepared by the General Services Administration, describes many problems with the FBI's wiretap plan and also shows that the GSA strongly opposed the sweeping proposal. The GSA is the largest purchaser of telecommunications equipment in the federal government. The FBI wiretap proposal, first announced in March of 1992, would have required telephone manufacturers to design all communications equipment to facilitate wire surveillance. The proposal was defeated last year. The FBI has said that it plans to reintroduce a similar proposal this year. The documents were released to Computer Professionals for Social Responsibility, a public interest organization, after CPSR submitted Freedom of Information Act requests about the FBI's wiretap plan to several federal agencies last year. The documents obtained by CPSR reveal that the GSA, which is responsible for equipment procurement for the Federal government, strongly opposed two different versions of the wiretap plan developed by the FBI. According to the GSA, the FBI proposal would complicate interoperability, increase cost, and diminish privacy and network security. The GSA also stated that the proposal could "adversely _affect national security._" In the second memo, the GSA concluded that it would be a mistake to give the Attorney General sole authority to waive provisions of the bill. The GSA's objections to the proposal were overruled by the Office of Management and Budget, a branch of the White House which oversees administrative agencies for the President. However, none of GSA's objections were disclosed to the public or made available to policy makers in Washington. Secrecy surrounds this proposal. Critical sections of a report on the FBI wiretap plan prepared by the General Accounting Office were earlier withhold after the FBI designated these sections "National Security Information." These sections included analysis by GAO on alternatives to the FBI's wiretap plan. CPSR is also pursuing a FOIA lawsuit to obtain the FBI's internal documents concerning the wiretap proposal. The GSA memos, the GAO report and others that CPSR is now seeking indicate that there are many important documents within the government which have still not been disclosed to the public. Marc Rotenberg CPSR Washington office rotenberg(a)washofc.cpsr.org Note: Underscores indicate underlining in the original text. Dashes that go across pages indicate page breaks. [Computer Professionals for Social Responsibility is a non- profit, public interest membership organization. For membership information about CPSR, contact cpsr(a)csli.stanford.edu or call 415/322-3778. For information on CPSR's FOIA work, contact David Sobel at 202/544-9240 (sobel(a)washofc.cpsr.org) ------------------------------------------------------------- (#4A) Control No. X92050405 Due Date: 5/5/92 Brenda Robinson (S) After KMR consultations, we still _"cannnot support"_ Draft Bill. No. 118 as substantially revised by Justice after its purported full consideration of other agencies' "substantive concerns." Aside from the third paragraph of our 3/13/92 attachment response for the original draft bill, which was adopted as GSA's position (copy attached), Justice has failed to fully address other major GSA concerns (i.e., technological changes and associated costs). Further, by merely eliminating the FCC and any discussion of cost issues in the revision, we can not agree as contended by Justice that it now " ... takes care of kinds of problems raised by FCC and others ...." Finally, the revision gives Justice sole unilateral exclusive authority to enforce and except or waive the provisions of any resultant Iaw in Federal District Courts. Our other concerns are also shown in the current attachment for the revised draft bill. Once again OMB has not allowed sufficient time for a more through review, a comprehensive internal staffing, or a formal response. /Signature/ Wm. R. Loy KMR 5/5/92 Info: K(Peay),KD,KA,KB,KE,KG,KV,KM,KMP,KMR,R/F,LP-Rm.4002 (O/F) - 9C1h (2) (a) - File (#4A) ------------------------------------------------------------- ATTACHMENT REVISED JUSTICE DRAFT BILL DIGITAL TELEPHONY The proposed legislation could have a widespread impact on the government's ability to acquire _new_ telecommunications equipment and provide electronic communications services. _Existing_ Federal government telecommunications resources will be affected by the proposed new technology techniques and equipment. An incompatibility and interoperability of existing Federal government telecommunications system, and resources would result due to the new technological changes proposed. The Federal Communications Commission (FCC) has been removed from the legislation, but the Justice implementation may require modifications to the "Communications Act of 1934," and other FCC policies and regulations to remove inconsistencies. This could also cause an unknown effect on the wire and electronic communications systems operations, services, equipment, and regulations within the Federal government. Further, to change a major portion of the United States telecommunications infrastructure (the public switched network within eighteen months and others within three years) seems very optimistic, no matter how trivial or minimal the proposed modifications are to implement. In the proposed legislation the Attorney General has sole _unilateral exclusive_ authority to enforce, grant exceptions or waive the provisions of any resultant law and enforce it in Federal District Courts. The Attorney General would, as appropriate, only "consult" with the FCC, Department of Commerce, or Small Business Administration. The Attorney General has exclusive authority in Section 2 of the legislation; it appears the Attorney General has taken over several FCC functions and placed the FCC in a mere consulting capacity. The proposed legislation would apply to all forms of wire and electronic communications to include computer data bases, facsimile, imagery etc., as well as voice transmissions. The proposed legislation would assist eavesdropping by law enforcement, but it would also apply to users who acquire the technology capability and make it easier for criminals, terrorists, foreign intelligence (spies) and computer hackers to electronically penetrate the public network and pry into areas previously not open to snooping. This situation of easier access due to new technology changes could therefore affect _national security_. (1) ------------------------------------------------------------- The proposed legislation does not address standards and specifications for telecommunications equipment nor security considerations. These issues must be addressed as they effect both the government and private industry. There are also civil liberty implications and the public's constitutional rights to privacy which are not mentioned. it must be noted that equipment already exists that can be used to wiretap the digital communications lines and support court- authorized wiretaps, criminal investigations and probes of voice communications. The total number of interception applications authorized within the United States (Federal and State) has been averaging under nine hundred per year. There is concern that the proposed changes are not cost effective and worth the effort to revamp all the existing and new telecommunications systems. The proposed bill would have to have the FCC or another agency approve or reject new telephone equipment mainly on the basis of whether the FBI has the capability to wiretap it. The federal- approval process is normally lengthy and the United States may not be able to keep pace with foreign industries to develop new technology and install secure communications. As a matter of interest, the proposed restrictive new technology could impede the United States' ability to compete in digital telephony and participate in the international trade arena. Finally, there will be unknown associated costs to implement the proposed new technological procedures and equipment. These costs would be borne by the Federal government, consumers, and all other communications ratepayers to finance the effort. Both the Federal government and private industry communications regular phone service, data transmissions, satellite and microwave transmissions, and encrypted communications could be effected at increased costs. (2) ============================================================= Documents disclosed to Computer Professionals for Social Responsibility (CPSR), under the Freedom of Information Act December 1992 =============================================================

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Re: more on security/obscurity/reality (fwd)
by tony＠morgan.demon.co.uk 16 Jan '93

16 Jan '93

In message <9218(a)eternity.demon.co.uk> you write: > Forwarded message follows: > > > From cypherpunks-request%toad.com(a)relay2.uu.net Fri Jan 15 12:52:47 1993 > > One thing I've really noticed over the 5 or 6 years I've been on the net > is the real hatred people have for what is coined "security by obscurity." > I think it is because of the terrible way people have gotten burned by > relying on conceiled methods only, or secret algorithms as ciphers to > protect their material. The method is discovered one way or another, and > everything caves in on itself! Quite understandable. > > Yet I cringe at the way people have just turned their backs on the whole > meta-philosophy of "coversion." If, for instance, you are to do battle with > an unbearable, overwhelming power, such as the Government, then what is the > only real way to "win?" Besides convincing them not to do battle with you? > > It is by staying conceiled, secret, untargetable. If they don't know to fight > you, or, if they do know, but cannot find you, then you stay all right. > Once it gets to a face-to-face confrontation, however, you lose, and you > lose immediately, there is nothing you can bring to bear, since it is now > just a force equation, and they have over 10,000 times the force you do. > Or more... > > This is one of the applications of the secret side of life. Modern crypto- > graphy has advanced, I think, by declaring all coversion as eventually > discoverable, and only seeking algorithms that will suffice even if the > enemy knows your methods. I agree with this. I guess I part company, however, > when people totally throw out being secretive as a partial or adjunctive > solution to something that is intrinsicly secret to begin with. The addition > of conceilment, disinformation, invisibility, etc. can be a tremendous > advantage when combined with strong methods (good ciphers that don't rely > on coversion). It is a multilayered approach that first tries to not become > a target, and, if it is a target is still hard to crack. > > When us little people try to maintain privacy against a Govt. that is REALLY > PISSED OFF BY EVEN THE IDEA WE WANT TO STRONGLY PROTECT OURSELVES, a multi- > layered, contingency-based approach is required. The most important part of > it is not a strong cipher, but, not to become a detectable or locatable > target. i.e. coversion and secrecy. While what you say is certainly true, it won't survive any kind of detailed attack. I'm all for the sentiment, but while there are so many mundane things going on round about, the best way to remain undetected is to remain undecipherable and to make sure that there is enough traffic about of the same sort. Press for encipherment of e-mail, that way, if everybody is doing it, who's to know what the underworld is doing? This is especially useful if you are not actually interested in violent revolution. You can then convince the powers that be that you are not worth monitoring. regards Tony ------------------+-------------------------------+--------------------------+ | Tony Kidson |`morgan' is an 8MB 486/33 Cat-| Voice +44 81 466 5127 | | Morgan Towers, |Warmer with a 670 MB Hard Disk.| E-Mail | | Morgan Road, |It resides at Morgan Towers in| tony(a)morgan.demon.co.uk | | Bromley, |Beautiful Down Town Bromley. | tny(a)cix.compulink.co.uk | | England BR1 3QE | -=<*>=- | 100024.301(a)compuserve.com| +=================+===============================+==========================+

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Re: possible solution to the anonymous harrassment problem
by Marc.Ringuette＠GS80.SP.CS.CMU.EDU 15 Jan '93

15 Jan '93

> If you read closer, you will see that you need "special permission from > RSADSI" to use non-published interfaces to RSAREF. I thought their interface was good enough to do all of the obvious operations -- RSA block encrypt and decrypt being the most important -- and that this restriction was just to prevent bizarrelly hacked versions of their code from being confused with the original. > R_SignPEMBlock computes a digital signature on a message > R_VerifyBlockSignature verifies a digital signature on a block of > data such as a certificate Let me know if I'm wrong, but I don't think I am. -- Marc Ringuette (mnr(a)cs.cmu.edu)

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Re: use of ripem instead of pgp
by Marc.Ringuette＠GS80.SP.CS.CMU.EDU 15 Jan '93

15 Jan '93

Bear in mind that many countries have restrictions about shipping encrypted traffic across their borders. These restrictions will be almost impossible to enforce, true, but do exist. M.

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Re: use of ripem instead of pgp
by jthomas＠kolanut.mitre.org 15 Jan '93

15 Jan '93

BRIAN MCBEE <opac!brian%OPAC.osl.or.gov(a)cs.orst.edu> writes: >Since the only reason we are talking about RIPEM is because of legality >concerns about PGP, I thought I'd mention that it is (at least theoretically) >illegal to export RIPEM from the US, annd therefore could not be legally used >to correspond with persons overseas. >I don't know if there is a legal way to do public key cryptography between >persons inside the US and persons outside the US. What is illegal to export is the software implementations of strong cryptography, not messages encrypted with them, or even detailed specifications of how to implement compatible software. So, theoretically, if a group in each COCOM-complying country and a group out of the reach of COCOM each independently implemented software to do the public-key cryptography (the U.S. group is the only one that will have to worry about licensing PKP's patents), then trading encrypted mail would be unquestionably legal. It would also be a lot of wasted work and duplicated effort, and I don't see any reason to respect the laws that make exporting or importing this software illegal. RIPEM has no doubt escaped the U.S. since RSADSI put it up for anonymous FTP last week, and PGP is everywhere. Joe

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