December 2003 - cypherpunks-legacy

retraction re: triple-DES
by Carl Ellison 17 Dec '03

17 Dec '03

Some of you may remember that I was promoting triple-DES-CBC using three feedback loops rather than one, claiming that is was clearly at least as secure as triple-DES with one feedback loop, while being faster for pipelined operation. It is clearly faster in a pipeline but Eli Biham has shown me his attack on inner-loop triple-DES and it's quite good and I was quite wrong...at least for chosen-ciphertext attacks. The inner loops weaken the resulting cipher drastically, under those attacks. I might still use the inner loops to get longer brute force attacks (as noted by Burt Kaliski in a posting here a while ago), if I knew that chosen-ciphertext attacks couldn't happen, but my original claim is clearly wrong and I thank Eli for pointing that out. Meanwhile, there are probably better ways to get the longer key for avoiding brute force (eg., XOR with a single secret value or with a simple (fast) PRNG). I'm told that Eli has a paper in preparation explaining his attack in full and I'm looking forward to that paper. I am sure that its location will be announced to this list when it becomes available. - Carl

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amusing quote
by doug＠netcom.com 17 Dec '03

17 Dec '03

I found this quote amusing: >obviously, I don't give a damn, do I? somehow my life has become far more >exciting now that I have so many enemies and have discovered all their >blackest secrets. I've been keeping out of the Detweiler fray, and wouldn't ordinarily quote him, but this is unusual...I'm taking him at face value here; that probably *is* the source of his motivation for all his frothing at the mouth. Paranoia is entertaining to him. The quote comes from talk.politics.crypto, where I was grazing the other day. Doug -- Doug Merritt doug(a)netcom.com Professional Wild-eyed Visionary Member, Crusaders for a Better Tomorrow Unicode Novis Cypherpunks Gutenberg Wavelets Conlang Logli Alife HC_III Computational linguistics Fundamental physics Cogsci SF GA VR CASE TLAs

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Weak Random Number Generators
by doug＠netcom.com 17 Dec '03

17 Dec '03

jerry(a)terminus.dell.com a while ago said he'd made a hardware random number generator, and offered to send out data generated by it, inviting people to look for weaknesses. I followed up on that and found problems with one of the two sets of data he sent (files a.bin and b.bin, one produced with his hardware and one with a software RNG, but which is which was not identified). He apparently is too busy to acknowledge my response, so I thought I'd post the results I emailed him here, for those of you interested in weaknesses of RNG's. The weakness is shown via ascii graphics of the results of the analysis, which makes it accessible and intuitive. -------------- included message ------------------ As I suspected, it only took a few minutes of programming to find periodicity in the phase space. The set you called "a.bin" is the one that shows a great deal of obvious structure. The intrinsic resonance is related to powers of two (I haven't figured it out more closely than that), which is what one might expect from software methods, but less likely from hardware methods (unless there's a power-of-two bias introduced by an ADC). On the other hand, I may be seeing structure in your psuedo-random number generator...they're notoriously bad unless you went out of your way to find a really really good one. The b.bin file appeared ergodic, almost completely filling the 2d phase space I picked as an easy-to-implement test. I may try another few tests shortly. For your amusement, I produced two psuedo-RNG files, one using the ancient and decrepit rand() function, well known to be a very poor source of randomness (c.bin), and one using the more carefully constructed BSD Unix random() function (d.bin). The latter also has its flaws, but they are far better hidden than those of rand(). Note that c.bin is even more grossly flawed (structured) than your a.bin. Meanwhile, if a.bin happens to be from your software RNG rather than from your hardware RNG, then you need a new one! I have one of the better ones lying around somewhere, let me know if you need it. Below is what I saw from my crude-ascii graphics output from the four test sets. If you think this would be of interest to cypherpunks, feel free to post this there...or tell me to. Doug (Note that I'm using a 35 by 80 window to view these) 2811> ran < a.bin . . .... . . .... . . ..... . ... . . . . ... .... . . . . . . . . . . . .. . .... . . . .... . ....... . .... ... ... .... .. ..... . ..... .... . ..... . ..... . ..... . .... . .... . . .... .... . ... . . ... . .. . . . .. . . . . .. .. ... . . ..... . . ..... . ..... . .... . . ....... ...... ..... ... . . ..... . ..... . ..... .... 2812> ran < b.bin ........................................................... .... . .............................................................. ..................................... .......................... ................................................................ ...................................... ......................... ..................... .......................................... ................................................................ ........................................ ....................... ................................................................ ................................................................ .................... ................. ......................... ................................................................ .......................................... ..................... ................................................................ .................................... ........................ .. ............................. .................................. ............................................. .................. ................................................................ ................................................................ ................................ ............................... ................................................................ ......... ..................................................... ............................ ................................... .......................... ..................................... ................................................................ ................................................................ ........... .................................................... ................... ............................................ .......................... ..................................... ................................................................ ................................................................ .............................................................. . 2813> ran < c.bin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2814> ran < d.bin ................................................................ ................................................................ ... ............................................... ....... .... ........................................................... .... ................................................................ ........................................................ ....... ................................................................ ................................................................ ................................................. .............. ...................................... ......................... ................................................................ ............ ................................................... ................................................................ ................................................................ ................................................................ ................................................................ ................................................................ ................................................................ ................................................................ ............... ................................................ ................................................................ ................................................................ ................................................................ ................................................................ ................................................................ ................................................................ .......................... ................ .................... ................................................... ............ ................................................................ ................................................................ ................................................................ ................................................................ -------------- end included message -------------

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Bay area BBS bust--fyi
by hkhenson＠cup.portal.com 17 Dec '03

17 Dec '03

Eric, please put me back on the list. Keith ------ About two years ago I helped a guy from Milpitias (just north of San Jose) deal with a BBS bust at what he described as a "light" porn BBS. The San Jose cops realized shortly that they had really goofed by not considering the ECPA and related laws in their search&seizure. The result was that they gave his system back after five weeks, and stated in a written release that this guy's activities were within the scope of the law. The BBS is called Amateur Action, and the sysop's name is Richard Thomas (408-263-1079). A few minutes ago Richard (who I have yet to meet in person) called. A search warrant was being served at that very moment by the US Postal Inspectors, who (with the help of San Jose cops) were packing up his equipment and carting it out--again. Richard managed to get one of these inspectors on the phone with me. This inspector seemed to be rather knowledgeable of such things as the ECPA, 2000aa, and the Steve Jackson case. He was completely unconcerned! He piously stated that it was their intent to bring the system back to Richard within a "few days" and, as a result of the short interruption of user access, and their good intent "not to look at private email," they were completely safe from the provisions of the ECPA. This postal inspector gave his name as David Dirmeyes, from Tennesse (does this sound like Bible Belt prosecution for pron?) and gave me the name of the US Attorney he was working under, one Dan Newson with a phone of 901-544-4231 in TN (though he stated that the phone # would be of no use because Dan was at a conference for a week). For what it is worth, the postal people were using the San Jose cops on the bust because they did not have the expertise themselves to move the system and make copies. According to the investigator, they did not know that they could get a court order to have a backup of the system made on the spot. It may be that Richard is the target, he said there was a mystery package which came today in the mail today (which his son brought in and his wife opened, but he had not gotten around to seeing what it was) which seemed to the center of the postal inspector's concerns. (In spite of not meeting him, I suspect Richard may be the kind of smart alec who attracts the attention of cops.) I don't know if this is something of marginal concern to those of us concerned with government abuse of people's computers and communications or a major concern. I intend to find out more tomorrow, but if the ECPA is applicable, this guy had about 3500 users, over 2k pieces of protected email on his system, plus (I think) agreements with his uses for him to represent them in an ECPA related legal action--two million dollars if I am multiplying right tonight. (My "Warning to Law Enforcement Agents" was part of his signup screens.) Keith Henson 408-972-1132 hkhenson(a)cup.portal.com

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No Subject
by ltech1!ltech1!mercury＠heifetz.msen.com 17 Dec '03

17 Dec '03

unsubscribe

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Updated/corrected posting
by hkhenson＠cup.portal.com 17 Dec '03

17 Dec '03

About two years ago I helped a guy from Milpitias (just north of San Jose) deal with a BBS bust at what he described as a "light" porn BBS. The San Jose cops realized shortly that they had really goofed by not considering the ECPA and related laws in their search & seizure. The result was that they gave his system back after five weeks, and stated in a written release that this guy's activities were within the scope of the law. The BBS is called Amateur Action, and the sysop's name is Robert Thomas (408-263-1079). Robert's lawyer, Richard Williams's phone number is 408-295-6336. Last night about 8 pm, Robert (who I have yet to meet in person) called. A search warrant was being served at that very moment by the US Postal Inspectors, who (with the help of San Jose cops) were packing up his equipment and carting it out--again. Robert managed to get one of these inspectors on the phone with me. This inspector seemed to be rather knowledgeable of such things as the ECPA, 2000aa, and the Steve Jackson case. He stated he was completely unconcerned about their lack of warrants for email! He piously stated that, because it was their intent to bring the system back within a "few days" and, as a result of the short interruption of user access, and their good intent "not to look at private email," they were completely safe from the provisions of the ECPA. This postal inspector gave his name as David Dirmeyer, from Tennessee (does this sound like Bible Belt prosecution for pron?) and gave me the name of the US Attorney he was working under, one Dan Newson with a phone of 901-544-4231 in TN (though he stated that the phone # would be of no use because Dan was at a conference for a week). For what it is worth, the postal inspector said they were using the San Jose cops on the bust because they did not have the expertise themselves to move the system and make copies. According to the investigator, they did not know that they could get a court order to have a backup of the system made on the spot. It may be that Robert is the target. (In spite of not meeting him, I suspect Richard may be the kind of smart alec who attracts the attention of cops.) Robert said there was a mystery package which came today in the mail today (which his son and wife picked up and she opened). The package turned out to be real honest-to-gosh kiddy porn. Robert claims not to have ordered it, and considering that his wife picked the (unexpected) package up and opened it, I think this is the actual case. Robert was busy with system problems that afternoon and had not gotten around to doing anything about the stuff. The guy who sent it is known as "Lance White," who Robert thinks is one of his BBS members. (As is postal inspector Dirmeyer.) They had Robert pull all postal correspondence with this guy (video porn orders) from his files and took it with them. Robert thinks the postal folks may be after this guy, and his BBS just got caught in the middle. An interesting side point is that while they asked for the package which came that day when they came in, they did not have a warrant for it, and said they would have drive over to SF to get one unless he volunteered to give it up. Robert signed off that they could take it, and they did. He noted this morning that the original warrant he has was neither signed nor dated, though a judge's name was typed in. I don't know if this is something of marginal concern to those of us concerned with government abuse of people's computers and communications or a major concern. I intend to find out more, but if the ECPA is applicable, this guy had about 3500 users, over 2k pieces of protected email on his system, plus (I think) agreements with his uses for him to represent them in an ECPA related legal action--two million dollars if I am multiplying right. (My "Warning to Law Enforcement Agents" was part of his signup screens.) Question for Mike Godwin. One aspect of this case gives me the shakes. *Anyone* with a grudge (and access to this kind of stuff) can send you a package in the mail and tip off the postal inspectors. Short of the obvious (don't make enemies!) how can you protect yourself from this kind of attack? My non-lawyer thoughts: Burn it at once! Call my lawyer. Call the cops. For a while this will be a very serious problem, because *any* of us with readily available morfing tools can make (what looks like) kiddy porn out of legal porn. Keith Henson 408-972-1132 hkhenson(a)cup.portal.com

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Crypto and Taxes, Etc.
by Duncan Frissell 17 Dec '03

17 Dec '03

To: cypherpunks(a)toad.com In a recent post, Carl Ellison <cme(a)sw.stratus.com> opined: >Mr. Bennett is clearly a victim of the popular impression that privacy is >somehow new. Anything which can be done with public key encryption can >be done already with private communications (whispers, notes which are >mailed and destroyed, secret mail drops, couriers, secret-key >encryption,...>. > >All the hype over cryptoanarchy is overblown. We are capable of anarchy, >income tax evasion and secret bank accounts today. Look around you. How >much of that do you see in your own life? What makes you think that >you'll see any more of it in 10 years? > - Carl PM has already responded pointing out that cryptography makes such things more convenient and this is certainly true. It is much easier to participate in real free markets if secrecy is cheap and easy. There is another aspect however that is tied up with crypto and telecoms. In traditional Black Markets, the transactions are illegal. In future Black Markets on the nets, most of the transactions will be legal. Legality certainly encourages transactions relative to illegality. If I am a non-US citizen resident in a tax-haven jurisdiction, I have no US tax liability for my non-US source income. I also have no tax liability in the haven jurisdiction as long as I wasn't working in that economy. This was OK in the past if you were a bank or a rich owner of passive income. You could accumulate it free in a tax haven. Most people couldn't participate, however. With commerce on the nets, however, it becomes much cheaper to arrange your affairs (if you are a non-US citizen) such that you have no tax liability. You may also be able to operate in a much looser regulatory environment. While it is true that you could accomplish all of the above using traditional technology, the nets mean that you can do it more cheaply (meaning it becomes economically appropriate for more transactions) and in a mainstream market not off to the side in a tropical pesthole. You can have all the benefits of forum shopping while not giving up access to the richest markets of the OECD countries. If a Brit or an American chooses to download a financial product, a video, a drug synthesis description file, medical advice, or some other bits of information from you (you being located somewhere on the nets) they may be breaking various laws (depending on the contents of their download) but you may not. Thus it is legal, today, for an American to purchase an unregistered foreign security but it is illegal for me to promote such a thing domestically. On the nets, we are all foreign and we are all domestic. It would be legal to promote the sale of an unregistered foreign security over the nets. What happens to the SEC? As I said in London in November (and *think* about this folks): "And what can we call this new form of social organization growing on the nets and in the modern fluid business environment? When two or more people can meet together and communicate freely and privately without interference by outsiders, they can trade -- they can form a market. If this trade on the nets is made free from even the *possibility* of external regulation, what we have is a free market and a free society." Unless you can block this communication, we've got a market since 90% of the economy will be in non-physical goods and services within a very few years. Sorry to repeat myself... DCF Frissell Glossary - OECD (Organization for Economic Cooperation and Development) AKA the 24 richest countries. (The 12 EEC Members, US, Canada, Japan, Aus, NZ, the non-EEC countries of Western Europe including Iceland, and Turkey.) --- WinQwk 2.0b#1165

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Public key encryption, income tax and government
by remail＠tamsun.tamu.edu 17 Dec '03

17 Dec '03

I don't agree with the extreme position that cryptography will lead to the failure of the income tax and the destruction of the government. Consider: untraceable, anonymous transactions occur every day - not through cryptography, but through simple cash purchases at the local grocery store, gas station, department store, restaurant, and so on. There are many occupations which primarily involve cash transactions. Are these people immune from income tax? Of course not. The government has many ways of extracting tax in these cases, ranging from periodic audits with heavy penalties (which keep people honest) to imputing income (as in the case of tip income by waiters), to fraud investigations for those living beyond their means. As I see it, cryptography may extend similar conditions to information workers - programmers, architects, authors. Naturally, since a disproportionate number of those on the net fall into these categories, this seems like a revolutionary development. But from the larger perspective, it is not a major change. The fact is, information purchases are a small part of most people's budgets. If you add up all of what the average person purchases that would fall into the general category of "information" - books, magazines, newspapers, music, video - you probably won't exceed a few percent of income. Information, despite the hype, is not a dominant part of our economy. Particularly at the corporate level, the notion that cryptography will allow widespread tax cheating seems especially questionable. I don't agree that the major force for tax compliance is government surveillance of telephone and electronic communications. Instead, the corporations have to keep books which reflect their financial transactions, and they have to make appropriate reports to the government and investors. To cheat they'd have to have two sets of books, with all the concomitant risks. It would be difficult to pass on the illegal gains to shareholders because they wouldn't match up with what was reported to the governments. Perhaps the beneficiaries in this scenario are the corporate officers? This sounds like simple fraud, and I doubt that the shareholders would allow their investments to be jeapordized in this fashion. Suppose I walk into IBM today and offer to go to work as a programmer, for 10% less than they would normally pay me, as long as they pay me "off the books", and pass on to me in cash the amount they would normally have to pay to the government in payroll taxes. Sounds like a win-win situation, right? Both IBM and I save money. But naturally IBM won't agree to this. And it's not because they're afraid of government bugging of their phones, which cryptography might overcome. They know that there are many ways a scheme like this can be detected. I don't think this will change once strong cryptography allows me to make the same offer to IBM across the net. Sure, my electronic conversations with IBM will be private - but my conversations in the example above were just as private. The advent of cryptography will not change the fact that violating the tax laws is a serious, difficult, and very risky business. Now, I don't know much about high finance, so it's hard for me to judge what the effects would be of cryptographically-protected communications with offshore banks. Again, I am skeptical that the main barrier to such widespread tax evasion that the government would collapse is the government's ability to eavesdrop on electronic communications. I was under the impression that money transfers have used the Data Encryption Standard for years, which is not known to be breakable, and yet government has survived. Summing up, the main change I see cryptography bringing is to extend to information workers some of the same possibilities for anonymous, private cash transactions that plumbers and shopkeepers have always had. Even then, big business will continue to operate under the present rules. I don't see this as a major change in society. I might add that over-hyping of the changes due to cryptography is actually counterproductive. To the extent that law enforcement believes these projections, the government will oppose simple cryptographic technologies that do have an important role to play in preserving privacy. Hal Finney hfinney(a)shell.portal.com ------------------------------------------------------------------------- To find out more about this anonymous remail service, send mail to remail(a)tamsun.tamu.edu with the word "remail help" as the only words in the subject field.

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"tentacles"-- I don't get it!!
by nobody＠cicada.berkeley.edu 17 Dec '03

17 Dec '03

I hate to intrude here but I have been seeing all the smoke out in the newsgroups about this "tentacle" business and L. Detweiler (who is this guy??!). I hope I won't be flamed so I am sending this through a remailer. (I love your technology, one of my friends went to a cypherpunk meeting once and told me about the cooler stuff.) I sent L. Detweiler some of these questions but he never responded, so I was hoping people here could help me understand what is going on out here!!! So anyway... Could someone define "tentacle"? Detweiler said, out in the newsgroups: > > 1) the cypherpunks betrayed me. they even got a an old college friend > to pretend he was real. M.Dale sent me mail claiming he was real. I > did not ask for this mail. But if you send me lies, I will call you a > liar. I don't agree with that in the least. (With what he says they did, not the paragraph itself). > > 2) Szabo is one of the most valuable cypherpunk tentacles as far as > reputation. `he' has been posting to the net for a long time in > many groups. this is why they fought so tenaciously to protect him. > > 3) T.C.May said at a cypherpunk meeting that everyone I have accused of > being a tentacle is real. T.C.May is a liar. I dare you, Mr. May, > to come out of your hole. I will tear your postings to shreds. I > will rip the lies apart. I will decapitate the tentacles, and they > will be afraid to show their sickly green faces anywhere respectable. > I have followed this thread for such a short time (relativly speaking). I think I picked up on the "Cryptoanarchist" part (someone who doesn't support the regulation of cryptography?). From what I've been able to gather, the talk is about "tentacles" coming from one "Medusa." > 4) B.Stewart says that he saw N.Szabo and J.Dinkelacker at the > last cypherpunk meeting, *and* their drivers license. B.Stewart is > an Accomplice. I challenge anyone who saw them to tell the world > you did. Did you really see the Phantoms? > > 5) the whole affair proves that the conspiracy is very active, > involves very many people, and has gotten quite out of control. > > 6) anyone who supports the cypherpunks or their leaders are > accomplices to lies and the `hidden agenda' of black marketeering, > manipulation, tax evasion, deception, money laundering, overthrow > of governments. And these are just the *obvious* ones. So many makeshift terms here that I'm not familiar with. Could someone Define "cypherpunk." (I HAVE heard of "CyberPunk," but couldn't extract a meaning out of that either.) Please enlighten me. > > 7) cypherpunks are responsible for a huge increase in trash lately > to newsgroups. It is a means of drowning my signal in noise. They > are nothing but conspiracists, powermongers, and extremists. > What trash is this? The only thing I have seen (so far, as I believe) are various messages written by an12070 (L. Detweiler?) that have erupted into flame wars. Keep in mind that I'm NOT FLAMING ANYONE here. > hey cypherpunks! you think that because no one challenges your > ridiculous posts, calling me insane, that no one believes me? that > no one is taking me seriously? That no one is stunned that szabo > is nothing but a worthless, slimy snake? the joke's on you. there > are a fantastic number of lurkers `out there' who are beginning to > sense the lies. > CyberAnarchists... Is that someone who doesn't want CyberSpace regulated? Personally, I have nothing against the free exchange of information (does anyone here?). I was really upset when he said > death to cyberanarchists-- by anarchy... > > > stay tuned, soon they will all be SQUISHed > > -- is this one of the "violent death threats" that everyone has been talking about? thanks for the help, I just want to know. sorry that I missed some of the earlier stuff. I will be watching this list for a reply. BTW that stuff that Detweiler is doing with signatures, switching them around, it is kind of ironic given that the cypherpunks are really into that thing. He seems to be really pissing you guys off. but I gotta admit it really is a sort of new art form in cyberspace, kinda like Graffiti. although, there is so much activity lately that it kind of makes me wonder if there is a whole team of people out there. there have been a lot of rumors about infiltrators and double agents. we'll see what the future brings. personally I think remailers are God's Gift to Cyberspace, and anything done to limit their capabilities or infringe on the privacy of whoever uses them is CENSORSHIP and ORWELLIAN POLICE STATE. we'll prove to Detweiler that we are not the hypocrites he claims we are, that under no circumstances whatsoever will we *ever* betray the people who use our remailers, even if they are our enemies, because Privacy is all that matters. .adAMMMb. .dAMMMAbn. .adAWWWWWWWWWAuAWWWWWWWWWWAbn. .adWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWbn. ..adMMMMMP^~".--"~^YWWWWWWWWWWHHMMMMMMMMbn.. "~^Y" / ..dMWMP".ammmmdMMMUP^~" | Y dMAbammdAMMMMMMP^~" | | MMMMMMMMMMMMU^" -Row l : Y^YUWWWWUP^" \ j "-..,.^ mveaudry(a)turing.acs.ryerson.ca & ld231782(a)longs.LANCE.ColoState.EDU (and how many more that I haven't revealed yet? Could I actually be jmurphy(a)apple.com? could I be 3CJS5@qucdn. QueensU.ca? Who am I? Who cares?)

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CRYPTO/TAX
by Sandy 17 Dec '03

17 Dec '03

-----BEGIN PGP SIGNED MESSAGE----- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SANDY SANDFORT Reply to: ssandfort(a)attmail.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C'punks, Hal Finney wrote: I don't agree with the extreme position that cryptography will lead to the failure of the income tax and the destruction of the government. Consider: untraceable, anonymous transactions occur every day - not through cryptography, but through simple cash purchases at the local grocery store, gas station, department store, restaurant, and so on. There are many occupations which primarily involve cash transactions. Are these people immune from income tax? Of course not. Do these people pay such income tax? Of course not. The government's own figures peg tax evasion at "only" 20%. Yeah, and Elvis lives in my closet. The government has many ways of extracting tax in these cases, ranging from periodic audits with heavy penalties (which keep people honest) to imputing income (as in the case of tip income by waiters), to fraud investigations for those living beyond their means. Think "cost-benefit analysis." Duncan has already pointed out that the modal number of years spent in prison by tax evaders is "zero." Hal should get friendly with a weekend mechanic or a waitress. He might want to re-think his belief in the voluntary tax compliance of alternative economy. Perhaps Eric Hughes will recap the "crypto point-of-sale" rap he gave at the previous Cypherpunks meeting. (Or maybe he won't.) What it demonstrated was that the types of economic transactions that can benefit from crypto-privacy is much broader than Hal is imagining. We have already won. S a n d y >>>>>> Please send e-mail to: ssandfort(a)attmail.com <<<<<< ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -----BEGIN PGP SIGNATURE----- Version: 2.3a iQCVAgUBK1IgLE5ULTXct1IzAQFC0QP/fWrSeauH3xnD7CFofRO8dTIdVN31etSO LPqw+XOC2us01cBRCyR6BNArbjpscLgiYjdvbEaMGBGbjPw8JFlVlDTI2+WV/b7h 6fLIFgCkUzmFaZKBHaNmiCIQarii8xucVaM8lHt8rZ3tQE9mCe8i6mosagcuDO5B +9/f0an++6g= =sZO9 -----END PGP SIGNATURE-----

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Who is L. Detweiler?
by tcmay＠netcom.com 17 Dec '03

17 Dec '03

Cyphertentacles, Here's a posting I made yesterday to the Extropians list, describing the Detweiler situation. Yes, even they have heard of L. Detweiler and his new prominence as a Net.Loon of note. So when some folks asked for an explanation, I sat down and wrote up a summary of the situation. Here it is: ***from the Extropians list (with a quote from that list excised, as they have rules about forwarding list traffic, except one's own, of course)*** I'll descend into the depths of Detweiler's mad world for a bit to answer some questions raised by John Clark. Detweiler is actually a fascinating case history in Net paranoia....we actually have gotten to see the birth of a Net.loon like McElwaine or Serdar Argic, a Net.loon who is already famous. He makes anybody we've seen on the Extropians list look like a Minor Perversion (apologies to Vinge's "A Fire Upon the Deep") by comparison. Antics like his are why postive reputation filters are needed so urgently, not just on mailing lists like Cypherpunks, but throughout Cyberspace. (The Extropians list software, with ::excludes, is sorely needed on Cypherpunks. Various things are holding up the transfer of this. I have suggested to Harry that one approach is to set up "mailing list servers" that support this software, as a profit-making venture.) Anyway, here's the saga of Lawrence Detweiler, aka S. Boxx and a dozen other such names. --quote from John Clark removed-- Lawrence Detweiler, sometimes called Larry and sometimes called Lance (which may be a mistake, one he never corrected until recently) is a guy who's about 22-23 who lives in Colorado, having recently graduated from Colorado State U. in Computer Science. Don't know what his career is now, if he has one. He joined the Cypherpunks list about a year ago and showed great enthusiasm and energy, volunteering to write the FAQ on "Anonymity on the Internet" and "Privacy and Anonymity." He put this out very quickly (too bad he's crazy and can't do the same for the Cypherpunks FAQ, which I have recently agreed to write, or the Extropians FAQ, about which I'll say no more). Detweiler was, like I said, very energetic, often writing very long rants against Clipper, Dorothy Denning, etc. He often got angry with someone and slipped into insulting them as being duplicitous, malicious, etc., instead of merely ascribing their different opinions as being just that. He asked for my help several times in getting his views accepted by the Cypherpunks, and I tried to get him to tone down his ad hominem attacks and general rants (he was always prone to writing agonized prose, such as "I am becoming increasingly disgusted and completely and thoroughly disenchanted by the nauseatingly waffling on vital issues by the Cypherpunks High Command."--this is not something he actually wrote, but my attempt to duplicate his style). His FAQs are very well-done, if a bit long, and tell us there's a glimmer of brilliance beside the madness....the two often go together, so this is hardly surprising. By last summer, Detweiler was handing out "Cypherpunks of the Week" awards, was arguing for his own form of electronic democracy (one person one vote, to be done on a daily basis on all sorts of issues....needless to say, many of us disagreed with him), and was generally ranting and raving. When I stated my disagreement with his electronic democracy idea as being the main goal of the Cypherpunks--and this was done in a mild, objective manner--Detweiler spat venom at me and accused me of being an agent of some government agency. His paranoia and rancor increased steadily throughout September and by October he had become "S. Boxx" and other pseudonyms, using his "an12070" account to argue about "pseudospoofing" and "tentacles of the Medusa." He apparently decided that I, for example, was using a variety of fake names, including Nick Szabo, Hal Finney, Geoff Dale (yes, the very same folks you all know from _this_ List!), to drive him crazy and to argue against his points. Thus, if Nick Szabo argues against electronic democracy AND has a Netcom account, as I do, then it's obvious: szabo(a)netcom.com is obviously a "tentacle" of tcmay(a)netcom.com! What could be more obvious? This all increased, with Detweiler launching daily rants against me, Eric Hughes, and others. He demanded apologies "or else." He demanded statements from the "Cypherpunks High Command" that we no longer "pseudospoof." He appealed to John Gilmore to "put a stop to this pseudospoofing," but John was in Nepal on a trek and didn't respond. When John eventually returned, he replied in a calm manner and suggested that Detweiler was mistaken. True to form, Detweiler went ballistic at this "betrayal" and declared Gilmore to be just another "Big Mac." (In DetSpeak, many new terms exist. Those of us who appeared on the cover of "Wired" (issue 1.2), Eric, John, and me, are "Big Macs." Other Cyperhpunks are "cheeseburgers." Of course, we are also "TENTACLES" and "SNAKES" of Medusa. Sometimes Detweiler refers to _me_ as Medusa, other times he imputes to "her" the role of coordinating the Grand Conspiracy to a) drive him crazy, b) spread the Cryptoanarchist message, and c) corrupt all of Cyberspace with Lies. He also drifts into Christian rants about Hell, Satan, God, and Damnation. Keeping track of his shifting terminology is a chore.) He asked to be removed from the Cypherunks list, and was, but continued to post to it (blindly). He created his own group, the "Cypherwonks" list, with a fascist list of rules and regulations about true identities, the evils of pseudospoofing, etc. I gather from reports that it is now moribund. (I didn't join, for obvious reasons, not even under a "tentacle"--which I don' even have, needless to say). Ironically, but hardly surprisingly, the very thing Detweiler rails against so much, "pseudospoofing," is precisely what he is most famous for! I'm sure a psychologist would have a field day with him. Detweiler issued death threats, saying he would be visiting the Bay Area to "kill the tentacles." He mostly did this under his an12070 name, though he often confused the identities and made several telling slips which confirmed to even the doubters that L. Detweiler = an12070 = S. Boxx = Pablo Escobar = Adolf Hitler, all names he has used for his paranoid rants. (Other evidence: same line lengths, same use of TeX-style ``quotes'' in messages, same use of no spaces between initials in names like "T.C.May," same florid languages, same emphasis on same issues, and, most tellingly of all, several "goofs" in which private messages to one or the other were quoted by the other, and even goofs within messages that alluded to himself as "Lance" or "Larry.") And so it goes. He has been posting his "CRYPTOANARCHIST INVASION ALERT"-type messages to several Usenet groups for the last couple of months, and has recently gone even further in the direction of madness. I expect one day to hear Detweiler has shot and killed himself, or has shot and killed others, or is holding them hostage. I know the Colorado Cypherpunks group--which expelled Detweiler from their physical meetings and from their list--is fairly concerned about their security, and the security of Phil Zimmermann, who lives in Colorado and whom Detweiler alternately characterizes as "God" or as "Satan." After the latest rounds of forged messages, with my name attached and with .sig block attached, I alerted Julf, operator of the anon.penet.fi site, to the obvious "abuse" of his remailer site....I didn't do this when Detweiler was ranting, only when he was sending out posts which gave the appearance of being from _me_. No an12070 messages have been seen by me for several days now, and Detweiler has made comments about how S. Boxx "told him" that his account has been stopped. Yeah, right. So that's the saga of L. Detweiler, the latest Net Perversion to be born in cyberspace. --Tim May -- .......................................................................... Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay(a)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. Higher Power:2**859433 | Public Key: PGP and MailSafe available.

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Crypto and taxes
by Hal 17 Dec '03

17 Dec '03

I can agree that cryptography will make some kinds of illegal private transactions easier. What I doubt is that this will happen at a large enough scale to seriously threaten the ability of governments to fund themselves by taxes. Take Perry's example of one person buying a rare, expensive item from another. This might be made easier to do anonymously with ecash. But how much significance will this have taxwise? If these were private individuals involved in a personal swap, chances are no taxes would be paid even under current conditions. I bought a car from my next door neighbor a few months ago. I doubt that he paid income tax on it. And transactions of this magnitude are rare among individuals in a non- business situation. Most of our transactions are done with businesses, generally corporations. Imagine taking $15,000 in cash to buy a new car anonymously. I believe you will find that the car dealers will not cooperate, that government regulations (designed to crack down on drug dealers) will require them to get some ID from you. Digicash would presumably be under the same restrictions. Furthermore, as I argued earlier, it will be much harder for a large business to successfully switch to cash transactions in the hope of evading taxes. A much larger group of people would have to be "in" on the secret, in order to cooperate to prepare the false receipts and books that would be necessary. Any situation like this will be risky and dangerous to maintain. I don't fully understand Duncan's arguments for how taxes can be avoided through being a non-citizen. I gather, though, that this would require me to either move to another country, or to go to work for a company that is in another country. Neither seems likely in the next few years for the majority of citizens. And if this did catch on, presumably this loophole could be closed, so that you were taxed by whatever country you lived in. (A similar situation exists today with respect to state income tax for people who live in one state and work in another. I don't think they are exempt from all state income taxes.) Sandy may be right that self-employed people who get cash payments do widely under-report their income, and no doubt self-employed programmers do the same to some extent. But I'm really not sure why or how a programming contractor or consultant, let alone an employee, will be able to avoid paying taxes once strong crypto is common. Won't the company paying him still want to record those payments on its books, so it can deduct them as business expenses? I believe similar records are used today to verify tax liabilities of paid consultants. Why won't this be true with crypto involved? And for employees, companies are still going to need a social security number, name and address, and they will still submit records to the government showing how much you were paid. I don't see widespread tax evasion in the picture at all. Sure, some smart people may be able to exploit the new technologies and disappear into the cracks. Self-employed information workers may have the most to gain. But the average worker and the average company aren't going to have major new opportunities for tax evasion. The economy will keep plugging along as it always has, and if the government goes down the tubes it won't be because of the advent of strong cryptography. Hal

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please resubscribe
by lear35!mdbomber＠nebula.acs.uci.edu 17 Dec '03

17 Dec '03

I somehow got dropped from this list. Several messages to cypherpunks-request have ended up in /dev/null somehow. Could someone please add me back to the list?

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No Subject
by Chris Goggans 17 Dec '03

17 Dec '03

After a complete sellout at HoHo Con 1993 in Austin, TX this past December, the official Legion of Doom t-shirts are available once again. Join the net luminaries world-wide in owning one of these amazing shirts. Impress members of the opposite sex, increase your IQ, annoy system administrators, get raided by the government and lose your wardrobe! Can a t-shirt really do all this? Of course it can! -------------------------------------------------------------------------- "THE HACKER WAR -- LOD vs MOD" This t-shirt chronicles the infamous "Hacker War" between rival groups The Legion of Doom and The Masters of Destruction. The front of the shirt displays a flight map of the various battle-sites hit by MOD and tracked by LOD. The back of the shirt has a detailed timeline of the key dates in the conflict, and a rather ironic quote from an MOD member. (For a limited time, the original is back!) "LEGION OF DOOM -- INTERNET WORLD TOUR" The front of this classic shirt displays "Legion of Doom Internet World Tour" as well as a sword and telephone intersecting the planet earth, skull-and-crossbones style. The back displays the words "Hacking for Jesus" as well as a substantial list of "tour-stops" (internet sites) and a quote from Aleister Crowley. -------------------------------------------------------------------------- All t-shirts are sized XL, and are 100% cotton. Cost is $15.00 (US) per shirt. International orders add $5.00 per shirt for postage. Send checks or money orders. Please, no credit cards, even if it's really your card. Name: __________________________________________________ Address: __________________________________________________ City, State, Zip: __________________________________________ I want ____ "Hacker War" shirt(s) I want ____ "Internet World Tour" shirt(s) Enclosed is $______ for the total cost. Mail to: Chris Goggans 603 W. 13th #1A-278 Austin, TX 78701 These T-shirts are sold only as a novelty items, and are in no way attempting to glorify computer crime.

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Somebody posting fake Detweiler messages
by nobody＠soda.berkeley.edu 17 Dec '03

17 Dec '03

This message was posted to alt.conspiracy. ============================================================================ From: Tommy the Tourist <nobody(a)soda.berkeley.edu> Subject: Apologies Organization: Cypherpunks From: "L. Detweiler" <ld231782(a)longs.lance.colostate.edu> Before the story gets around from other sources, here's what *really* happened. I guess that I should start by saying that I'm sorry. I'm sorry for the tremendous disturbance that I caused, I now see that I was completely wrong. Nick Szabo is a real person, and I was mistaken to say otherwise. I don't know how to go about cleaning up the mess that I made, but I guess that I'll start by humbly asking all of you to forgive me. It began when I was at home one evening last week, watching TV. The voices were back again. They told me that the TENTACLES were going to use his account to spread their LIES, and to RAPE the unsuspecting net.virgins. The more I thought about it, the more agitated I became. Their SCREAMS filled my ears, and their TEARS came from my own eyes. I couldn't sleep because I knew that their fates rested in my hands. I had to do something. The hell that awaited them was known to me alone, and only I could save them. The poor souls would SQUIRM in AGONY and CRY OUT in pain, but the GROTESQUE cypherpunks would only LAUGH. Every time that I closed my eyes, I'd see the inferno. The monsters believed, I knew, that no joy was greater than UTTERLY DESTROYING an unsuspecting user, SODOMIZING their innocent victims just as they do each other. I thought about posting another message, but decided that this time I had to take my stand. The SATANIC CABAL must be BROKEN, as totally and completely as the Tower of Babel. I flew to Washington, D.C., determined to prove once and for all that szabo(a)netcom.com is nothing but a deceiving TENTACLE, bent on PILLAGE and PLUNDER. Once that was done, the fate of the MEDUSA was sealed. Thanks to one of his net *friends*, I had Szabo's phone number. Locating his address was not difficult. I knocked at the door and asked for Szabo. The fellow who answered the door asked my name and, when I gave it, he told me to wait there. A few seconds later I heard a voice from upstairs yelling ``Call 911! Call 911!''. His roommate jumped me and we wrestled until, finally, I freed myself and was able to calm him down enough to talk. Szabo came downstairs and said that he'd called the police, and I'd better hightail it out of there or be prepared to spend some time in jail. Thinking that he was an imposter paid by t.c.may and e.hughes to act as Szabo should anyone check, I agreed to talk with the CHARLATAN. He would meet his fate soon enough, and he would PAY DEARLY for his complicity. I convinced him that I wasn't armed, and he agreed to talk. He insisted that he *was* Szabo and tried many ways of proving it. He produced a drivers license and a passport, both issued to Szabo and with pictures of this same man. They seemed valid. I was confused. He then dialed into netcom as szabo and read some mail. It was then that I noticed the sounds, soft and just at the edge of my hearing. It was a light and breathy sound. It was... LAUGHTER. The VOICES WERE LAUGHING AT ME. It was then that the clouds parted and the gleaming ray of sunlight came down to illuminate my vision. All of the time that I had spent jousting quixotically with the cypherpunks had been wasted, as they weren't the enemy. They weren't the ones who were sending the voices to disrupt my sleep. It wasn't them at all. The voices were my true enemy, and I set out with renewed vigor to seek out and destroy the voices. Um, anyway, I guess that he really is szabo(a)netcom.com. Sorry. Now what I need to know is how do I go about rebuilding the reputation that I've spent so long destroying? So many people have learned to ignore posts from my account that I fear I'll not get another hearing. Gee, maybe on the internet they CAN tell if you're a dog... ============================================================================

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One of our alumni achieves "alt.usenet.kooks" fame!
by tcmay＠netcom.com 17 Dec '03

17 Dec '03

Our own former member, but still all-too-frequent contributor, L. Detweiler has achieved fame by appearing in the compilation of net.cranks in the new group "alt.usenet.kooks." I had a hunch he'd be listed there along with such luminaries as Robert McElwaine, Jack Schmidlang, Gary Stollman, and Serdar Argic, and he was. Here's in entry in the draft FAQ: "L. Detweiler (you are all TENTACLES of the CYPHERpunk anarchoSYNDICALIST pseudospoofing CONSPIRACY; everyone who contacts me via post or email is a tentacle of a single Medusa): All information relevant has been deleted (probably by the cypherpunk pseudospoofers); ask around - old-timers can tell you about him, through "safe" avenues (like email). Warning: attempting to disillusion him of his theories usually results in threatening mail and getting incorporated into said theories. Handle With Extreme Care. Appears occasionally on the news.* hierarchy, crossposted to hell and back. Author of the Internet Anonymity FAQ. (Posts as ld231782@<various>.lance.colostate.edu (L. Detweiler) and an12070(a)anon.penet.fi (various constantly-changing identities).)" Which one of us will be next? --Tim May -- .......................................................................... Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay(a)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. Higher Power:2**859433 | Public Key: PGP and MailSafe available.

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szabo@netcom.com is NOT a tentacle!!!
by nobody＠pmantis.berkeley.edu 17 Dec '03

17 Dec '03

As for the `Szabo being a tentacle thread' in the newsgroups, pmetzger just posted stating that he had indeed posted the name of the town Szabo lives in, as well as the names of his roommates. He refrained from posting that information again. I seem to vaguely recall seeing the original post, but can't find it in the buffers here -- everything before December 21st or so has expired. the thing that ROYALLY PISSES ME OFF is that NOONE WHO HEARD PMETZGER CLAIM THIS has POSTED TO SAY THAT THEY HEARD HIM SAY THAT. reminds me of the infamous rape and murder of that NY woman, with dozens of witnesses hearing her screams, just going about their business. who will be raped next? and who will be silent? everyone who is watching my thread, and being silent about what they know, is a hypocrite and a dangerous accomplice to lies. I guess that's a bit overstated. I suspect people in most major metropolitan areas don't want to get involved partially because they fear retribution, and partially because, with that many people packed together, you tend to care less about your neighbors than you would in a small town, where you know the people in your building or street. I suspect people on the net don't bother because "it's just bits" -- they read the Net like they watch TV, without any connection to the characters or dramas unfolding before them. In large part, what is said here doesn't really matter. People get curious, but it's not worth getting into an uproar. if YOU GIVE A DAMN, POST! Ah, there's the rub. Deep down, I really don't care about this particular issue. To my knowledge, Nick Szabo, whether real or not, has never said anything that has made me even care whether or not he has real. I've never found anything he's said particularly interesting. He's a net.person. Should he turn out to be a "tentacle," that's fine by me -- he won't be the first I've encountered. If he turns out to be T.C.May in disguise, all that means is that there's one less person with T.C.May's ideas in the world than people thought. I think that uncaring attitude, which I regard as fairly dominant among people who've used cyberspace (and especially Usenet) a good amount of time, is the very reason that May's ideas about widespread crypto bringing down governments will never come to pass. People have, and I believe will continue to have, a distrust about putting much faith into computers, and thus cyberspace will always have limitations. I believe people put a great deal of stock in the feel of a crisp paper dollar bill, as well as a smile and a handshake. :-) Perhaps to add more fuel to the fire, a Nicholas Szabo does indeed live in Cupertino, according to a 1990-1991 White Pages from the area. There is no G.Dale listed, however. (I was hoping to correlate the two numbers) I suspect that I need a more recent phone book to make a better test. ------ Legalize: >--<o | I confess to an unatural, and abnormal . \ / :-)-~ o>--< | act I have programmed a computer. . . \ / You are ~1,000,000,000,000,000 .1ms NAND gates have a nice day. . . . \/ The true theory of everything will run on a finite turing machine. . . .

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Re: szabo@netcom.com is NOT a tentacle!!! (fwd)
by Johan Helsingius 17 Dec '03

17 Dec '03

> Sigh, more garbage from the cypherwonks list ownere posted to cypherpunks: Sigh. Why do you associate this garbage with the cypherwonks list owner? And who are you refering to by that? Unfortunately *I* am the physical list owner, as I offered to host the list on lists.eunet.fi to channel away the Detweiler discussion from cypherpunks. And I *know* I didn't send that stuff! Julf

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Extropia remailer
by Martin.Greifer＠f28.n125.z1.FIDONET.ORG 17 Dec '03

17 Dec '03

Is it just me, or is the usually-reliable Extropia remailer (remail(a)extropia.wimsey.com) down? ... Origin: The Crusade for Moorish Dignity, N'orl'ns, LA ___ Blue Wave/QWK v2.12 -- Martin Greifer - via FidoNet node 1:125/1 UUCP: ...!uunet!kumr!shelter!28!Martin.Greifer INTERNET: Martin.Greifer(a)f28.n125.z1.FIDONET.ORG

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But Detweiler _Is_! (Was Re: szabo@netcom.com is NOT a tentacle!!!)
by lefty＠apple.com 17 Dec '03

17 Dec '03

>This feels like Detweiler spoofing again. Anyone else get that >feeling? It's certainly possible. A possibility which, I might add, raises in me an almost uncontrollable desire to yawn, deeply. Isn't it interesting, though, that Mr. Detweiler has become precisely what he rails against? As Friedrich Nietzsche once remarked, "He who fights with monsters should see to it that he does not _become_ a monster." FWIW, I felt that the "Tentacles--I don't get it" posting was a good candidate for hidden Detweiler-hood as well. Mr. Detweiler, the abyss is gazing into you... -- Lefty (lefty(a)apple.com) C:.M:.C:., D:.O:.D:.

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Re: szabo@netcom.com is NOT a tentacle!!!
by futor＠llnl.gov 17 Dec '03

17 Dec '03

> This feels like Detweiler spoofing again. > Anyone else get that feeling? It's not. I recognize: >> ------ Legalize: >--<o | I confess to an unatural, and abnormal . >> \ / :-)-~ o>--< | act I have programmed a computer. . . >> \ / You are ~1,000,000,000,000,000 .1ms NAND gates have a nice day. . . . >> \/ The true theory of everything will run on a finite turing machine. . . . from someone else on the net. There *are* similarities between their names, but I doubt that they're the same person. I *have* been wrong before, however. __ \/ -+- randy -+- all generalizations are flawed -+- futor(a)llnl.gov

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underground industry
by Perry E. Metzger 17 Dec '03

17 Dec '03

Someone asked me the obvious question in private mail... > > Perhaps not. Its very common in many large business conducted here in > > New York in certain seemingly legitimate industries for much of the > > business to be conducted off the books -- people who will take cash > > for work are sought after. I will not name the industry in question, > > but it is one of the few major ones left in the city and it isn't > > finance. > > Politics? Politics also involves some of that, but it wasn't what I was refering to. The answer to the question is the garment industry. Huge underground factories and design shops operate on a completely cash basis. Millions of dollars of goods enter in to the system "mysteriously". There are "sweatshops" (read, free market factories) operating all over the city in concealed locations. They are almost always operated by the Chinese -- they have a code of silence about such things. Its one of the few things thats keeping the economy in NYC going. This operates on a HUGE scale. Its a counterexample to Hal's beliefs about industry and taxation. Perry

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Re: Public key encryption, income tax and government
by nobody＠soda.berkeley.edu 17 Dec '03

17 Dec '03

Hal Finney put out an excellent posting on why digicash and such are not likely to undercut the tax system. While a lot of what he says is valid, I would like to throw in another data point. You see, my wife is Italian, and I've spent quite a bit of time hanging out with the in-laws, seeing how they live and how their society works. Italy's underground economy is estimated at being 30% or more of the total GDP. It is a very cash-based economy, obviously. It is also a country where, IMHO, standards for honesty are lower than in the US and a certain amount of cleverness in avoiding things like taxes earns respect. Any Italian will tell you with pride that Italians do not follow rules. Italian merchants are required by law to produce receipts for every transaction. In fact, you as a customer may be required to produce the receipt on demand and will be fined if you do not have it. Nonetheless, if you do not insist on a receipt for many purchases -- even for very expensive things -- it has a good chance of not being produced. If you do insist, the price may suddenly increase. Tax evasion at the retail level is widespread. > Suppose I walk into IBM today and offer to go to work as a programmer, > for 10% less than they would normally pay me, as long as they pay me > "off the books", and pass on to me in cash the amount they would > normally have to pay to the government in payroll taxes. Sounds like a > win-win situation, right? Both IBM and I save money. But naturally > IBM won't agree to this. The only taxes that are sure to be paid are wage taxes for normal employees. Right? Well...for normal work, yes. My brother-in-law works in a furniture factory that, like all the rest of them, does a lot of its production off the books. As a result, much of his work is off the books too. This is how Italians make ends meet in a country with (relative to us) low salaries and high prices. There is a word for it -- arrangarsi -- "to arrange oneself". Tax evasion at the manufacturing/wholesale levels is widespread. The official response to this is a good study in governmental desperation. Customers are fined for leaving businesses without a receipt. Your car may be stopped and searched for undocumented merchandise at any time. Imputed income taxes for self-employed people are at ridiculous levels (i.e. a large degree of evasion is assumed). Taxes are levied on everything (car radios, the width of your driveway, electric lighters for gas stoves). I am told that Italians were, at one time, forbidden to possess foreign bank accounts; this rule is not sustainable under the European Community, of course. And none of the above is working very well. As long as Italians believe that it is their right to skip out on their taxes (while, of course, demanding extensive benefits from the government) the situation will continue. I guess my point here is that one should not be too quick to assume that this sort of situation could not arise in the US. Cryptography and digital cash may not, in and of themselves, bring down the tax system. But if Americans decide that they have had enough of it, severe problems could arise with or without such tools; they would only make it easier. Tax evasion rates are low (relatively) in the US because people here are more inclined to follow the rules, and because most people seem to believe that you can't get something for nothing. That is a much more powerful force than any repressive governmental action.

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Public key encryption, in
by Duncan Frissell 17 Dec '03

17 Dec '03

R >As I see it, cryptography may extend similar conditions to R >information workers - programmers, architects, authors. Naturally, R >since a disproportionate number of those on the net fall into these R >categories, this seems like a revolutionary development. But from the R >larger perspective, it is not a major change. R > R >The fact is, information purchases are a small part of most people's R >budgets. If you add up all of what the average person purchases that R >would fall into the general category of "information" - books, R >magazines, newspapers, music, video - you probably won't exceed a few R >percent of income. Information, despite the hype, is not a dominant R >part of our economy. You left out a few information purchases: education, much of medicine, all of financial services, design, marketing, supervision, and management. Note the current tendany to "unbundle" tasks and outsource them to other businesses will tend to encourage the development of "information only" companies. Once the interface is good enough, virtual offices with full workgroup interaction built of pure information will spring up and the "information" component of much of what we think of as physical work will become apparent. I expect information purchases (broadly defined) to reach 90% of our GDP in a few years. Agriculture once represented 90% of GWP (Gross World Product). It is now down to the 5% range in the OECD countries. Yet we eat better than our ancestors. Goods industries (and real estate sales) can show a similar relative decline. We will have more "stuff" than ever, it will just be a smaller part of the total economy. What will cause this growth? Humans are *thinking* machines. We exist inside our minds. We already exist as 100% information. What we are doing is to map the rest of the world to bring it into congruance with what we already are. We don't feel as many constraints in our mind as we do in our bodies. We are deploying our minds to reduce the physical restraints under which we've labored. (Just a guess...) In any case, since the restraints are fewer in the non-physical universe than in the physical universe, costs are lower and much of the growth of the economy will be in the non-physical realm. Certainly the non-physical parts of the economy have grown more than the physical ones in the OECD countries in recent years. If there is also a *regulatory* difference between the physical and the non-physical worlds, then this switch to the non-physical will be exaserbated. R >Particularly at the corporate level, the notion that cryptography R >will allow widespread tax cheating seems especially questionable. Did you see HP on 60 Minutes with Indian contract programmers hired cheaply in probable violatiion of US immigration law. Companies are already setting up programming shops in India. Once they are set up "in cyberspace" they will be harder to control. R >I don't fully understand Duncan's arguments for how taxes can be R >avoided through being a non-citizen. I gather, though, that this would R >require me to either move to another country, or to go to work for a R >company that is in another country. Neither seems likely in the next R >few years for the majority of citizens. 95% of the world's population are not US Citizens/Permanent Residents. You may not be willing to live in another country but they already are. Since other countries don't tax their expats (as the US does) it is easier for non-US expats to eliminate their tax liability. In the past you had to be in the US to work here but foreigners will soon be able to work for US-based companies as easily as anyone else. Because of tax savings, they will be able to underbid US workers. Also companies (or more likely contract services firms) will be able to themselves locate in friendlier jurisdictions and still supply workers (from anywhere on earth to anywhere on earth) to companies that may be in the US or somewhere else. Remember, under current law it is legal for a US company to hire workers overseas and US taxes are not owed. There are technical questions of withholding from payments to entities located in non-tax-treaty jurisdictions but these problems can be planned around. Offshore subsidiaries will also be very cheap to form. If you wander down the shopping street of a future MUD/MOO and you buy or sell things, what nation has jurisdiction for tax purposes. What if the MUD/MOO exists as a set of cooperative processes spread around the globe. There is commerce there but who rules. The proprietors not any government. Look at the situation in this country vis a vis state income and sales taxes. There is tremendous fiddling going on now in a country with the soverign jurisdiction of the federal government and concepts like "full faith and credit." Imagine how much fiddling there will be when disperate soverignties are involved with no overall international authority. Tax compliance is down anyway, it will further decline as more people are self-employed or "reside" in ambiguous jurisdictions. DCF --- WinQwk 2.0b#1165

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CRYPTO & TAXES
by Sandy 17 Dec '03

17 Dec '03

-----BEGIN PGP SIGNED MESSAGE----- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SANDY SANDFORT Reply to: ssandfort(a)attmail.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C'Punks, Hal still has his doubts about crypto and taxes. He wrote: I can agree that cryptography will make some kinds of illegal private transactions easier. What I doubt is that this will happen at a large enough scale to seriously threaten the ability of governments to fund themselves by taxes. Government tax policies are extremely susceptible to the "tipping factor." Initially, non-compliance is addressed by simply hiking up collections across the boards. When non-compliance reaches some critical factor, however, such techniques become counter- productive. Previously compliant taxpayers begin to chaff at higher taxes and more aggressive collection. More and more become non-compliant as taxes go higher and higher. Eventually, the runaway chain reaction either causes the government to cut back or the system undergoes a core melt-down. Non-crypto versions of this scenario have occurred repeatedly in countries around the world. Hal also have several specific examples of transactions he felt demonstrated the difficulty of using crypto-anarchy techniques. Perry and others have address some of these, but one or two things should be added to round out the picture. Hal wrote: Most of our transactions are done with businesses, generally corporations. Imagine taking $15,000 in cash to buy a new car anonymously. I believe you will find that the car dealers will not cooperate, that government regulations (designed to crack down on drug dealers) will require them to get some ID from you. Digicash would presumably be under the same restrictions. Maybe, but the example begs the question. You don't need to *own* a car, to have the *use* of a car. Imagine leasing a car and using your cyberspace bank digital checks, digital money or credit card to pay the monthly rent. No audit trail, and no asset to be seized. Similar techniques can be used for virtually all of your assets. Don't like renting? Well there are other offshore techniques that can cure that problem as well. I don't fully understand Duncan's arguments for how taxes can be avoided through being a non-citizen. I gather, though, that this would require me to either move to another country, or to go to work for a company that is in another country. . . . I think Hal hasn't been reading Duncan or my posts very closely. Here's a hint: A Cayman Islands corporation is a non-US citizen even if it is owned by an American. You have questions? We have answers. S a n d y >>>>>> Please send e-mail to: ssandfort(a)attmail.com <<<<<< ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -----BEGIN PGP SIGNATURE----- Version: 2.3a iQCVAgUBK1MJWE5ULTXct1IzAQG8cgQAtZ5xbIn6wO/GkjVd68hPe+37Sj4C3uD1 eI2YEUodHRzPC5on4hoHs+AeTtGR132Bcr76oj366cvJF42YqtaZt/4xWKaN+QKJ 5xMJS4qjQorGQw9fxAPjERJ9O+WCgFYn1vNDGnsn4+HGC4Ax/CevQdtBlt2sBlMc SUWGU1GdSkM= =Fyuc -----END PGP SIGNATURE-----

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