December 2003 - cypherpunks-legacy

Re: In Search of Genuine DigiCash
by rah＠shipwright.com 17 Dec '03

17 Dec '03

At 11:09 AM 8/27/94 -0700, Eric Hughes wrote: >One can consider that a digital cash exchange creates a delay between >the two legs of the transaction. In between the beginning and end, >the transaction is suspended. That's the sense of the word. If you mean the transaction that occurs between the net as a whole and underwriter. I agree. There may be lots of non-trivial transactions on the net in the meantime, however. Nevertheless I'll keep using "suspension account" until I'm disabused of it, for lack of a more descriptive word, than for anything else. > >"Float" is a financial concept, not an accounting one or a legal one. >The issues are greater than financial ones only, and the terminology >needed is correspondingly greater. As an aside, most finance professors consider accounting to be applied finance. I expect that accountants don't take to that kindly, however. "Float" reminds me of "kiting checks", for some reason, so I'm glad not to use it now. Cheers, Bob Hettinga ----------------- Robert Hettinga (rah(a)shipwright.com) "There is no difference between someone Shipwright Development Corporation who eats too little and sees Heaven and 44 Farquhar Street someone who drinks too much and sees Boston, MA 02331 USA snakes." -- Bertrand Russell (617) 323-7923

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Re: Cash, cheaters, and anonymity
by rah＠shipwright.com 17 Dec '03

17 Dec '03

Just getting caught up here. Started backwards, and cut out most of what is addressed already. I swore I wouldn't touch Tim's posts, for all the trouble I seem to get into when I do, but, well, here goes, anyway... At 11:46 PM 8/25/94 -0800, Timothy C. May wrote: >(Coins and cash bills are really "on-line clearing" though, in that their >existential properties make them acceptable immediately; they are not >replicable, at least not easily, and hence can be conserved in transations. >All the usual stuff about the nature of cash money.) I thought that was the definition of off-line, Tim. If you can be reasonably certain, without running to the issuer on every transaction, that a piece of digital cash will be worth a dollar when you cash it out to get it off the net, then you have something whose existential properties make it acceptable, right? If you have to run a piece of paper money to a bank in order to cash it into something more stable wouldn't you consider that more of an "on-line" transaction? >"Zero knowledge interactive proof systems" have been used for password >systems; no amount of past snooping or eavesdropping helps. (Of course, the >user still has to have physical security over his local computer, or PDA, >dongle, or secret decoder ring.) This seems like a readily-solvable problem >(and one we already accept with existing ATM machines). I really like this concept in a bunch of different applications, most importantly, the ability to keep my personal history out a gajillion databases someday. >THE INCREDIBLE IMPORTANCE AND ELEGANCE OF ON-LINE CLEARING Tim put a whole lot of stuff here, all of which I agree with, including the concept of whoever gets to the train locker first, gets the loot. Except I'm confused about why he doesn't think that if confidence is maintained in the very same online scenario he just described (chaumian blinding, etc), that extending it to off-line use is not too difficult, and that for a very large percentage of transactions may be more useful, *if* the veracity of the digital cash is still there. I think that people *will* do predominately on-line transactions early on, in a scheme which uses the ability to pass cash through several transactions before getting cashed out. I believe that if I were an underwriter, I would get more business if off-line transactions were pretty much as safe as on-line ones. That implies exposing double spenders, and that may or may not imply positive identification. In schemes where I have an ATM gate, I let the referring bank vouch for the identity of the person buying digital cash with real money. It's also easy to see that only a bank customer (and thus identified) could bring cash off the net to be deposited either. It's easy to see how there may be holes in this scenario over time. And, if a "self-credentialed" nym out there touches a piece of cash in the daisy chain, who cares? If that same nym double-spends money I underwrote, then the person who shows up at my "train locker" is shit out of luck, but they have the identity of whoever dunnit (however useful that may be). As underwriter, however, I reserve the right to go after the offending double-spender with a pair of dull spoons (or with the law, whichever is easier) if he did it on purpose, because he's messing with the efficacy of my business. >IS PROOF OF PHYSICAL IDENTITY NEEDED? [snip] >The danger of making the "person who withdrew it" a culprit if the money >has already been "spent" is clear: he is just as likely to be an innocent >victim of a setup as the guilty party. I agree. This is why cash which unmasks double-spenders is important. >UNTRACEABLE MARKETS FOR ASSASSINATIONS This, and other "perfect crime" argments make me a little bit uncomfortable. But not because they're right. It's because there's a forest and trees mentality at work here that's readily apparent to people outside the argument. It's like Alexander and the Gordian Knot. Just cut the damn thing in half. In this case, even though there's a perfect double blind, there are still two crimes being committed, (buying a hit, killing someone, three really, acting as agent for a hit). All unknown, all untraceable. The person who ordered the hit knows he did it. The person who arranged the hit knows she did it. The person who made the hit knows he did it. At some point one or all links in that chain of silence will break. In normal criminal procedure that's it. All is known. In this case it isn't. But, on a separate, independent basis, one of those people *ever* tells anyone, that person knows, and maybe snitches someday. Depending on how perfect the criminal is, evidence will be left, confessions will be made, and, who knows, maybe the guilty party goes to jail. Actually, that's how most cases are solved. Someone rats on somebody, and gives the cop an excuse to snoop around and find something else which incriminates the culprit. The upshot is, the independence of the events doesn't make a crime less amenable to most criminal procedure. It's like our friend Binky, the third (International Drug Trafficking) horse of the apocolypse. There isn't a direct chain of evidence linking him to each and every crime he directly committed, much less the second and third order effects of his actions. But he was there in Columbia with a monsterous pile of cash and no visable means of support. Hung with other drug types. If it walks like Binky, and quacks like Binky, hey, it's Binky, right? Find a few times when he was messy, find a few snitches, presto, changeo, Binky's in jail. You can assume all the perfect crimes you want, but, just like the argument about the evil guy in Plato's Symposium, who did only right deeds but was an evil man nonetheless, you come to silly conclusions. People aren't perfect. They screw up more often than not. They get caught. When they don't get caught, that's tough, but I wouldn't bet the rent on the possibility of it consistently happening. >THE DANGER OF EVER USING PHYSICAL IDENITY VERIFICATION >Danger! Danger! Danger! Any such system, that relies on physical IDs is >substantially less private that banks today in many countries, and is not >at all what I would call "digital cash." > >On-line clearing makes this unnecessary. So do offline systems, I thought. I thought it was easier to do an offline trade with a nym, than an online one. I bet that you would have a huge problem putting up an anonymous on-line system. Without fiating your own country into the argument, I mean. >Hal says: >>Without the authentication, you're not going to have off-line cash, >>IMO. You will be stuck with on-line systems in which everyone has to >>verify everything before accepting it. This means you pay a cost in >>communications overhead and possibly other foregone opportunities. > >Agreed. But acceptable with a two-tiered system: > >- off-line cash for small transactions, with smartcards, "observer" >protocols, and with built-in limits > >- on-line , immediately-cleared cash for larger transactions, also with >various agreed-upon limits or requirements How about a single system that covers both. Isn't it the case that when a seller in an otherwise offline system deposits cash directly upon receipt (possibly while the receipt of cash is happening) you have something equivalent to an on-line system? Isn't it also the case that if the last person to the train locker loses, then trust of nyms will be sort of forced to happen eventually? It seems to me that people won't waste their time instantly depositing their digital cash revenue the second they get it if the currency doesn't get bounced. ___________________________ There. Let me say here that Tim May is one of the major reasons I read this list. This posting that I'm replying to is easily the best one he's made, probably anyone's made, since I got here a few months ago. Having said that, fully expect him to piss on my shoes, for any of a number of reasons. I've put on my sea boots as precaution. Fire away, Tim. :-). Cheers, Bob Hettinga ----------------- Robert Hettinga (rah(a)shipwright.com) "There is no difference between someone Shipwright Development Corporation who eats too little and sees Heaven and 44 Farquhar Street someone who drinks too much and sees Boston, MA 02331 USA snakes." -- Bertrand Russell (617) 323-7923

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Re: In Search of Genuine DigiCash
by rah＠shipwright.com 17 Dec '03

17 Dec '03

At 11:00 AM 8/27/94 -0700, Eric Hughes wrote: > Digital cash has to be issued by someone, who > *really should* back it up with real money, and should thus receive real > money as collateral for the digicash on the net. > >The basic distinction that is missing in your analysis is that between >legal structure and financial structure. Here is my very short >clarification of the difference. > >-- The financial structure matters when things go right. >-- The legal structure matters when things go wrong. > >Your financial analysis is fine, but also mostly irrelevant for >determining legalities. I've never worried too much at all about the >financial structure for digital cash issuance, because I've always >thought it a straightforward problem to manage the backing portfolio. Unfortunately, Eric, I think you'll agree in hindsight that financial structure and legal structure is a little more tightly coupled than that. The law and the enforcebility of agreements is what makes financial instruments exist. Their behavior is a direct result of their legal underpinnings. Thus, the financial structure is the legal structure. The financial behavior of a security can thus be predicted just by assuming the efficacy of the legal system they're written in. If you break the law or agreements creating a market, say if people didn't make their margin calls and got away with it, there wouldn't be a market on margin for very long. Thus, by collateralizing what you would call a digital banknote, you are agreeing with the person you issued it to that at the very least, that dollar-for-dollar, there's money to back the note up. By the way, I figured out just now why this can't be called a digital bank note, though I can't figure out what to call it except digital cash for the time being. Digital cash isn't issued by a bank in the scenario I outlined, at least a bank of deposit. The issuing underwriter isn't anymore a bank than an institution offering any other piece of collateralized paper, like GNMA, a railroad offering an equipment mortgage bond, whatever. >I think you misunderstand me. Secured and unsecured are legal >concepts, not financial ones. Merely saying that the money sits >somewhere while it's in transit (which it clearly does) does not make >the instruments secured. But it does, Eric. Especially if the underwriter says at the outset that the money's secured (collateralized). If money isn't secured dollar for dollar, especially in the early stages, you get a whole mess of legal, not to mention financial problems. It should be possible to keep an issue of digital cash fully collateralized (secured) and still make money. > >What happens during bankruptcy of the issuer? > > This probably won't happen except in cases of fraud. [...] > Unwinding a position in the money markets is not really a scary > proposition at all. > >I would strongly suggest that you go look up some references to >systemic failure in payment systems, which is a big concern these >days. And unwinding a position in the case of bankruptcy can create >real negative value in the system, and cause other banks to collapse. >Unwinding can be _very_ expensive. Again, Eric, if one digital cash underwriter has to unwind a fully collateralized bunch of digital cash, what's the problem? If the underwriter isn't fully collateralized, he's in violation of his issuance covenants and is likely to be sued by the trustee for the instruments, at the very least, long before a run on the cash started. Thus, the shareholders of the company doing the underwriting take the hit for a bankruptcy, while the suspension account and the portfolio backing it may not even have to be unwound at all. They may simply be transferred to another underwriter for safer keeping. It's not at all like banks, where they get to make money by creating a little, and thus should have insurance to keep the their liabilities and their reserve requirements. Having a fully collateralized digital cash (for lack of a better term) system is pretty simple to do from a financial, and legal standpoint. Thanks! Bob Hettinga ----------------- Robert Hettinga (rah(a)shipwright.com) "There is no difference between someone Shipwright Development Corporation who eats too little and sees Heaven and 44 Farquhar Street someone who drinks too much and sees Boston, MA 02331 USA snakes." -- Bertrand Russell (617) 323-7923

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In the year 2525
by Rick H. Wesson 17 Dec '03

17 Dec '03

If I stole all the digital cash in the world, and held it for 30 seconds in a numbered account, how much interest would I have? -kcir

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Re: Are RSA licenses fungible?
by Rick H. Wesson 17 Dec '03

17 Dec '03

> From owner-cypherpunks(a)toad.com Sat Aug 27 22:08 PDT 1994 > Received: from relay2.UU.NET (relay2.UU.NET [192.48.96.7]) by ar.com (8.6.9/8.6.5) with ESMTP id WAA01459 for <wessorh(a)ar.com>; Sat, 27 Aug 1994 22:08:22 -0700 > Received: from toad.com by relay2.UU.NET with SMTP > id QQxewa21172; Sun, 28 Aug 1994 01:07:36 -0400 > Received: by toad.com id AA01260; Sat, 27 Aug 94 21:59:17 PDT > Received: from nic.cerf.net by toad.com id AA01254; Sat, 27 Aug 94 21:59:07 PDT > Received: from ininx (ininx.com [134.24.4.70]) by nic.cerf.net (8.6.8/8.6.6) with SMTP id VAA26020; Sat, 27 Aug 1994 21:59:00 -0700 > Received: by ininx (4.0/SMI-4.0) > id AA05474; Sat, 27 Aug 94 20:42:04 PDT > Date: Sat, 27 Aug 94 20:42:04 PDT > From: jkreznar(a)ininx.com (John E. Kreznar) > To: perobich(a)ingr.com > Cc: cypherpunks(a)toad.com > Subject: Re: Are RSA licenses fungible? > Sender: owner-cypherpunks(a)toad.com > Content-Type: text > Content-Length: 2530 > > -----BEGIN PGP SIGNED MESSAGE----- [snip] > > JEK: > Is this true even if the person is a registered buyer of 2.7? > > Public availability of a program's source code is a powerful means to be > sure that it is correct. How can one gain such assurance for PGP 2.7? > > How could confidence in the correctness of a secret program, even by its > author, ever match that of a program open to public scrutiny by any > interested person? > > Uhlhorn: > ViaCrypt has exactly the same position if a person were to > make 2.6ui look like ViaCrypt PGP V2.7 regardless of whether or > not they are a registered user of ViaCrypt PGP V2.7. It is plain > dishonest and illegal! > > [End of Uhlhorn dialogue] > > Granted, the issue here is different from yours, but it does give an > idea of how ViaCrypt might react to an attempt to use their license to > legitimize your use of another PGP. Hope this helps. > > John E. Kreznar | Relations among people to be by > jkreznar(a)ininx.com | mutual consent, or not at all. > > -----BEGIN PGP SIGNATURE----- > Version: 2.3a > > iQCVAgUBLmAGZ8Dhz44ugybJAQGSKAQAjlOFHarkVhF7Cjcy3xX3v7A4XyAH5B7H > C61efV7poiJXcYCV8H6t2w6RGrk1ux/ynwoseVOjTdDraK5crqxxITCplLqY13Vv > rzaY0BFOWOLBIgty9Gjh4Oz4v89lRKxn2MhsflrS/TxMBZSeaYec7K4ufDZwCvWN > JQ94CgrJM/g= > =1O6L > -----END PGP SIGNATURE----- > why don't you just buy an RSA toolkit licence and patch it inro whatever you want, just don't redestribute code... -Rick

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Re: FCC Regulation (Challenging Majority Whim)
by blancw＠pylon.com 17 Dec '03

17 Dec '03

[more excruciatingly enlightening grandiloquence] Responding to msg by Phil Karn: . . . . how can one create a government that rises above the petty illiberalism of the people it governs to protect the rights of the individual? ................................................... It appears that being given a position in charge of upholding abstract ideals makes some people forget whose interest or which ideal it is that they are supporting, and they take too seriously the opportunity to lord over others. When someone has been given responsibility over others, they seem to suddenly lose their perspective and propose all sorts of things contrary to what they claimed to think prior to assuming that office. I think there will come a time when business enterprises will completely replace 'government' functions. Most people see both society and political systems as means to practical ends. These two organizations have pragmatic functions which individuals see as advantageous to their own comfort and advancement. When neither of these deliver on the promise of the desired benefits, all of those who were depending upon them complain that their expectations were betrayed. It remains to 'overthrow' these organizations or raise hell at least, but still conditions remain largely unsatisfactory. A business enterprise is more precisely a tool for the realization of the kind of benefits which people are looking for from each other. It also has the advantage of flexibility - it can be modified to suit or disbanded altogether without affecting uninvolved parties in the same way as must happen when attempting to "improve" a society or a government. A company does not recognize an individual in the same way that a society or a government does in terms of a comprehensive ideal, but it can better provide the means to achieve personal goals & ambitions, and I think is thus better suited as a tool for providing (read 'creating') what individuals could want from the world while living in co-existence with strangers. Blanc

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The Trouble With Crypto
by blancw＠pylon.com 17 Dec '03

17 Dec '03

Responding to msg by nobody(a)ds1.wu-wien.ac.at: 1 >if [crypto] only >needs to be used once in a while, there will be no >good reason to implement some of the more interesting >protocols, or implement the "maximum strength" >possible. 2 >For the overwhelming majority of >people, the benefits of "digital cash" will not be >worth the time and trouble over "digital cash with >anonimity removed". . . 3 >As for encrypting all email, much like people use >envelopes? Be honest, there isn't sufficient cause to >warrant the time and trouble. 4 >Nor is there sufficient cause to warrant the time and >trouble of signing messages sent to mailing lists or >usenet. . . . 5 >Nor is there sufficient cause to warrant the time and >trouble of communicating via anonymous remailers, >except for say folks like Pr0duct Cypher. 6 >Nor is there sufficient cause to warrant the time and >trouble for banks and stores to offer digital cash. 7 >As for dc-nets, give me a solid example why you ever >need to communicate with one. 8 I see a limited deployment, and almost no >fundamental restructuring of society. 9 >. . . I suppose a discussion about >atomic bombs will likely be of greater impact on our >future than crypto anarchy will. 10 >Cypherpunks write code, but if there is sufficient >cause to warrant the time and trouble! ............................................................... You might be right, having accrued at least 10 reasons why the list discussions do not altogether convince of the importance of using encryption as a matter of course or for the re-structuring of society. The choice to use crypto is a little different from the sense of wanting to use it from desperation; I think it is the difference between determining factors: when it is the individual themselves who decide to employ the tool for whatever reason they have to either use it or not at their discretion, or when the circumstance seems to dictate for the person what they must do - that they must go to desperate means to ensure privacy, from a perceived threat which demands that they hide their communication. One of the important issues regarding the use of encryption is not necessarily whether it is used or not as a matter of course, but rather the controversy over the source of the permission to use it as well as the imposed obligation to participate in self-incriminating applications of it. i.e. do individuals have the sovereign right to use tools which result in a division between public & private existence, or are they obligated to keeping their lives accessible to intervening governing agencies? To me a cumbersome tool would require sufficient cause to use it. However, I would appreciate its existence in case of emergency, if there was no better one available, and I would protest the idea that it was anyone else's prerogative to decide for me when it was an appropriate occasion to do so. Is crypto only a toy with destructive implications for governments & societies, or a tool of subjugation with destructive implications for individuals? If only cypherpunks or only government officionados made the decisions about it the answers would be easier to predict. But they are not the only ones involved, and it is my understanding that not all future developments will be determined on this list. Blanc

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Magic Money / NexusBucks
by nobody＠vox.hacktic.nl 17 Dec '03

17 Dec '03

-----BEGIN PGP SIGNED MESSAGE----- To those at the Nexus who are using Magic Money: thank you and good luck. So far you are planning to accept Magic Money as payment, and to pay out Magic Money to a few people who write some code or otherwise help you out. This will not get it into widespread use. Instead, everyone who signs up for one of your services (Internet access, etc.) should get a rebate back in Magic Money. This rebate can be used toward the next month's bill or any other service you provide - but only if the person learns how to use Magic Money and sets up a client. Now there is a real economic motive for quite a few people to use it. Direct exchanges between the users will follow naturally. In your description of Magic Money and the Nexus system, you said that a bug in the Magic Money client would cause loss of coins if you enter a bad coin value while entering coins to be paid out. This is not true, at least not on the systems I've tried it on. You get an error message and a rather ominous-looking blank line, but entering a correct coin value will continue the process. Also, for automation and Perl scripts, you might want to take a look at the v1.1 auto-client. The auto-client is designed especially for control from another program or script. Control from a perl script would be very easy - much easier than controlling the manual client. I also encourage you to standardize on v1.1 now because it adds the bank's keyid to the end of each coins.dat file. The auto-client can retrieve the keyid, and its presence will be very important if you ever start using multiple banks. Pr0duct Cypher Cypherpunks build Bombs? -----BEGIN PGP SIGNATURE----- Version: 2.3a iQCVAgUBLmAfDMGoFIWXVYodAQFmfQQAj79YF9oYtzakrhBgEcLDB8SezWc89o5f TE1jnjKLNnLQGRlzcLuqv0PSRP02ABhAT7VcPkqnOYH28ctvD+SR8MiB65IZI0Ul NHnD6mvSqY7kF0RQVjdVTXPBmGdAq5GZIaLEDl8n1wkh/cf/4XY30J3R13Ac0+Ds ZqrHviE1mQc= =2Dj6 -----END PGP SIGNATURE-----

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software wants to be sold.
by Gary Woodward 17 Dec '03

17 Dec '03

Anyone want to be part of a list to discuss sales and marketing issues of data security software? I will run the list. Regards Gary ............................................................................. Gary A. Woodward internet:p00140@psilink.com SECURITY FEATURES Compuserve:71564,247 P.O. Box 5549 phone: 202.928.1231 McLean, VA 22103 infosec & docsec

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DigiCash ???
by Jim choate 17 Dec '03

17 Dec '03

Hi all, I would like somebody to explain how I would go about using an anonymous digicash system to buy a automobile? Just for arguments sake lets say I want to buy a new Ford Mustang GT from the local dealer and desire that nobody at the dealer has any idea who I am or where I come from.

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