December 2003 - cypherpunks-legacy

Markoff article on encryption
by Anonymous 17 Dec '03

17 Dec '03

extracted from: RISKS-FORUM Digest Saturday 15 January 1994 Volume 15 : Issue 38 ------------------------------ Date: Fri, 14 Jan 94 9:38:33 PST From: "Peter G. Neumann" <neumann(a)csl.sri.com> Subject: "INDUSTRY DEFIES CLINTON ON DATA ENCRYPTION" -- John Markoff [The following item is copyrighted by the 1994 N.Y. Times, and appeared on Thursday, 13 Jan 1994. It is reproduced in RISKS with the permission of its author. Any further reuse requires permission of the New York Times. PGN] REDWOOD CITY, Calif. The Clinton administration's newly articulated information technology policy of persuasion, rather than dictation, is getting an early test. At an industry conference in Redwood City this week, computer hardware, software and telecommunications companies as well as a major bank, are saying they intend to adopt an industry coding standard for protecting the privacy of electronic communications, rather than support a standard being pushed by the administration. Unlike the administration-backed standard, the technology, which has been commercialized by RSA Data Security Inc., does not provide an electronic ``trapdoor'' that would enable law-enforcement agencies to eavesdrop on digital communications. The administration, whose standard is known as the Clipper chip, contends that a trapdoor is necessary to detect criminal activity or espionage because sophisticated encryption techniques can make digital phone calls or computer communications nearly impervious to wiretaps. Wednesday, Hewlett Packard Co. became the last of the leading United States computer companies to license the RSA software, joining Apple Computer, IBM, Sun Microsystems, Digital Equipment and Unisys. Several companies announced at the conference that they planned to begin selling products that embed RSA's software. Among them are General Magic, a software developer; National Semiconductor; a consortium of five cellular data companies, and Bankers Trust Co. The conference was sponsored by RSA, which is based in Redwood City, and attracted many of the nation's best non-government cryptographers a group of code makers and code breakers who have generally been hostile to any form of government restrictions on their technology. They have sparred for more than a decade with the National Security Agency, the main proponent of the Clipper chip. The agency is responsible for monitoring electronic communications worldwide for the government, in the name of national security. In addition to opposition from the cryptographers, the government's Clipper chip proposal has already stirred bitter opposition from civil liberties organizations and computer user groups, who fear the Clipper chip would make electronic communications too easy for anyone to eavesdrop. Now the industry's rush to embrace an encryption standard that does not provide a way for the government to listen to data or voice conversations is certain to put new pressure on the Clinton administration, which is now in the final stages of a classified review of its Clipper standard. ``It's clear that what is going on here today is contrary to the way the NSA wants the world to move,'' said Lynn McNulty, associate director for computer security at the National Institute for Standards and Technology, a Commerce Department agency. The institute proposed the Clipper standard last April, although most of its technical development was done by NSA researchers. Despite their defiance, researchers attending the conference worried that the government might still have the means to enforce its vision of a coding standard. ``They have the trump card that we don't have,'' said Bruce Schneier, a former government cryptography researcher, who is the author of a textbook titled ``Applied Cryptography.'' ``They could make it a law that it's mandatory to use their standard.'' ------------------------------

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Remailer Technology
by L. Detweiler 17 Dec '03

17 Dec '03

Hello darlings! I was playing with your remailers recently, yesterday in particular, and was a bit disappointed in them for a variety of reasons. I got a list of the current ones from K.Barrus some time ago but even this supposedly up-to-date list had a lot that appeared not to work. Out of ~20 on the list, ~8 sent back a ping message. One kept sending me some strange error. In another test, I sent out an informative posting to a whole bunch of mailing lists recently through some of the remailers. The remailers seem to be very fragile and can be overcome by a huge onslaught of postings. It appears that every new message spawns a new process, and the machines get overloaded and don't have memory left to do anything. Kind of a serious flaw! One could mess them up doing this. Good thing that no one has any malicious feelings toward the cypherpunks or their remailers, or this might have already happened. As a solution to the `spawning' problem, here is a possibility: I am just guessing, but I bet the perl script is grabbing in the message from the incoming socket at the beginning, and then closing the socket, and then going about its business to send the message out. But during this period, new messages can be sent to the now `clear' socket, hence spawning a new process. A solution would be to keep the socket `busy' for the duration of the execution of the perl code. Another solution is to have the messages sent into a buffering script, and something else continuously running in the background to go through the queue to send messages. Finally, I was wondering if anyone else was doing Ping tests on the remailers for run times and whether they post them. If there is interest I would be willing to write a script to automate this process and post the results say every week, so that people can keep abreast of what remailers are active and responsive. If we want a strong infrastructure for all our evil deeds, we have to make sure that it is resilient! Thanks, and please don't flame me for trying *earnestly* to contribute!

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Re: PGP posting validation
by W. Kinney 17 Dec '03

17 Dec '03

-----BEGIN PGP SIGNED MESSAGE----- Robert A. Hayden writes: >How would requiring that postings made to a list be verifyable be >censorship? What it does is verify that REAL people posted the message >and that the person who's address is on the message is actually the person >that posted it. I have to say, I'm uncomfortable with this, not even _considering_ the ironic similarity some of the ideas brought up lately bear to LD's original points about True Names and reputation servers. My point of view is that if the possibility of being spoofed is high enough, that should provide sufficient incentive to the the _poster_ to PGP sign his messages. None of this, however, precludes offering auto-validation of signatures by the list software as a service to those who choose to avail themselves of it. -- Will (Feeling rather smug that I've been signing most of my posts for a while...) -----BEGIN PGP SIGNATURE----- Version: 2.3 iQCVAgUBLTmKpvfv4TpIg2PxAQEV9wP9G2B6fy4GbH5K++8jdhbCWaJvZmcBFrda H9oCDHCUKwdCv/pTzxce/qupqYb5LQTHAAbvJJMl/GpwwfksGpYhxPJuc8kEqgI8 SUIhDstWjve5PqgALDPToL0Oh49vZpwG2YZbUHCg+fAs9oYVbyS8pOGCWU2im90K wV9RM8HNoTQ= =6eB+ -----END PGP SIGNATURE-----

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CYBERSPATIAL SNAKE *SQUISHING* CONTEST!! HUGE CASH PRIZE!!
by nobody＠pmantis.berkeley.edu 17 Dec '03

17 Dec '03

INTRODUCING === ##### #### ## ## #### ##### ## ## ### ## ## ## ## ## ### ## ## #### ## ## ## ## ## #### ###### ### ## ## ## ## ## ### ## ## ##### ###\\ #### #### ##### ## ## ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Introducing the SECRETLY QUIZZICAL UNIFIED INTERNET SNAKE HUNT! * THOUSANDS OF CONTESTANTS * HUGE CASH PRIZES * * FASCINATING DISCOVERIES * HEDONISTIC DELIGHTS * * FANTASTIC FUN FOR EVERYONE * ENDLESS ENTERTAINMENT * CONTENTS ======== - INTRODUCTION - UPDATES - DEADLINE - THE CASH PRIZE - MORE ABOUT `SQUISH' & `FACE' - QUESTIONS === The recent WHITE HOT interest by multiple groups and individuals in the CYBERANARCHIST TENTACLE INFILTRATIONS into the Internet have inspired an EXCITING NEW CONTEST and COMPETITION! we, the Federation of Associations of Cyberspace Everywhere (FACE), announce the SUPREMELY QUACKY UNIFIED INTERNET SNAKE HUNT! (SQUISH) * THOUSANDS OF CONTESTANTS * HUGE CASH PRIZES * * FASCINATING DISCOVERIES * HEDONISTIC DELIGHTS * * FANTASTIC FUN FOR EVERYONE * FAMOUS PARTICIPANTS * UPDATES === updates on the SQUISH contest will be posted regularly. Send in notice of the more spectacular point accumulations with proof for verifications immediately and the Halls of Fame and Shame. Unverified points are not valid toward the cash prize. DEADLINE === TIME IS RUNNING OUT! AVOID INQUIRING FURTHER OR WAITING FOR FURTHER INSTRUCTIONS. START IMMEDIATELY! MONTHS OF PARTICIPATION ARE REQUIRED TO ACCUMULATE COMPETITIVE STANDING. SOME PARTICIPANTS ALREADY HAVE A HEAD START. THE CASH PRIZE WILL BE AWARDED APRIL 1, 1994. FURTHER INCREMENTS WILL BE AWARDED AT YEARLY INTERVALS THEREAFTER. MORE ABOUT `SQUISH' AND `FACE' === The Federation of Associations of Cyberspace, Everywhere was founded in 1994 as a group that coordinates the activities among the many different online organizations. We have played a very low-profile role to date, and wanted to find some way of promoting our newfound alliance. We have groups combined from BBSes, local area networks, the Internet, and other global and local networks around the world (see below). We have built up some membership funds from the contributing organizations and private contributions to provide the prize money for SQUISH, and some private individuals have donated significant amounts. The contest was inspired by S.Boxx, who was the architect of point classifications and the current opponent lists. S.Boxx has also promised to provide any funds necessary for the successful completion of the contest. We hope that recent interest into snakes and tentacles by many on the Internet will make the contest spirited entertainment and a strong success. We encourage reporters and the media to use this announcement as our official press release. Feel free to redistribute or comment on this announcement in any forum. QUESTIONS === Address further questions to cypherpunks(a)toad.com, gnu(a)toad.com, tcmay(a)netcom.com, or hughes(a)ah.com. Some additional information is available in RISKS 15.25, 15.27, 15.28x: ftp CRVAX.SRI.COM, login anonymous, directory RISKS: (include the colon), file RISKS-i.j === ///// //// // // //// ///// // // /// // // // // // /// // // //// // // // // // //// ////// /// // // // // // /// // // ///// ///\\ //// //// ///// // // ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Introducing the STELLARLY QUOTABLE INTERNET SNAKE HUNT! === Brought to you as a coordinated effort between the individuals * S.BOXX * MEDUSA * INFOCALYPSE * THE EXECUTIONER * PABLO ESCOBAR * DEADBEAT and the Federation of Associations of Cyberspace Everywhere (FACE) * ILF (INFORMATION LIBERATION FRONT) * BLACKNET (INTERNET ESPIONAGE COORDINATION HEADQUARTERS) * BLOODNET (CYBERSPATIAL BLACK MARKETEERING AND LIQUIDATION SQUAD) * CRAM (CYBERSPATIAL REALITY ADVANCEMENT MOVEMENT) * CRaP (CYBERANARCHIST REPRESSION AND POISON) * CY{B,PH}ER{PU,WO}NKS === * THOUSANDS OF CONTESTANTS * HUGE CASH PRIZES * * FASCINATING DISCOVERIES * HEDONISTIC DELIGHTS * * FANTASTIC FUN FOR EVERYONE * CRIMINAL CONVICTIONS * * GRISLY DEATH TORTURE * JUDGEMENT DAY * APOCALYPSE NOW *

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Questionnaire: Encyclopedia of Associations
by ae446＠freenet.carleton.ca 17 Dec '03

17 Dec '03

[If this is of interest to you, please return the questionnaire to the address in Detroit, not to me. Thanks.] If you would like your association to be listed free of charge in the Encyclopedia of Associations, the standard reference guide to associations, societies, and other nonprofit organizations, please fill out the following form and return it to: Encyclopedia of Associations Gale Research Inc. 835 Penobscot Building Detroit, Michigan 48226-4094 telephone (313) 961-2242 fax (313) 961-6815 no e-mail address If you do not have time to fill out the questionnaire, then just send in some descriptive material about the organization, together with its name, address, phone number and the name and title of an executive officer that people can contact. The symbol [ ] represents a box that you can check or type an x in. Name of organization: ____ Address: ____ Telephone number: ____ Name and title of executive officer (president, chairperson, executive director, etc.): ___ Fax number: __________ Toll-free number: _________ Telex number:________ [ ] Multinational [ ] Binational [ ] National [ ] Regional [ ] State [ ] Local Former Name (and year of name change): ____ Predecessor group (if formed by merger): ____ ORGANIZATIONAL STRUCTURE Year founded ____ [ ] Nonmembership [ ] Membership. Number of members_______ Describe Membership _ Number of staff_______ Budget ____ Number of: Regional groups _____ State groups ____ Local groups _____ ORGANIZATION'S OBJECTIVES AND ACTIVITIES Describe the objectives of your organization; also explain how your organization works towards these objectives. (Please attach printed material if helpful.) SPECIAL SERVICES (check box and describe services) [ ] Competitions [ ]Awards [ ] Biographical Archives [ ] Hall of Fame [ ] Placement Service [ ] Speaker's Bureau [ ] Children's Services [ ] Charitable Programs [ ] Museum [ ] Statistics [ ] Library [ ] Research Programs [ ] Educational Programs [ ] Political Action Committee Describe (e.g. holdings, types of services) ___ Computerized Services (e.g., data bases, online and mailing list services) __ Telecommunications Services (e.g., electronic bulletin boards, telephone referral services) __ Subunits (e.g. committees, divisions, departments, councils) PUBLICATIONS (please attach information on additional publications.) Title____ Type of Publication ____ Frequency of Issue ____ Features of Publication: ____ Price: ___ ISSN: ____ Circulation: ____ Advertising: [ ] accepted [ ] not accepted Alternate formats: [ online [ ] microform CONVENTIONS/MEETINGS Type (e.g., conference, congress) ___ Frequency (e.g. annual, semiannual) ____ None held [ ] Dates and Locations: please be specific; use additional sheet if necessary. 1993: Month/Dates: ____ City/State/Country: ____ 1994: Month/Dates: ____ City/State/Country: ____ 1995: Month/Dates: ____ City/State/Country: ____ 1996: Month/Dates: ____ City/State/Country: ____ Commercial exhibits? [ ] Yes [ ] No A Letter from the Editors: We are currently compiling information for the new edition of the Encyclopedia of Associations: National Organizations of the U.S., which describes more than 20,000 national, nonprofit groups. The Encyclopedia of Associations is published by Gale Research Inc. (founded 1954). Complemented by companion volumes International Organizations and Regional, State and Local Organizations, the Encyclopedia is updated and revised annually. The Encyclopedia of Associations, now in its 24th edition, is considered a standard reference source and is found in libraries throughout the country. It is used by researchers and market analysts, as well as individuals looking for groups in a specific field. Critics have hailed EA as a classic research tool. We wish to include your organization in this directory and ask that you complete the questionnaire on the other side. Please return it within 15 days (or as soon as possible). We would also be grateful for any additional information you could provide, such as lists of parent and sister organizations with addresses, if possible. There is no charge or obligation for this or any subsequent listing in the Encyclopedia of Associations. -- Nigel Allen ae446(a)freenet.carleton.ca

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UNSUBSCRIBE
by Micromine 17 Dec '03

17 Dec '03

UNSUBSCRIBE

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LD's "Contest"
by W. Kinney 17 Dec '03

17 Dec '03

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Coming Soon From A Tentacle Near You...
by nobody＠rosebud.ee.uh.edu 17 Dec '03

17 Dec '03

This message was posted here a while ago, describing all of the nasty things we have in store for us. Right now we seem to be enjoying Operations SQUISH and Octopus. What else do you suppose he has in mind? From: smtp%"an12070(a)anon.penet.fi" 3-JAN-1994 02:01:08.99 To: smtp%"cypherpunks(a)toad.com" CC: Subj: Current Operational Status We (operation Cyberanarchist Repression and Poison) thought you might like an update of our current status and future plans. We have been extremely busy! So much has happened lately! Remember when we said, > You have 24 hours before we >launch our next cyberspatial strike. That was a reference to Operation Tick-Tick-Tick. We were really delighted with the outcome of this attack, we made very significant gains in our campaign, and there were some stellar fireworks. The sequence of Usenet posts equating cyberanarchists with drug users and Sodomites found great response. The Cyberanarchist glossary was unchallenged! We nailed the szabo(a)netcom.com tentacle mercilessly, and he is afraid to show his sickly green face any more. The Pit Bull (His Royal Eminence) showed up to make a fatal mistake in exposing the Szabo tentacle, and we nailed him some too (his brilliant smear tactics give us more ideas ourselves!). As usual, Emminent Eric has been rather quiet. We did spoof him spectacularly with that Apology feint. `I never wanted a brainwashed follower.' `Democracy stinks.' `I am the anti Christ.' Ha, ha. Tantalizing Timmy showed up a bit `out there' to further whine, evade, and threaten, and tell us that he doesn't know anything about drugs! He says he has a gun, and isn't afraid to use it! Fantastic! `The rumors about high level conspiracies and drug use are false' he says. Ooops, have you talked to Ingenuous John? (hee, hee). You guys really have to work on getting your stories straight. It's pretty pathetic. As for the BS, we don't know who it is you saw at your last Cypherpunk party and their California IDs. Must have been some cardboard cutouts! Oh, what fun. This is all in addition to the shrapnel wounds on the public lists (we have no comment on the private ones!). We appreciate your feedback in all areas. What did you think of the delightful poetry? How about the Nazi Espionage story? That brought tears to our eyes when we thought how much your own Big Macs have surpassed the Fuhrer in their own present glories and future ambitions. Perhaps the people `out there' on Usenet will be similarly impressed ... ? === Nevertheless, the Big Macs don't seem to understand that we have long since lost interest in the tentacle exorcisms, although we like to continue to play to keep our practice. We have graduated to the Big Leagues and they are still scratching their crotches in the minors. Full fledged exposure! The Cypherpunk Credit union for money laundering! the black markeeting! the tax evasion! The lies in the media! The secret mailing lists! Thank you so much for finally coming clean (or at least opening a few windows to diminish the stench) in some key areas. Our next projects should help encourage you to continue this wonderful Glasnost, where before we had the KGB. Once again, we remind you that you can relent and surrender at any time. Some of the things we are interested in at the moment: 1. Further information on the media deceptions in Wired and NYT. These are very difficult to unravel. 2. A complete status report of the TX bank and CA credit union. Maybe some more info on the `real' Chaum link. 3. A complete comment by the Big Macs on their knowledge and involvement in pseudospoofing and all the `quasi-legal' activities. 4. A complete list of all the secret mailing lists. Your subscribers to this list would probably be interested in this too, why not post it publicly? After all, they don't know that all the *real* development is being done under the table. Kind of ironic, too, how long people were asking for a `list split', not knowing that it had already been done in secret. Ah, a pity, but that is your modus operandi. But, since in the true spirit of warfare we must be prepared for any eventuality, including the continued persistence and tenacity of the enemy. So you know, here are some of the operations we are planning over the coming weeks and months, listed in scale of seriousness and potency. Operation SQUISH - a very sophisticated and comprehensive simultaneous attack on many fronts that will involve a `grass roots' approach vs. the last `top down' attack in the newsgroups. Medusa keeps asking for our complete knowledge. This will lay it all out on the table for everyone to examine -- a complete list of tentacles, Small Fries, Big Macs, Poison Needles, Medusa Sisters, and Medusa. It will also be a bit disorienting for you in the spirit of our favorite tactics of `polymorphic paragraphs'. You really seem to get a buzz from that. If you think that the last Usenet strike was bad, wait 'til you see what happens with this one! Operation Octopus - this is the multiple pseudonym and agent project. We plan to have at least a dozen (hence the name) posting simultaneously to many different lists and the newsgroups. But the overhead on this is very significant, and it will take us awhile to gear up and build the infrastructure to the point we can `engage'. You have seen more of these agents lately `out there', but our coordinated attack will take some more planning. Hopefully, these operations will crack the nut. It is already wobbling, splintering, chipping, and shaking. But this is a tough nut to crack. The following operations are far more insidious and devastating. We have been hinting about them in various places. They are our `secret weapons' -- the will require some further developments, but will be immensely effective in destabilizing your technology and `movement'. Operation Duplicity - extremely top secret. Let's just say, you will be seeing double, and triple, and quadruple, and ... Operation Apocalypse - extremely top secret. Let's just say, Robert Morris and Richard Depew would be proud ... Of course, in the meantime your list will be subject to the same drizzle of froth that has you so excited lately. And we'll probably recycle some of our better artillery to strategic positions `out there' on Usenet some more. We wish to thank T.C.May personally for all the stellar ideas in Reputation Assault and Cyberspatial Sabotage. What's good for the criminal is good for the police, so to speak! Finally, just to let you know, we are going to take a momentary breather here and scale back all the current operations somewhat to reorganize and retrench before the next onslaught, so enjoy the respite. Happy New Year! p.s. you might want to see this below. This software and attack report was part of our last strike, Operation Tick-Tick-Tick. The software for the new operations is far more complex (you know how difficult it is e.g. to track multiple identities well), partly the reason for the delay. [Long shell script and its output deleted] Key ring: 'pubring.pgp' Type bits/keyID Date User ID pub 1024/9C0865 1993/10/12 W.Meredith <Genie w.meredith(a)genic.geis.com> W.MEREDITH <GENIE> Bill Meredith BILLM3 pub 1024/2DF719 1993/08/11 Raidar <nowhere - use encrypted address> Do not send this key to key servers! pub 1024/77308D 1993/08/05 WhiteBeard 77308D <pool0(a)extropia.wimsey.com> pub 1024/7C06F1 1993/04/05 J. Michael Diehl, 3, <mdiehl(a)triton.unm.edu> pub 1024/EB2B0D 1993/07/28 Victor A. Borisov aka blaster <blaster(a)rd.relcom.msk.su> pub 1024/C0EA49 1993/08/30 Anonymous Remailer <catalyst(a)netcom.com> pub 1022/ABFBB3 1992/12/02 remailer03 <> pub 1024/69464F 1993/09/11 Sameer's Remailer <sameer(a)soda.berkeley.edu> pub 1024/9E3311 1993/09/02 Sameer's Remailer <sameer(a)netcom.com> pub 1024/567449 1993/09/01 Sameer's Remailer <cs60a-qu(a)cory.EECS.Berkeley.EDU> pub 512/606225 1993/08/11 Zaphraud (Zaphraud(a)usa.805.445.9630) pub 1024/569A09 1993/07/31 Mike Ingle <mikeingle(a)delphi.com> 12 key(s) examined.

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Re: PGP's e exponent too small? Not!
by hfinney＠shell.portal.com 17 Dec '03

17 Dec '03

-----BEGIN PGP SIGNED MESSAGE----- Matthew J Ghio, <mg5n+(a)andrew.cmu.edu>, argues that low public exponents such as are used by PGP are unsafe in the RSA public-key cryptosystem. I think his analysis is mistaken, although there were a fair number of typing errors which make it hard to be sure I am understanding him correctly. > Here's why > you shouldn't use low powers of d: The issue is not whether the d power should be low; of course it should not be, since that is the secret exponent, and choosing a small one will make it easier to guess. The question is whether small e values are unsafe. I think this is just a typographical mistake. > Remember that d and e are factors of (p-1)(q-1)+1. This is the fundamental error in his analysis. The correct equation is d*e = 1 mod (p-1)(q-1) or, in other words: d*e = k(p-1)(q-1) + 1 All of Matthew's reasoning about putting bounds on d*e (he often writes of bounding p*q, but I'm pretty sure he means d*e) is based on this false assumption that d*e is a factor of (p-1)(q-1)+1. Actually, the true relation is that (p-1)(q-1) is a factor of d*e-1. The concern about low values of e in the Schneier book relates to the issue of RSA-encrypting the same value with the same low e value and different RSA moduli. This might be done if you were using "pure" RSA (which PGP and PEM do not) and encrypting the same message for multiple recipients. Kaliski is right that adding random padding to what is encrypted will eliminate this attack. PGP and PEM do add such random padding, following RSA's Public Key Crypto System standard. Hal -----BEGIN PGP SIGNATURE----- Version: 2.3a iQCVAgUBLTnW4agTA69YIUw3AQFPOAP9Hk+bwFCgF6F16Cl+WUh0ZfoUvHXLQGuV +pGVySmTe1yftSUq4NQTVMFmzHXc16MvxJjMBYgH445qpwn9EgHVHISG/YdaDsFs 9AA7c5lcgLxUPwzwkOLlUhICXyFLy+Hz9kWqE90ypd+7RFk0UiCwtIT9EsVywC0c 3GM8BKtJNJI= =/BA8 -----END PGP SIGNATURE-----

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Crypto and Taxes
by hfinney＠shell.portal.com 17 Dec '03

17 Dec '03

-----BEGIN PGP SIGNED MESSAGE----- I'll just briefly recap some of the points: Hal> I don't agree with the extreme position that cryptography will lead to Hal> the failure of the income tax and the destruction of the government. Perry> No one is arguing, by the way, that all the economy will go black. I'm Perry> merely noting that whereas right now its hard to lead a normal life Perry> entirely in the black economy (you suffer from a myriad of Perry> inconveniences), an anonymous offshore banking system that you have Perry> free access to changes all that. It's not clear to what extent Perry and I disagree here. I agree that some people will exploit the new opportunities. My doubt is whether the vast silent majority on which the government depends for its taxation revenues will do so. I read the other day that the government gets something like 70-80% of its tax revenues from people making less than $35,000 a year. These people are not financially sophisticated. Duncan> In traditional Black Markets, the transactions are illegal. In future Duncan> Black Markets on the nets, most of the transactions will be legal. Duncan> Legality certainly encourages transactions relative to illegality. I agree with the last point about legality helping, but I don't understand why most transactions will become legal in the future. I thought we were talking about ways to evade laws via cryptography. My assumption is that governments would actually crack down when faced with lost revenue, similar to what was described as happening in Italy: ??> 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). So I'd think even more transactions would be illegal in the future. The main issue, I thought, was whether people would widely risk violating these laws in order to save on their taxes, and whether cryptography would let them do so with impunity. Duncan> You left out a few information purchases: education, much of medicine, Duncan> all of financial services, design, marketing, supervision, and Duncan> management. Duncan is pointing out that more of the economy is in the form of information than I was counting. Even if we count these things as information, though, the question is still to what extent the providers of these services will be able to escape taxation. Take medicine as an example. I should be able to go to a doctor today and pay him cash, off the books, at a greatly reduced rate, for my medical services. Yet no doctor I've ever seen, and I've probably seen twenty or thirty in my lifetime, has ever suggested that. I don't see how cryptography will change this. Duncan> Once the interface is good enough, virtual offices with full workgroup Duncan> interaction built of pure information will spring up and the Duncan> "information" component of much of what we think of as physical work Duncan> will become apparent. Is this the key, people working for virtual businesses? No one knows the true name of anybody else, so no one is afraid of being caught? I am still skeptical. A whole nation of people tele-commutes to work for companies whose name they don't know, with co-workers protected by aliases, all so they can be paid in cash for their services. I find this notion implausible in the extreme. Joe and Jane Sixpack aren't going to want to work for a boss who wears a mask. Duncan> If you wander down the shopping street of a future MUD/MOO and you Duncan> buy or sell things, what nation has jurisdiction for tax purposes. Duncan> What if the MUD/MOO exists as a set of cooperative processes spread Duncan> around the globe. This may be uncertain now, but I don't see why it would always remain that way. There is nothing to stop governments from declaring, say, that residents in their boundaries are subject to their taxation, or that their citizens are subject to their taxes regardless of where they do business. More interesting from the crypto perspective would be the case where the business in the MUD refuses to disclose its true nationality or location. There again, though, I think running an anonymous corporation will pose many practical problems. Sandy> You don't need to Sandy> *own* a car, to have the *use* of a car. Imagine leasing a car Sandy> and using your cyberspace bank digital checks, digital money or Sandy> credit card to pay the monthly rent. No audit trail, and no Sandy> asset to be seized. Similar techniques can be used for virtually Sandy> all of your assets. How does this bear on the issue of government collapse due to failure of income tax? This example actually strikes me as an unobjectionable use of cryptography, one in which individual privacy is protected. The only tax consequence I see is possible avoidance of sales tax, which is col- lected only at the state level and not the national level. Sandy's example shows that car rental agencies might be able to operate on a cash basis, like the local fried chicken outlet. I don't see how this brings down the government. Sandy> I think Hal hasn't been reading Duncan or my posts very closely. Sandy> Here's a hint: A Cayman Islands corporation is a non-US citizen Sandy> even if it is owned by an American. Sandy is replying to my question about moving out of the country to avoid taxes. I gather that he is suggesting that people could set up corporations in the Cayman Islands and somehow divert some of their income to them, so that the income would be shielded from taxes. Can this be done today? Can I go to my boss and ask him to start sending my salary to this numbered bank account in the Cayman Islands, and to stop troubling the U.S. government with information about how much he is paying me? Sounds great. Why doesn't everybody do it, and why will everybody start doing it in the future? To sum up, I am willing to accept that people will be eager to avoid paying taxes, but I still doubt that cryptography will bring down the United States government. Particularly when we consider the lack of sophistication (both financial and technical) of the vast middle class who provide the bulk of tax receipts, I think that virtual corporations and offshore tax havens are not likely to become widespread enough to seriously endanger the government. (In response to John Kreznar's comments about my use of the term "cheating" to refer to violation of tax laws, I accept the thrust of his comments but I'll just observe that while preparing a false set of books may be justified and in some circumstances even honorable, it is not honest.) Hal -----BEGIN PGP SIGNATURE----- Version: 2.3a iQCVAgUBLTnMY6gTA69YIUw3AQHqlgP/d6GTpNrK3c4B/jfxT5tQqAJ0uBkvc5Y7 fh1dtj16QrR/CmAHEJVV+JWXUjwaTnjqO1RdgPJfjjG1U7CaSiuy84OVlyQPSpAc JeIC7qa1HfqXRCK/bQmxcJMhbOULMKkk2plphcwDvL2Tlxe8DXvmgDLS21DUV6r+ bOT9RBf2U3c= =p55w -----END PGP SIGNATURE-----

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