December 2003 - cypherpunks-legacy

Re: rng, anyone?
by wcs＠anchor.ho.att.com 17 Dec '03

17 Dec '03

Eric et al write: > >> There is a problem with generating random numbers by repeated > >> iterations of a hash function when these numbers will be used to > >> simulate an encrypted message body. > >Try xoring the output with a secret value between MD5 hashes. > That'll work. Take the seed as the secret value, and take the first > hash as the first block. Or you can delete some bits from the MD5, or, since MD5 takes more input than it gives output, append a secret value to the MD5 before rehashing.

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RE: Laundering money through commodity futures
by wcs＠anchor.ho.att.com 17 Dec '03

17 Dec '03

Pat Farrell writes: > On the OP-Ed page of the WSJ a week ago thursday (page A14) is an article > that describes a way to make a $100,000 bribe look like extrodinary luck > in the cattle futures market. > [ shady broker registers both sides of the trade, gives the bribee > the winning side and the briber the losing side. ] Yeah. To somebody's comment > Slick my immediate reaction had been to add the word .... Willie! Bill

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Re: Does the List Have a Political Ideology?
by Black Unicorn 17 Dec '03

17 Dec '03

-> But discussing politics here is not at all banned--how could it be? Politics comes up a lot, including the Clipper debate and all the recent discussions. <- I couldn't, even by a stretch, make a case for the topic at hand and its connection to crypto. :)

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Terra Libre?
by jim＠bilbo.suite.com 17 Dec '03

17 Dec '03

I recently received some junk mail from a group/company called Terra Libre (I think that's their name). Anybody know anything about them. >From their mailing it seems like they would be very interested in the privacy technology this list promotes. Jim_Miller(a)suite.com

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IRS vs. privacy
by m5＠vail.tivoli.com 17 Dec '03

17 Dec '03

There was a neat piece on NPR Friday about why it's a bad idea to evade filing Federal tax returns. Among the spine-tingling techniques used to pinpoint tax cheats: * The IRS knows about big cash transactions (we knew this already here.) * The IRS has all data from states concerning individuals registered as licensed persons in any field of work; thus, if you're a doctor, lawyer, plumber, electrician, or registered professional engineer, the IRS knows it. * [This blew my socks off] The IRS has subscription data for many national magazines. Thus, if they know you're getting Time & Newsweek & Barron's and USNews but they see no tax return, they nab you. This builds a good case for the notion that the IRS will have big, big problems with digital cash economies. They also probably have problems with electronic magazines mailed through anonymous remailer chains :-) m5

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Re: 'Nother MIT talk on crypto...
by Peter Wayner 17 Dec '03

17 Dec '03

I saw the talk Micali gave on his Fair Crypto systems at Crypto 92. Someone asked him about governmental abuse and he said (I approximate), "Well, you have to trust them. That's why they're called trustees."

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Re: Warrentless Search
by Black Unicorn 17 Dec '03

17 Dec '03

Mr. Davis said: The average citizen operates from a paradigm of self interest, perhaps extended to his/her family. If a governmental action does not resonate with this paradigm- (i.e. "what's in it for me?")- the government action goes largley unnoticed. When the Reagan administration exhumed the 1888 Law allowing military to assist law enforcement, but not make arrests, I took note of that because it directly affected my life. Almost no one else paid any attention to it. <- What you describe, as near as I can tell, is the effect of "entrepreneurial politics." That is when a policy (allegedly) creates general and widespread benefits at a cost that burdens a small portion of the popolous. The incentive is strong for the few opponents to oppose it. These tend to pass when the opponents are poorly represented and cannot make their objections widely known. Compare these with: Client politics: When the benefits of a policy are concentrated, but the burdens widely spread. Small groups have powerful reasons to support the regulation/legislation. The opponents have little reason to resist if it even is clear that the legislation will effect them. These usually pass when watchdog groups are not present. Interest-Group politics: Costs and benefits are narrowly concentrated. The public doesn't have much incentive to be bothered with the legislation and doubts there is a serious effect to them. Interest groups usually carry the day here. Majoritarian politics: All or most of society hopes to gain; all or most hopes to gain. Interest groups have little incentive to form. In general what you seem to want to attribute to a basic non-concern by the people in general is really the fact that none or little of the citizenry feel themselves effected by the legislation. The circumvention of the rights against warrantless search in such a major way is a majoritarian politic issue, and is not comparable to the example that you gave, (baring more specific information). Ignoring the potential ramifications of a seizure of constitutional rights to fight the symptoms of some invented "Crime Crisis" is to me much more indictive of citizen's apathy. I make this assertion with the admission that I don't know the specifics of your example, as you did not provide them. I feel this conversation, which facinates me, bears off of the cypherpunks topic. Unless the voices calling for a more technical and a less political subject matter have waned, I think we should consider another forum. Personally I find the discussion of centralist issues in general important. It's the tie in to cryptography and the lack of a comprehensive list position on the political nexus with the technical that worries me. Sorry for the bandwidth in any event. See, J.Q. Wilson, The Politics of Regulation (1980) for a deeper discussion. -uni- (Dark)

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Re: IRS vs. privacy
by Duncan Frissell 17 Dec '03

17 Dec '03

M >The IRS loves the current digital cash systems, such as ATM cards, M >because they let them spy on your bank account. :) M >digital-cash!=anonymous-transactions M > The existence of ATM networks gives the IRS no info that they didn't have in, say, 1965 except your physical movements if you use them a lot. If you used to cash or use a lot of checks in the past, they could "follow" you that way as well. What *does* give them (and everyone else) extra powers are the new "voice mail" account information systems that use the SS# as a PIN. Anyone can use those to spy on your account. As always, accounts not in your True Name or in another country are much harder to link to you. DCF In 1985, while he was dying of AIDS, Roy Cohen had almost $1.5 million in judgments against him -- half in favor of the IRS and half in favor of civilian creditors. Meanwhile, he lived in an Upper East Side townhouse, used a house in the Hamptons, and flew Concorde back and forth to Europe frequently. Being judgment proof means never having to say you're sorry. --- WinQwk 2.0b#1165

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Laundering money through commodity futures
by gnu 17 Dec '03

17 Dec '03

I wonder if anonymous digital cash will really consist of shares in frozen orange juice futures... John Date: Fri, 15 Apr 1994 06:55:58 -0400 From: farber(a)central.cis.upenn.edu (David Farber) Subject: The Soft Pork Underbelly of Efficient Markets [I knew electronic markets were good for something .. djf] To: interesting-people(a)eff.org (interesting-people mailing list) Date: Thu, 31 Mar 1994 23:30:20 -0500 From: Peter Wayner <pcw(a)access.digex.net> Subject: The Soft Pork Underbelly of Efficient Markets The Under Pork Belly of Efficient Markets, or How to Launder Money Using Cattle Futures The great promise of electronic networks and virtual communities is a collection of very efficient markets. In the future, information will be moved, products will be sold and trades will be executed in a blink of an eye. This efficiency is usually considered to be a pretty good thing by everyone in business, in economics or in line at the video store. The underside of this efficiency, though, is a blurring of the line between legitimate and illegitimate business. A good way to understand this effect is to study the case of how to launder money using the futures markets. Laundering money is an age old problem for people who want to move funds from person A to person B without leaving a suspicious trail. Cash is the nieve approach and it has plenty of problems: it is bulky, it can be lost or stolen, and most importantly it often leaves people asking "Hey, where did that come from?" The futures markets, though, make it simple to move funds in a way that is indistinguishable from ordinary commerce. If it is done correctly, the recipiant, person A, looks like a lucky stiff or a market savvy investor. Person B is usually out of the picture or out of luck. The same games can be played with almost any other market, but futures markets are so efficient that the process is actually feasible and easy to do. The basic transaction in futures is to buy or sell a contract for the delivery of x pounds/barrels/tons/feet of some commodity at y dollars/yen/marks etc. If you buy a contract, then you're obligated to actually cough up y dollars when the contract comes due. Most people don't hold on to the contracts long enough for them to actually take delivery. They sell another contract and the futures market maintains a clearing house that is responsible for matching up the contracts and cancelling them out. It's a great system. Very efficient and very useful for farmers, manufacturers and others who actually produce and consume commodities. Futures markets are great for laundering money, though, because they can generate big losses or big gains in a short amount of time. It is quite possible for $100 to turn into a $5000 gain overnight. The downside is that it can often turn into a $5000 loss in the same amount of time. In fact, the market is a zero sum game. If you make n dollars, then there is someone out there who just lost n dollars. The sum total of the losses and the winnings equals zero. This zero sum nature is the key to laundering the money. Person A and Person B get together and guess that the price for a commodity is going to go up. That means that who ever buys a contract will make money. So Person A, the intended recipient buys a contract and Person B sells a contract. If they're right, then Person A gets the money and Person B loses the same amount. Bingo. The money moved from B to A and no one can trace how it got there. Person A looks smart or lucky and Person B looks out of luck. There was no direct connection between the two. There are thousands of other people out there winning and losing money at the same time. The marketplace's central clearing house arranges it so each wins and loses their rightful share. You may wonder why B bothered to sell a contract and lose money. This is the safeguard against guessing wrong. No one is correct all of the time. Even the people who try and rig the markets and corner them get burned as often as they succeed. The best investors in the futures markets, the ones who make money time after time, are the arbitrageurs. They spot inefficient pockets and try and remain neutral to the overall shifts in the market. Person B sells the contract so that if the market goes down, i.e., the wrong way, then A and B together have lost no money. It's a zero sum. Now they just have to play the game a bit longer or for stakes that are twice as high. You can think of the process as flipping a coin until you have encounter a heads. Ideally, you play this game with two players with relatively deep pockets. This means that A can cover the short term loses. This is a bit of a disadvantage because many money laundering operations must move cash from the rich to the poor. You can cover up this problem by using the same broker for A and B. The broker executes the trades and then assigns the winning trade to A and the losing trade to B. They fill in the order books after the fact. Using the same broker for A and B can be problematic because it may look too suspicious if the mirrored trades appear on the same ledger. The beauty of this system is that it can look quite indistinguishable from normal business practices. Many companies actively enter the futures markets to hedge themselves against foreign currency movements. Others actively enter the futures markets to guarantee themselves a good supply of their raw materials. The essential point of this lesson is that fast, efficient markets make it possible to move money easily. The futures markets were designed so that is no real other half to every trade. It's literally you against the world with every trade. The RISKS, of course, is that accountability can vanish as the size of the crowd grows to be as big as the world. There is no way to catch up with this. The futures market are so great because there is no need to deal one on one. The effects of speed are not only apparent in big financial markets. Credit cards and overnight delivery are a dangerous combination. You could steal cards, order a fortune of stuff, arrange for it all to be delivered overnight and then jump town quickly before people notice the card was gone. Suddenly, merchants must deal with the fact that something that used to be complete legitimate (exchanging cash for goods) is now a potential theft. Of course, there are other crimes that lose their edge. It is much harder to escape the law by heading to a new town. Computerized fingerprint files are very, very efficient. I think everyone felt that perfect, computerized markets would bring about the right mixture of accountability and efficiency. It would be a perfect mixture of Big Brotherly scrutiny would take care of everything. Every trade, after all, is recorded in the futures market. Yet, the best mechanism for anonymous fund transfer yet discovered exists here in the midsts of all of this record keeping, legal scrutiny and oversight. ------- End of Forwarded Message

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Cypher software on CD
by Ian Robert Nandhra 17 Dec '03

17 Dec '03

Hi, Does anyone nkow a source of Cyper/Crypto software, documentation etc on CD-ROM?? Thanks! Ian

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