December 2003 - cypherpunks-legacy

e$: Geodesic Securities Markets
by rah＠shipwright.com 17 Dec '03

17 Dec '03

Flame bait alert. Those of you who "know this already" (or know who's posting ;-)) hit your spacebar (or down-arrow, whatever) now. When it rains, it pours. I've been yammering about e$ to another one of my UofC friends for a while now. He's ABD (all but dissertation) in Physics, repeated the process in Finance, spent some time at First Boston and now builds asset/liability software for insurance companies. He'll remain nameless, 'cause if he wants to fess up for his part in this craziness, he can do it himself. Recall I'm screwing around with business models for e$ financial entities, and how I talked about how the crypto-security it requires makes the funds transfer system more granular and the network it lives in more geodesic. Definition of geodesic network: a network where nodes (switches) become more prevalent than lines (lines :-)) the opposite of pyramidal or hierarchical, where the opposite holds. (From Peter Huber's "The Geodesic Network", 1987, U.S. Government Printing Office) So I'm swapping OJ jokes with this guy, and he says, "I've been thinking about how this electronic money stuff makes brokerage firms disappear". And I blurt, "like I did with banks!", and I sent him my last e$ screed, about how to make demand deposits obsolete with digital cash ;-). We gibbered at each other for an hour or so, and here's how *he* made *brokerage firms* go away... The primary reasons for a brokerage account are 1.) safety, to protect your securities from theft. 2. To be able to trade those securities conveniently, by keeping them in "street name", 3. only brokerage firms can trade in the capital markets, because the markets are a giant "web-of-trust", to quote someone around here. Strong crypto accomplishes 1, and e$ protocols make 2 and 3 meaningless. Without boring you folks too much, trades are executed by brokerage firms for their clients in the market, where buyers and sellers are matched. The trades are given to clearing houses, which are like banks, but hold nothing but stock. The clearing houses swap book entries around and then notify the corporation that the stock was sold so the company know who the new stockholder is. The reason this can happen is because your stock is actually held at the clearinghouse in the name of your brokerage. You've signed paper somewhere allowing all this to happen. Otherwise you have to take physical delivery of your securities, and re register them in street name when you want to sell them, which takes time and money to do. Your time and your money. Most people don't take physical delivery as a result. They just leave it at the brokerage in street name. If you remember the last post, you can see where I'm going with this. Strong crypto allows the reinstitution of physical delivery. Well, the electronic analog of it, anyway. Instead of keeping a security at a broker's account in a clearinghouse, a stock "certificate" is issued by the clearinghouse to the buyer immediately at the time of sale. Instead of keeping brokerages' securities on account and swapping accounting entries, the clearinghouse acts more as an officiator, "blessing" the trade, and notifying the corporation of the change in its ownership, etc. Like digital cash, No one can steal your certificate or use it if they do, and if you're backed up, you might as well have it in Fort Knox... Okay. Those are points 1 and 2 from above. Point 3 is where we wave our hands a bit. Unless I'm beaten senseless by arcana, it seems to me that every kind of securities market (including the electronic ones!!) from the specialist system to open outcry can be done on line. (In cyberspace no one can hear your open outcry <hyuk!>). The important question here is, _who trades?_. It seems pretty obvious to me that if you can prove you own a security, you should be allowed to trade it. Since you have taken "physical" (metaphysical???) delivery, if *you* can't prove ownership, no one can. Notice this system allows for position traders, arbitrageurs, portfolio managers, investment bankers, equity and fixed income salesmen (who buy inventories of securities and resell them to their clients at a spread for the information<fat chance!>), and lots of other current players in the markets. In addition, it blows the doors off the role of the brokerage firm as the gatekeeper to the capital markets. It also creates a menagerie of other financial creatures and entities... To quote the famous Dr. Emil Lizardo, "It make-a the ganglia twitch!" My pal says that these protocols could help in derivatives markets, where securing ("insuring?") instruments is a problem...When I get that out of him, in a form that I can understand, I'll write it up and kill more bandwidth... 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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Cellular Phone Monitoring Made EZ!
by Michael Handler 17 Dec '03

17 Dec '03

In light of the recent cellular phone monitoring discussions: check out the most recent issue of _2600_, Spring 1994. It has a product review for the "Cellular Telephone Experimenters Kit", $125 from Network Wizards in Menlo Park, CA. Given this kit and a OKI-900 cellular phone ($450 new, $300 used), you can do wonderous things. The kit connects to the phone and a standard PC RS-232 port, and lets you control the phone via your computer and do all sorts of things. The kit comes with a C API for controlling the phone, so you're not limited by what software comes with the kit. The author of the article listed these things that he programmed in a day or so: * Scan for a paging channel and display the messages. If a voice channel is assigned, go to that channel and listen to the call. * Scan for voice channels and listen to active channels. * Scan OMNICELL channels and listen to active channels. * While listening to a call, display the voice channel messages. * Automatically follow handoffs. * Decode DTMF, change the volume or audio source. * Automatically mute the audio and stop monitoring when the call is released. Possible things he said you could do with more time: * Log all messages and call information for certain cellular phone numbers. You could log paging channel messages, calls places and recieved, call durations, DTMF digits dialed, cell channels used, etc. * Create a "spectrum" display of the cellular band by scanning all channels and recording the signal strength. * With a map of cell sites in your area, physically track a phone as it moves from cell to cell. The article is interesting in itself. Check it out. Spring 94 issue of _2600_. I'm typing in the article for a friend, so I'll mail it to anyone who wants a copy.... -------------------------------------------------------------------------- Michael Brandt Handler <grendel(a)netaxs.com> Philadelphia, PA PGP v2.6 public key on request Boycott PSI, Inc. & Canter & Siegel <<NSA>> 1984: We're Behind Schedule

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nobody@vox.hacktic.nl is up.
by nobody＠vox.hacktic.nl 17 Dec '03

17 Dec '03

Vincent.Cate(a)FURMINT.NECTAR.CS.CMU.EDU once said: :If we use "nobody" as an email address we can hide remailers or make it :seem like there were remailers where there are not, etc. : :The convention on the Internet is for mail to "nobody" to go to :"/dev/null". This is used as a return address when you don't want bounced :mail. : :Now remailer operators are clearly more interested in privacy than in :following conventions. Imagine remailers also had addresses like :"nobody(a)vox.hacktic.nl", and "nobody(a)jpunix.com". You now can choose from three cypherpunx remailers at vox.hacktic.nl : -> remailer(a)vox.hacktic.nl -> remail(a)vox.hacktic.nl -> nobody(a)vox.hacktic.nl Regz, -- ____ Alex de Joode <usura(a)vox.hacktic.nl> \ /__ =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- \/ / "It's dangerous to be right when the government is wrong." \/ --Voltaire --finger usura(a)hacktic.nl for PGPpublicKEY--

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Thoughts on the NSA's correction to SHA
by schneier＠chinet.chinet.com 17 Dec '03

17 Dec '03

This is the fix to the Secure Hash Standard, NIST FIPS PUB 180: In Section 7 of FIPS 180 (page 9), the line which reads "b) For t=16 to 79 let Wt = Wt-3 XOR Wt-8 XOR Wt-14 XOR Wt-16." is to be replaced by "b) For t=16 to 79 let Wt = S1(Wt-3 XOR Wt-8 XOR Wt-14 XOR Wt-16)." where S1 is a left circular shift by one bit as defined in Section 3 of FIPS 180 (page 6): S1(X) = (X<<1) OR (X>>31). This is exactly one additional line in assembly language. The very fact that this correction had to made offers some insights into the National Security Agency. I believe that releasing DES to the public was the biggest cryptography mistake that NSA ever made. Consider the state of research in cryptology before DES. It was simplistic. It was haphazard. There was little interest. If any results of value were ever discovered, the NSA could squash them with a secrecy order. No one cared. Then, in the late 1970s, came DES. Suddenly there was a an algorithm to argue about, dissect, study, and learn from. A whole generation of cryptographers learned their craft from DES. Even today, we're still learning from DES. We're learning new techniques of cryptography and cryptanalysis. DES has transformed academic cryptology in ways the NSA never envisioned. The NSA will not make this mistake again. They will not release Skipjack or any other algorithm to the public, because that could galvanize another fifteen years of research in algorithm design and analysis. (Even so, I believe that Skipjack is similar in design to DES; the NSA realizes that Clipper chips will be reverse-engineered eventually.) When it came time to propose an algorithm for the SHS, the NSA chose not to use an algorithm from its own arsenal. Instead it chose to take an algorithm from academia, Ronald Rivest's MD4, and modify it to produce a 160-bit hash. While this approach did not compromise any of NSA's work, it also short circuited NSA's lengthy internal algorithm design and review process. The SHA was announced only two years after MD4. By contrast, NSA claims to have spent five years designing and analyzing their Skipjack algorithm, based on an additional seven years of design. There is no substitute for years of intense cryptanalysis, and the flaw in SHA illustrates that. >From owner-cypherpunks Tue Jun 21 20:47:03 1994

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Re: something I've always wondered
by danisch＠ira.uka.de 17 Dec '03

17 Dec '03

> Does DES (or name your favorite encryption algorithm) produce as output > all possible cyphertexts of length L, given all possible conbinations of > keys and plaintexts of length L? Choose any cyphertext and a random key and decrypt the cyphertext with that key. Now you have a key and a plaintext which produce this cyphertext. Hadmut

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sorry...
by Mikolaj Habryn 17 Dec '03

17 Dec '03

apologies for last message...

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Re: HOW TO MUTATE AND TAKE OVER THE WORLD
by nobody＠shell.portal.com 17 Dec '03

17 Dec '03

> Date: Tue, 21 Jun 1994 12:57:11 -0700 > From: Judith Milhon <stjude(a)well.sf.ca.us> > > I, Judith Milhon, am not a fink. I was at the first meating of this > weird coalescence. I even thought up the name "cypherpunk." I write I wasn't at the first meeting. I wasn't the one who coined the term "cypherpunk". I heard that Andy Hawks did. Cat Shoe

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Re: e$: Geodesic Securities Markets
by rah＠shipwright.com 17 Dec '03

17 Dec '03

I don't really want to thrash this out point by point, but I will anyway ;-). >Perry Metzger says: >>Robert Hettinga says: >> Strong crypto accomplishes 1, and e$ protocols make 2 and 3 meaningless. > >Not really. Not all commodities are fungible. Agreed. And? >Not all entities are >willing to conduct all sorts of trades with all other sorts of >entities. No, but buyers of a specific security might want to buy those securities from those who hold them... Could you elaborate on your comment, please? >Besides all that, someone has to hold physical goods, Unless it is a stock, bond, derivative, call option, etc. Most of which are "held" in offsetting book entries at brokerage houses, banks, and clearinghouses. If it's not kept there, then you need a certificate of some sort (though I'm hard pressed to have heard of a certificate for a call option, say), which might as well live on a hard drive as a desk drawer. I guess I was saying that it could be that a "certificate" on a hard drive was as tradeable, as "liquid"? as book entry in a clearinghouse. >and >investing will continue to be a realm for which expert advice is >purchased. I thought I did say that people like portfolio managers, anal(ah, I *didn't* say *analysts* back there... OK. There. I said "analysts")lysts, investment bankers etc., still played their usual roles. For example, a market analyst essentially sells his time to a brokerage house to write reports on securities. Those reports are then "sold" to the brokerage's customers in exchange for brokerage fees. They don't have to work for brokerage houses any more, even. In the institutional markets, it is now a common practice for some percentage of a commission to go on a soft-dollar basis to third party analysts for their work. (There was a time 10 years ago or so where portfolio managers were getting *junkets* to investment "seminars" in tropical locations on soft-dollars. They don't do that much anymore, I'm told.) In an e$conomy, you sell your reports direct. Newsletter writers do it already. Our "Peter Lynch" (forgive me Mister Lynch, I take your name in vain) successor sitting in Marblehead would do some background e$ transaction to have the report stuck on the screen of his trusty UltraPowerMac VXXI (next to a Ren-N-Stimpy rerun) as soon as it came out. In that case, as we said before, the mutual fund is where the investment advice, the "editing" *is* being purchased. But if an individual, or even a professional trading his own money for his own profit, wanted to trade, he only need put up one of two things to do so. Money if he's buying, of the securities if he's trading. In either case you don't really need a brokerage firm for that... Thanks Perry. Cheers, Bob ----------------- 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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PGP Comments and Questions.
by trollins＠debbie.telos.com 17 Dec '03

17 Dec '03

Hey, Got some comments about the future of PGP. I would like to compair PGP with DOS. It has gotten a large following and that is good. It has it's limitations and that is bad. Like DOS, expanding it's functions seems to be trouble. Trouble from the tech side and from government. I believe that we should lay a framework so that people around the world can modify and enhance various parts of PGP and not get in each others way. After all, how much can 1 or 2 or 3 or 4 people do vs thousands on the net. Also if the code is modular, people in the US can work on sections that do not contain the crypto engines. Bulk crypto engines could be replaced and not get in the way of the Public key stuff. So, now for some questions.... As I understand the Gnu CopyLeft. People can make changes and pass them on with the source code and NOT step on anyone's toes. Why then should there be an official release by a small group of people that still have bugs in the code after N years. An official framework which will allow for expansion and change is in order. Is Mathew in the UK a named remailer for Phil Z? (just kidding) How fine do you have to divide the crypto code before it is not considered crypto code anylonger. (for US ITAR regs) How do the French get around the anti crypto laws? I want to know before those laws get enacted here in the US.

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CYPHERPUNK OPERATIVE
by Sandy Sandfort 17 Dec '03

17 Dec '03

C'punks, Apologies to those who saw this, but most missed it due to the loss of the list yesterday. -----BEGIN PGP SIGNED MESSAGE----- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SANDY SANDFORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C'punks, Okay, somebody needs to fess up. I *know* someone on the Cypherpunks Channel is writing about the Clipper Chip and other crypto-privacy issues for /Expat World/. I thought I was the only one who had even heard of this newsletter for expatriates until I saw some of the crypto articles. Whoever it is, is doing a great job. In the June 15 issue, in the article, "How Big Brother Wants to LIsten, Too," the writer coined the term "Al Gorewellian." Gotta love it. If the writer of these articles is reading this note, please let us know who you are. You deserve the recognition. (If you want to keep a low profile, how 'bout sending me private e-mail? I'd like to discuss some things with you.) S a n d y ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -----BEGIN PGP SIGNATURE----- Version: 2.3a iQCVAgUBLgYBPU5ULTXct1IzAQEINgQAhzypoIDVoX5bad9Vd8psttmS5ClRbKqr vNA7L88jallJzrmUL5NZv6SO7NPAFxQzC2bnS2KJv4MpyRFl+ZYIku2cQZfQWShY 3TLUXuqK9HVHED7rCzq3Xq1Kny/fZZ9U74PSLe8fi+L9xsL5Ht0yDEmBYCG3REkv J0npF+9FCHw= =xgFs -----END PGP SIGNATURE-----

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