December 2003 - cypherpunks-legacy

Re: the cost of untracability?
by jim bell 17 Dec '03

17 Dec '03

At 05:30 AM 4/7/96 -0700, Wei Dai wrote: >I think you're right. There is no need for the issuer to pay explicit >interest. The easiest way to eliminate signorage would be to steadily >increase the value of each denomination of ecash. It would be kind of >like a mutual fund that doesn't pay dividends. In fact, if the ecash is >backed by a portfolio of investment securities and its value floats with >the value of the portfolio, then it would be almost exactly like a mutual >fund. > >Of course, as Jonathan Wienke pointed out, the IRS would not be very happy >about this. Then again, the IRS would not be happy with a lot of the >technology discussed on this list. Some more than others, huh? B^) FWIW, I think that there is no capital-gains-type tax on currency conversions. In other words, if I take dollars and buy yen today, and the interconvert rate changes and I convert back and make a "profit," that is not considered income. If that's the case, then ecash has an excellent precedent behind it to avoid any taxes on interest, especially if that interest is, in effect, paid by increasing the inherent value of the currency. And most of the "interest" will simply be the avoided inflation loss that would have otherwise occurred. Buying ecash may be equivalent to buying an absolutely non-inflating currency that the government can't manipulate. Jim Bell jimbell(a)pacifier.com

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Re: Australia's New South Wales tries net-censorship
by Robert A. Rosenberg 17 Dec '03

17 Dec '03

At 9:01 4/8/96, Mike Duvos wrote: >I'd be interested to know if the courts have ever had a case in >which a person has been declared to have been in "possession" of >illegal material merely by virtue of its momentary presence in >their cache, screen buffer, or usenet spool. If you want a real world analogy, there are cases where overeager USPS Inspectors who want to "get" someone have sent them porno as a Return Receipt Requested Item and then raided before the person had had a chance to open the package. That is possession under the Law.

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Why sign pubkey?
by rollo＠artvark.com 17 Dec '03

17 Dec '03

Why You Should Sign Your PGP Public Key Francis Litterio (franl(a)world.std.com) If you generate a public/private key-pair and distribute the public key without any signatures on it, you are open to a denial of service attack. Here's how the attack works. I take your unsigned public key, and (using a suitably powerful editor, such as Emacs) I edit the userid string so that it still has your name but my email address on it. Then I distribute this fake key widely. Anyone who uses the fake key to encrypt email to you will send the email to me instead (if she uses the email address in the key). Of course, I won't be able to decrypt the email I receive, because it was encrypted with your public key, but I have denied you the option of decrypting it. You might never know the message was even sent. If you have at least one signature on your public key, PGP detects the tampering of the userid string and alerts the person who is sending you encrypted email. This is possible because of the nature of a digital signature. A digital signature is the output of a cryptographically secure hash function taking as input your RSA public key and your userid string (among other things). That hash output value is encrypted with the private key of the signer. If you have a valid public key from the signer and if you trust the signer to sign other people's keys, then PGP allows you to infer a certain degree of trust that the signed key belongs to the person named in the key's userid field. A cryptographically secure hash function is an irreversable hash function for which it is computationally infeasible to find an input message that hashes to a given output value. A task is computationally infeasible if the sun will have burned out before even the most powerful computer could finish the task. This prevents people from forging digital signatures. ------------------------------- How to Sign Your PGP Public Key You should sign your PGP public key immediately after generating your public/private key-pair. To sign your own public key, type this: pgp -ks <userid> where <userid> is the userid attached to your just-generated public key. If you have more than one userid on your public key, then you should sign each one individually. ------------------------------- Misconceptions About Signed Keys A widespread misconception about self-signed public keys (i.e., keys that have been signed by their corresponding private keys) is that a self-signed key is somehow more valid than a key that is not self-signed. A self-signed key is no more valid than a key with no signatures at all. Why? Suppose you have a public key with this userid string: John Q. Public <jqp(a)somewhere.com> Here's my denial of service attack. I use PGP to generate a new public/private key-pair with the same userid string as your public key but having different RSA public key bits. I self-sign that public key with its private half. I distribute that public key widely. Someone thinks it's yours based on the userid string. She makes the mistake of concluding that it is your key because it is self-signed. This is the mistake of inferring validity merely from the presence of a self-signature. She uses it to encrypt email to you, but you will not be able to decrypt that mail. This is a different kind of denial of service attack than the one described earlier (see Why You Should Sign Your PGP Public Key above). The only defense against this attack (that I can think of) is to be ever-vigilent for public keys that have your userid string but a different key-id and key-fingerprint. The key-id is the 32 least-significant bits of your RSA modulus, which is one of the two numbers that make up your RSA public key. The other number is the RSA public exponent (see the mathematical guts of RSA encryption for more details). The key fingerprint is a cryptographically secure hash of the RSA modulus and RSA public exponent, which together make up your public key. The cryptographically secure hash function is Ron Rivest's MD5, which outputs a 128-bit (16-byte) number, which depends in no discernable way on every bit in its input. It is much easier for two people to compare a 16-byte hexadecimal value over the phone that it is for them to compare the many hundreds or thousands of bits that compose the modulus and public exponent. If an RSA public key were tampered with in transmission from one person to another, comparing the fingerprints (via a tamperproof communication channel) would certainly reveal the tampering. The moral of this story is that you should regularly verify that the fingerprints of distributed copies of your PGP public keys (such as those in the PGP keyserver databases) match the fingerprints of your copies of those keys. Rollo

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Re: Spinners and compression functions
by Perry E. Metzger 17 Dec '03

17 Dec '03

[I've sent a fuller reply to Jon in private mail.] JonWienke(a)aol.com writes: > >Actually, it doesn't. The entropy present from a reasonable source > >like keyclick timings is much much lower than the output of pkzip is > >going to suggest to you. > > I am not saying that the output of the compression function has 8 bits of > entropy per byte, but rather that it will have a more consistent entropy > level per byte than the input to the function. What makes you think that? There is little to no cause to expect this at all. I can think of a number of instances, like image data streams, where this idea is completely unfounded for most conventional compression techniques. Perry

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Re: the cost of untracability?
by jim bell 17 Dec '03

17 Dec '03

At 12:53 PM 4/7/96 PDT, Jim Gillogly wrote: > >jim bell <jimbell(a)pacifier.com> writes: >>FWIW, I think that there is no capital-gains-type tax on currency >>conversions. In other words, if I take dollars and buy yen today, and the > >I bounced this off a CPA, who said she would be very suprised if this is >really the case: in general the IRS considers increases in wealth to be >taxable, and unless there's a specific exclusion for currency transactions >that she doesn't know about, she suspects this is not the case. As a >conceptual counterexample she points out that you are responsible for any >profit you make from selling your car for more than you pay for it (but, >as you might expect, you don't get to take a loss if you sell it for less). That assumes that there is "profit" from exchanging currencies. On any given transaction, there is never any "profit." The only thing that might be called a profit is a difference in exchange rates, and that really isn't an increase in wealth at any point. Ask that CPA to look it up. This makes sense: If the currency in my pocket becomes less valuable due to inflation, I cannot deduct the loss. If it becomes MORE valuable due to deflation, I do not need to declare the difference as income. Currency transactions only generate "profits" from a change in conversion rates, which are simply differences in inflation rate between two currencies. >>interconvert rate changes and I convert back and make a "profit," that is >>not considered income. If that's the case, then ecash has an excellent >>precedent behind it to avoid any taxes on interest, especially if that >>interest is, in effect, paid by increasing the inherent value of the >>currency. > >My tame CPA also volunteered the information that the IRS is very interested >and concerned about how they're going to capture transaction information for >electronic transactions, and they do think it's in their bailiwick... she's >read some articles on it. The answer is, "They're not!" That's right, you heard me. It's uphill all the way for the IRS.

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Re: So, what crypto legislation (if any) is necessary?
by jim bell 17 Dec '03

17 Dec '03

The following is a comment of mine that Unicorn didn't respond to. My comments are included as well. I repeat this because I just saw a quote from Lysander Spooner which was appropriate under the circumstances. Those who read Unicorn's notes will notice that he frequently ignores embarrassing gaffes that he makes. [beginning of re-quote] At 08:56 PM 3/30/96 -0500, Black Unicorn wrote: >> Naturally, you won't address this >> problem, but the man-on-the-street is more realistic about his own privacy. >> How many times must I raise this issue? How many times do you ignore it? >> Face it, people are smarter than you give them credit for. They will simply >> not tolerate any more shit from the government. > >Funny, the latest primary has been one of the highest voter turn outs in >quite a while (except in Deleware). Considering those are the law-and-order >types who are most likely to invade personal liberities, I think its a >bit hard to make the case that the temper of the country is anything but >very pro-political process. Unicorn again displays his cluelessness. If people know that the system is sick, and they believe (even wrongly) that the only way to fix the problem is through "the political process," they can reasonably be expected to take one last, desperate effort at fixing the situation. That doesn't make anybody "pro-political-process," in fact they could be disgusted with the lack of progress that this system produces. They simply believe that they have no alternative. To put it in simple terms that even you should be able to understand, the fact that a drowning person moves his arms and legs around a lot doesn't mean that he LIKES to swim, it may merely mean that he likes drowning even less. [end of re-quote] Spooner's quote follows: "Doubtless the most miserable of men, under the most oppressive government in the world, if allowed the ballot, would use it, if they could see any chance of thereby meliorating their condition. But it would not, therefore, be a legitimate inference that the government itself, that crushes them, was one which they had voluntarily set up, or even consented to." Lysander Spooner

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Re: Spinners and compression functions
by stewarts＠ix.netcom.com 17 Dec '03

17 Dec '03

At 06:52 PM 4/7/96 -0400, perry(a)piermont.com wrote: >JonWienke(a)aol.com writes: >> I am not saying that the output of the compression function has 8 bits of >> entropy per byte, but rather that it will have a more consistent entropy >> level per byte than the input to the function. >What makes you think that? There is little to no cause to expect this >at all. I can think of a number of instances, like image data streams, >where this idea is completely unfounded for most conventional >compression techniques. Obviously you need to mix raw data with a hash function if you really want to smear out the entropy so there's an even amount per output byte. But lossless compression can gain you a little bit, and seldom hurts (assuming it's faster than the hash), and it can help you be less unrealistic about the amount of entropy you've really got. Data contains varying quantities of predictablity and unpredictability. Some of the predictability has simple enough structure that a basic compression function can find and exploit it to squash the data. Some of the predictability doesn't. For what it's worth, compressing the data before using it for other things does leave you with somewhat more consistent entropy per byte for "typical" random input, because it eliminates the easy stuff. Obviously there are cases where this doesn't help you much, like inputting a graphic representation of a column of Chinese characters, where you'd benefit a lot more by looking them up and outputting Unicode or some such and then compressing (and where the first time you encounter a given character, the output of the compression function has to represent the picture, where the next time it sees the same set of input bits, it's able to abbreviate much more.)

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Re: So, what crypto legislation (if any) is necessary?
by jamesd＠echeque.com 17 Dec '03

17 Dec '03

At 05:55 PM 4/7/96 -0800, jim bell wrote: > Those who > read Unicorn's notes will notice that he frequently ignores embarrassing > gaffes that he makes. Those who read Jim Bell's notes will notice that Unicorn is not alone in this practice. --------------------------------------------------------------------- | We have the right to defend ourselves | http://www.jim.com/jamesd/ and our property, because of the kind | of animals that we are. True law | James A. Donald derives from this right, not from the | arbitrary power of the state. | jamesd(a)echeque.com

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They're running scared.
by jim bell 17 Dec '03

17 Dec '03

Jim Hoagland's newspaper column from April 4, 1996: Governments awakening to threat of the Internet The computer and modem now downsize the globe, enabling citizens to vault over walls of secrecy, law and control erected by governments. Still gathering steam, the information revolution is creating a new generation of ticklish foreign policy and national security problems for the world's governments. They are organized to operate in a heirarchical world of borders and customs posts and to keep out the unwanted, the unhealthy or the dangerous. But the boundaries of cyberspace are unfixed and amorphous. They are being determined more by the availability and cost of communication modems, sophisticated software, satelite stations, encryption techniques and other data processing technology than by government fiat. An example of cyberspace's potential for harm surfaced last week when France asked the United States to crack down on a San Diego-based Islamic group that posts instructions on the Internet for assembling inexpensive bombs like those exploded on the Paris subways last year. French officials traveling or posted abroad fear they are the intended targets of these homemade bombs, the Quai D'Orsay's senior Middle East expert, Denis Bouchard, told American diplomats at a meeting last week on international terrorism in Washington. State Department officials offered the French sympathy. But they did not hold out much hope they coudl act on the sparse information the French provided. The line between computer-driven incitement to terrorism and electronic free speech still has to be drawn in the brave new cyber world. The inchoate nature of that world was underscored by the disclosure March 29 that U.S. authorities had charged an Argentine student with three felonies for illegally entering Pentagon and other U.S. military computers to obtaining confidential files on satellites, radiation and energy-related engineering. But Julio Cesar Ardita, 22, who raided Washington files from his home in Buenos Aires, cannot be extradited under American-Argentine treaties, which do not cover these alleged national security violations. Governments are waking late to the implications of individuals and small groups operating across boundaries and oceans to bypass, introde upon or flip and electronic finger at bureaucracies that have controlled or regulated the security and business of nations for centuries. The implications are particularly dramatic for totalitarian regimes that brook no open dissent. China seeks to impose a government monopoly over economic data transmission into China to go along with the draconian political censorship already practiced on the nation's traditional media. But as long as the Middle Kingdom remains part of the International telephone system with its faxing and modem capabilities, words and facts the communist leadership abhors will spread faster than Big Brother can track them. The world stands roughly where it stood as television began to reshape politics, and policy-making, in ways that we still do not fully understand. A new communication technology arrives to change what we think, as well as how we think and communicate. Traditionalists fear anarchy (or obsolescence). Optimists foresee the best of all worlds, with Orwell's 1984 predictions of Big Brother tracking and brainwashing everyone through television proven to have been 180 degrees off course. But the picture is in fact mixed. Governments have begun to talk seriously to each other about controlling the computer revolution. The Pentagon is studying the information highway as the route to complete domination of the battlefield and thus the ultimate source of power. THe FBI, IRS, and CIA are determined to keep you from being able to encode and transmit information they want to see. Orwell may turn out to have been premature, but not wrong. The struggle over the course of the information revolution is only beginning. The bureaucracies that are most threatened still have powerful hands to play. There is no guarantee that cyberspace will provide the world with the era of new freedoms that now seem likely. That battle is still to be fought, and won. [end of article] Articles such as this are interesting because they appear to be written without any illusion that the interests of governments are anything other than just that, interests of governments. They are NOT the interests of the average citizen.

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Re: Australia's New South Wales tries net-censorship
by Robert A. Rosenberg 17 Dec '03

17 Dec '03

At 17:47 4/6/96, David K. Merriman wrote: >Makes me wonder if browser companies/authors couldn't be dragged into any >such conflicts. If Person A inadvertently stumbles across Pedophiles 'R' Us >on the net, and quickly moves on, I have yet to see a browser that lets >him/her say "quick - delete that last cacheing operation", thus *making* >him/her 'guilty' of criminal possession. Netscape in the Cache Preferences has a button to delete your cache contents so button would seem to serve this need (while being a little overkill for this capability since it deletes everything and you must then rebuild your cache from scratch).

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