December 2003 - cypherpunks-legacy

Re: e$ seigniorage (and is this the cost of untracability?)
by Gary Howland 17 Dec '03

17 Dec '03

Wei Dai wrote: > > On Sat, 6 Apr 1996, Gary Howland wrote: > > > - What will be the typical time between the withdrawal of ecash > > and it being deposited? > > I think this will depend on how easy it is to withdraw ecash. If the > client software includes an option of automaticly withdrawing ecash from > the bank when you don't have enough ecash to pay for the current purchase > (thereby reducing the time between withdrawal and deposit to zero), then I > suspect most people will use it, even though (anticipating your next > question) this compromises their untraceability. Interesting note - I think that if the time between withdrawal and deposit ever reaches zero, then we have a e-cheque system (which is fully traceable).

1 0

my apologies
by Perry E. Metzger 17 Dec '03

17 Dec '03

My apologies about getting drawn into an argument about conspiracy theory and whether the fed is "privately owned" or some such bull. It isn't cypherpunks material. We all forget on occassion. Perry

1 0

Re: e$ Signorage
by Perry E. Metzger 17 Dec '03

17 Dec '03

I misdirected this yesterday. Yes, its relevant: it answers the contention that ecash somehow lowers government seignorage income. ------- Forwarded Message To: James Gleick <gleick(a)around.com> cc: cypherpunk(a)toad.com Subject: Re: e$ Signorage From: "Perry E. Metzger" <perry(a)jekyll.piermont.com> James Gleick writes: > >> It's not obvious, but it's true, that the Fed collects the "float" > >> on dollar bills you carry in your pocket, > > > >Oh, really? From whom? First I've heard of this. > > Then you're learning something new. Oh, really? Don't teach grampaw to suck eggs. > On the contrary. The Federal Reserve holds Government securities > corresponding to the dollar value of currency in circulation. Ah, no. Sorry. The Fed does indeed monetize debt, but 1) that isn't related to seignorage, and 2) all new money is monetized debt, and it makes no difference whether it is held in paper or bank accounts or anything else. > It earns interest income on this amount, and returns this income to > the Treasury. This is called seigniorage. It amounts this year to > something over $20 billion. This is a very real issue. To the > extent that electronic money replaces currency (reduces the amount > in circulation), it will cost the Treasury seigniorage- -and the > Government is acutely aware of this. Whether the beneficiaries are > consumers, banks, or other issuers of digital cash will depend on > the system. Again, you really don't know what you are talking about. The vast bulk of the money in the field is not currency. Most of it is in the form of bank deposits and is circulated through bank mechanisms like checks and such. When the Fed wants to expand the money supply, it buys government debt on the open market, paying for it with nothing at all other than changing numbers in the Fed's computers. This is how debt is monetized. The bulk of that money never becomes dollar bills, and whether it is circulated via checks or ecash or direct deposit or whatever makes no difference to the amount of fake interest earned. I say "fake interest" because it isn't real income to the government at all. The amount of currency in circulation is dependant purely on demand by consumers, via banks, for currency. When banks want dollar bills, they ask the Fed -- they hand the fed electronic money and the fed gives them back dollar bills. The amount of currency, however, has nothing to do with the amount of bonds being held -- whether the monetized debt is held in bank accounts, in dollar bills, or in ecash makes absolutely no difference. Again, you just don't know what you are talking about. E-Cash has no impact on the fake interest earned by the fed, which is not seignorage to begin with. Perry ------- End of Forwarded Message

2 3

Re: Unicorn of Color
by tallpaul＠pipeline.com 17 Dec '03

17 Dec '03

On Apr 06, 1996 11:57:33, 'tcmay(a)got.net (Timothy C. May)' wrote: > >Also, I am hesitant to call you "Black Unicorn," as applying the adjective >"black" to a person is illegal in some jurisdictions, and "Unicorn of >Color" does not ring true. (But I grew up calling blacks "colored people," >and gladly switched to the more noble-sounding "black" in the 1960s, and >now I almost vomit everytime I hear some radfem lesbian claim "All wimmin >are people of color!!!!" Yeah, colored people. My, how the worm has >turned....) > Don't go Grubor on us now Tim. Slip over the border and get some downers to handle the delusion of "some jurisdictions" that make it "illegal" to call someone "black." Your gorge is also a lot more steady than you think, so I wouldn't worry about it. If you can choke down nuclear bombings of civilians, surely you can handle the new "private dictionaries" of a few radical feminists who spell "adult female" w-i-m-m-i-n. --tallpaul PS: I identify with that section of the women's liberation movement who spell a different word b-y-t-c-h.

1 0

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

3 2

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.

2 1

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

1 0

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

1 0

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.

3 2

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

2 1