December 2003 - cypherpunks-legacy

Free E-Cash
by jya＠pipeline.com 17 Dec '03

17 Dec '03

WSJ, September 20, 1996, p. A16. Fed Chief to U.S: Back Off On Electronic-Cash Rules Washington -- Regulators should stay out of the way and let the market for electronic money develop without government meddling, said Alan Greenspan, chairman of the Federal Reserve Board. "The private sector will need the freedom to experiment without broad interference from the government," he told a government conference on electronic cash yesterday. Too much interference could impede innovation, he said. Bank debit cards, along with other forms of electronic payments, "account for a very small percentage of transactions," he said. "Even the use of popular credit cards has only recently begun to challenge paper's dominance." [End]

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re: Stego inside encryption
by Mullen Patrick 17 Dec '03

17 Dec '03

To take this one step further, has anyone tried to ever use this method as an encryption method? You could hide data in a stream of random bits, using position as the encryption method. Obviously, the data would not be stored in packets; rather as single bits strewn throughout the stream. Even ASCII characters could be hidden in such a system very well, as the possibility of choosing the correct 8 bits (extended char set) from the data stream when any combination has equal potential of being the correct sequence would be extremely difficult. Error checking/correcting code could even be used. Using this system, the placement algorithm would be the focus of attack. If an algorithm which has a sufficiently random placement was used, extracting the correct bits would be difficult. Another way to increase the security would be to hide the correct message inside a bitstream created by using the same method on other similar messages. (Hiding a real message inside bogus messages. Hmm... Which one's real?) Patrick _______________________________________________________________________________ From: Mullen Patrick on Thu, Sep 19, 1996 9:19 Subject: Stego inside encryption To: Cypherpunks I know a lot of times the idea behind steganography is to hide the fact that a secret message is in a seemingly normal file/mail/whatever. This is good for avoiding unwanted interest in your file. The benefit of not having people attempt to crack you code, added to the strength of the cryptosystem is wonderful. However, I propose this-- Don't hide that anything's encrypted! Rather than hide this fact, throw it in their face! I propose hiding an encrypted message inside another encrypted message. Set bits in specific places to data in the real message. The benefit is Oscar not only doesn't know what the crypto is, he attacks the wrong message. Hiding statistically random bits from the true message in statistically random bits from the masking message shouldn't be too hard. Granted, this scheme doesn't get you past measures designed to keep out all encrypted messages, and it surely wouldn't keep you message from generating interest, but it would be very hard to decrypt the message, especially when some algorithm is used which (seemingly) randomly selects which bits to use for the stego. Just a thought... My apologies if someone has already proposed this method. Patrick

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[NEWS] Crypto-relevant wire clippings
by dlv＠bwalk.dm.com 17 Dec '03

17 Dec '03

News Release (Environics): Monday, September 16, 1996 Smart Card Forum Draws 500 Industry & Government Leaders SAN FRANCISCO-- The Smart Card Forum today announced that more than 500 industry and government leaders met at its Annual Meeting in San Francisco to review the progress of smart card technology and to lay the foundation for the accelerating pace of its adoption during 1997. Representatives from a "who's who" of government and corporate America gained first-hand information and senior-level perspectives that will help them make strategic decisions around the use of smart cards in emerging markets such as payment, network security, relationship banking, remote data access, and cellular phone security. The way in which the combination of PC and smart card technologies will accelerate the deployment of new applications providing a greater security and portability on the Internet was an area of particular interest. "As these exciting new applications are created and gain momentum during the next five years," says Jean McKenna, Forum President, "the smart card becomes a logical vehicle for distributed information management, identification, security and payment." According to McKenna, who also is V.P. Payment Technologies, Visa International, "The impact will be revolutionary, widespread and positive -- especially for consumers." Speakers on the theme: The History of Money - The Future of Payments: Past, Present and Future Perspectives on How Commerce is Enabled, included: -- Martin Mayer, author of The Bankers and numerous financial and business books and Guest Scholar at The Brookings Institution in Washington, D.C.; -- Peter Hill, Executive Vice President, Visa International; and -- Michel Ugon, Vice President, R&D, Bull CP8, and early developer of the microprocessor smart card. 1996 will be looked at as the year when stored value applications on smart cards started serious deployment in North America. The 1996 Annual Meeting reflected the crest of this wave with presentations today on four leading stored value card implementations. The speakers were: -- Cynthia Bengier, Vice President, Wells Fargo, for Mondex International; -- Edgar Brown, Vice President, First Union National Bank, for Visa Cash; -- Michael Bradley, Project Manager, Bank of Montreal, for Proton; and -- Lin D. Ison, Executive Manager, Smart Card Systems, Commonwealth Bank of Australia, for MasterCard Cash. The next wave in smart technology The next wave coming that will capture more and more energy of the Forum and its members is the Internet. The combination of PCs and smart cards will promote the development of new applications that tie security and portability together. "The emergence of 'virtual' merchants and the expansion of mechanized payment options promises to offer consumers, merchants, and financial institutions a broad set of new opportunities," says Roger Bertman, Vice President and General Manager, Internet Commerce, VeriFone. "In particular, the Internet will offer a whole new world of selling and buying, and the mechanization of what has been cash will provide a basis for expanded purchasing options. The smart card will clearly be the 'glue' that will enable the disparate worlds of physical and 'virtual' merchants and a broad spectrum of payment methods to be brought together in order to tap these opportunities." Interoperability was among the pivotal issues addressed by Gerald Smith, Manager, Smart Consumer Services, IBM. "As smart card implementations evolve from single to multiple-applications and from single to multiple-issuer services, the subject of interoperability is gaining increased scrutiny," says Smith. To achieve critical mass, interoperability between cards and reading devices is required. Panelists addressing the future directions and strategies of payment included: -- Janet Hartung, SVP, Wells Fargo; -- Marlee Laks, Technology Leader, American Express; -- Tim Steward, EVP, Mondex International; -- John Tunstall, VP, MasterCard International; -- Bette Wasserman, VP, Bank of America; and -- Gaylen Howe, Visa International. John D. Wright, Senior Counsel, Wells Fargo, and John Burke, Partner, Foley, Hoag & Eliot LLP, moderated a panel discussion of key legal, public policy and private issues presented by a multi-application smart card, including Regulation E, FDIC insurance and relevant state laws. Consumer and merchant research shows smart card potential A new Forum study made public at the meeting indicates that merchants are quickly focusing on the many other benefits smart cards offer, beyond the stored value application, and they see different benefits to be derived from the technology. These benefits include customer information, offering loyalty or "frequent shopper" programs, electronic ticketing and couponing and stored value for self-service purchases. A second important finding of the study is that a surprisingly low level of customer base penetration is required for many merchants to realize the benefits of smart cards. Grocery stores, convenience stores, movie theaters and gasoline retailers indicated that a mere two to 10 percent of consumers -- an extremely low threshold of marketplace demand -- is required for them to realize the benefits of smart card implementation. "A smart card, as opposed to a magnetic stripe card, has the capability of storing information, monetary value, processing transactions off-line, and enhancing a consumer's security and privacy," McKenna says. "Merchants are quickly focusing on the many benefits smart cards can offer both them and consumers." Consumers also favor multi-application smart cards -- 61 percent responded positively in Forum research. They prefer multi-application smart cards in order to carry and access information needed in an emergency and to reduce the number of cards carried, paper records kept and forms to be filled out. The Smart Card Forum The Smart Card Forum is a non-profit, multi-industry membership organization promoting the widespread acceptance of multiple application smart card technology in North America. Its primary mission is to bring together in an open forum, leaders from both the private and public sectors to address topics associated with the development and evolution of smart card technology applications. The Forum was established in September 1993 and currently has more than 225 corporate and government members including: Chase Manhattan, Citibank, Bellcore, MCI, MasterCard, Visa, IBM, Microsoft, Mobil Oil, Schlumberger, Gemplus, Delta Airlines, U.S. Postal Service, the Federal Reserve, U.S. Department of Treasury and U.S. Department of Defense. Associated Press: September Wednesday, September 18, 1996 As Electronic Cash Emerges In U.S., Regulation In Question By Guy Dixon NEW YORK-- As microchip-embedded smart cards hit the market, U.S. banks and credit-card companies are hedging their bets. They don't want regulations that prevent new applications for smart-card technology - from simple cashless purchases to potential uses like bank or credit-card fund transfers, all with a single card. But they also quietly welcome rules that could boost their market share over other companies issuing competing smart cards. The main issue is whether the U.S. Federal Reserve Board will require smart-card issuers to provide receipts for all sorts of electronic cash transactions, a move that could play to the strength of the credit card issuers that now dominate electronic transactions by applying rules they must follow already for conventional credit and debit cards. Established card companies which have dominated the U.S. credit-card market since the 1960s are hoping government policy on electronic cash will follow the lines of current bank and credit card regulation. To address some of these concerns, the U.S. Treasury will host a conference on September 19-20 in Washington, D.C. on the role of government in electronic money and banking. Scheduled speakers include Treasury Secretary Robert Rubin, Federal Reserve Board Chairman Alan Greenspan, and Citicorp Chairman and CEO John Reed. So far, the Fed is taking a wait-and-see approach on emerging electronic money. 'The general consensus is that we don't want to over-regulate and stifle innovation,' said Washington Fed spokesman Joe Coyne. Yet as new digital cash products hit the market, many say regulators will have to adapt existing rules to the emerging electronic cash market. Banks, in particular, worry that if regulation is too lax, all sorts of non-financial companies could flood the market with alternative cash forms. They worry about being driven out of the electronic market by competition, said Gerald O'Driscoll, vice-president and director of policy analysis at Citicorp. Analysts point out that regional and long-distance phone companies, along with other large and trusted companies, could easily market their own smart cards to customers, such as a smart-card version of AT&T Corp.'s Universal card. Indeed, AT&T is collaborating with National Westminster Bank PLC to develop smart cards in the U.S. The problem with any new regulation is that no one knows what type of smart cards the market will embrace. Smart cards are currently being test-marketed primarily as stored-value cards, holding a limited cash amount that a cardholder can use for purchases until the card runs out. Yet with a smart card's microchip able to hold up to 80 times more information than the magnetic strips on conventional credit cards, many in the industry see the distinctions between bank cards, credit cards and store-value cards blurring to the point where a single smart card could do the work of all three. European credit cards already commonly come equipped with microchips, allowing merchants to verify a payment at the point of purchase. And stored-valued telecom cards with tiny chips are everywhere. 'In the end, it comes down to which features people will pay for,' said Lawrence White, economist and electronic commerce analyst at the University of Georgia. 'And that is the danger of regulation jumping the gun.' Visa USA's test run of smart cards in Atlanta during the Olympic Games featured cards that used only a fraction of a microchip's potential. The cards stored amounts of up to $100 which cardholders could then draw on for purchases. Some Atlanta banks, such as First Union, went one step further, issuing cards whose value could be reloaded. In another promotional blitz, participants at Vancouver's international AIDS conference this summer could buy VISA Cash cards for use at conference venues. Later this year, VISA plans another trial run of stored-value smart cards in Manhattan's Upper West Side with MasterCard, Citibank and Chase Manhattan. These smart cards, typically sold in $10, $20, $50 and $100 denominations, differ from debit cards, such as checking cards which already are being distributed widely by many banks in the United States and Canada. When a debit card is inserted into a merchant's card reader, the amount of the purchase is deducted from the buyer's bank account. Because there is a transfer of funds, the merchant's card-reading device has to be connected to a bank or credit card company by phone lines. Smart cards, however, can transfer a certain amount of funds from the card itself to a card-reading device usually without having to go on-line. Not all smart cards are alike. A leading competitor to VISA Cash and MasterCard's smart cards is National Westminster Bank's Mondex card, now being test-marketed in the U.K. and soon in Canada. Mondex cards are stored-value cards, with the added feature that the funds can be transferred electronically to another Mondex card, allowing a card-owner to give money to someone else in the same way one can with cash, said Fred Billings, a Mondex developer at the Royal Bank of Canada. AT&T is currently in an alliance with NatWest to develop the Mondex card in the U.S., said Mitch Montagna, spokesman for AT&T Universal Card Services. VISA's technology, on the other hand, is geared more toward the company's long-term approach of sticking to established credit-card billing and account practices, a traditional market niche VISA want to hold on to with affliated banks, said VISA USA Executive Vice-President Rosalind Fisher. 'We are riding that horse right now, but we'll have to see which system the market takes to,' Fisher said. But some digital cash developers continue to worry that any regulatory move, once it comes, may be the wrong one for their product. Much of the debate hinges on Regulation E of the 1976 Electronic Funds Transfer Act, say analysts. Reg E requires issuers of ATM and other electronic fund transfer cards to provide receipts and account statements to cardholders. It also requires issuers to assume certain liabilities if funds are electronically lost or stolen. Stored-value smart cards are seen as largely exempt from this regulation, at least for the time being. The Fed is still weighing the impact of cards in denominations of $100 or less. But the industry is going on the assumption that stored-value cards of $100 and under will not require receipts or credit statements, said VISA USA's Fisher. WNET's Future of Money: September 16, 1996 Viewpoints Is Cyberspace Safe for Financial Transactions Today? YES. William M. Randle, Senior Vice President and Director of Marketing, Huntington Bancshares, Inc. Some cyberspac transactions can be made very secure with technology in use today. But... The security currently in place is not ready to safeguard fast, simple, low-cost transactions that would allow customers to order items and authorize direct bank payment to the merchant. That would require the financial information pathways between banks to be protected by public-private key encryption, such as RSA encryption, invulnerable to unauthorized persons. And the value of encryption depends on a reliable authentication procedure, assuring that both senders and receivers of financial information are who they say they are. A variety of solutions to protect every stage of cyberspace transactions have been proposed. I am most impressed with the system in use at Security First National Bank, the first Web-only bank, as well as at Huntington National Bank; it has been approved by the government for secure electronic banking transactions, and has been proven over time. The system server, the Hewlett-Packard Virtual Vault, has been used by the Department of Defense for a number of years, and the banking software was developed by 5 Paces Technology in Atlanta. The problem of authentication is harder to solve. Real-time settlement of third-party transactions will require all insured financial services institutions to agree on a central trusted authority to provide for the safety and soundness of the future electronic payment system and insure privacy of information for all involved. Not only must the authentication procedure be reliable---it must also be perceived as reliable, and implicitly trusted by buyers and sellers, if electronic commerce is to grow to its full potential. Currently, the banking industry is engaged in a collaborative effort to evaluate the technology that exists today, with a view toward the creation of such an authority. As the group most knowledgeable and experienced in handling money safely and efficiently, and which has long held the public trust in financial matters, it is to be hoped that they succeed. When they do, the answer to the question "is cyberspace safe for financial transactions today?" can be answered with an unqualified Yes." NO. Colin Crook, Senior Technology Officer, Citibank. The fact is that secure financial transactions cannot be assured today in the new and dramatically changing landscape of cyberspace. Market participants need to improve security and learn more about doing business in the electronic marketplace before providing assurance to their customers that they can safely do business there. Companies must be honest with their customers, making them aware of the risks of doing business in cyberspace and providing assurance that the enterprise values the customer's security and privacy. Today we are witnessing a series of experiments in electronic commerce, experiments conducted by all sorts of companies. These opportunities for learning-- on the part of both market participants and customers--will lead to further improved products and to levels of security that approach, or even surpass, the levels present today outside of cyberspace. The experiments are challenging the capabilities of both the technology and the enterprise itself, and the willingness of the customer to accept new and often novel ways of doing business. Customers value this kind of experimentation and innovation; however, where the customer's money is concerned, we at Citibank have learned that trust is paramount! In this context, managing the balance of the level of security with the factors of customer convenience and business opportunity becomes the focus in moving forward. Companies must manage risk so as not to compromise customer trust. Because some companies-- mostly non-traditional providers of financial services-- have released products very quickly, a major concern is that ill-conceived or hasty experiments may cause damage to the reputation of the entire marketplace. Because absolute security is impossible, an overriding consideration for security and customer trust must dominate the experiments- -which Citibank and other institutions with long histories of customer relationships emphasize in their approaches to cyberspace transactions. Customers already understand and accept the risks associated with credit cards and other financial instruments. Customers in cyberspace should be aware of the experimental nature of this new business environment and use caution before taking on the risks contained within it. As Senior Vice President and Director of Marketing and Strategic Planning at Huntington Bancshares Inc., William M. Randle has developed direct service channels, including Huntington Access, which uses teleconferencing and other electronic channels in the world's first complete virtual branch offices. On June 2 of this year, Huntington launched a Web-based bank. Colin Crook is Senior Technology Officer, Citibank. He is responsible for establishing technology policy and standards, introducing new technology, evaluating the quality and direction of system efforts, and introducing technology policy within the corporation. --- Dr.Dimitri Vulis KOTM Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps

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Financial Cryptography '97 Call for Papers
by R.Hirschfeld＠cwi.nl 17 Dec '03

17 Dec '03

Financial Cryptography '97 February 24-28 1997, Anguilla, BWI CALL FOR PAPERS General Information: Financial Cryptography '97 (FC97) is a new conference on the security of digital financial transactions. The first meeting will be held on the island of Anguilla in the British West Indies on February 24-28, 1997. FC97 aims to bring together persons involved in both the financial and data security fields to foster cooperation and exchange of ideas. Original papers are solicited on all aspects of financial data security and digital commerce in general, including Anonymous Payments Fungibility Authentication Home Banking Communication Security Identification Conditional Access Implementations Copyright Protection Loss Tolerance Credit/Debit Cards Loyalty Mechanisms Currency Exchange Legal Aspects Digital Cash Micropayments Digital Receipts Network Payments Digital Signatures Privacy Issues Economic Implications Regulatory Issues Electronic Funds Transfer Smart Cards Electronic Purses Standards Electronic Voting Tamper Resistance Electronic Wallets Transferability Instructions for Authors: Send a cover letter and 9 copies of an extended abstract to be received by November 29, 1996 (or postmarked by November 15, 1996 and sent via airmail) to the Program Chair at the address given below. The extended abstract should start with the title and an abstract followed by a succinct statement appropriate for a non-specialist reader specifying the subject addressed, its background, the main achievements, and their significance to financial data security. Submissions are limited to 15 single-spaced pages of 12pt type. Notification of acceptance or rejection will be sent to authors no later than January 17, 1997. Authors of accepted papers must guarantee that their paper will be presented at the conference. Additional Information: Conference pricing and information on travel, hotels, and Anguilla itself will follow in a separate general announcement. A very limited number of stipends may be available to those unable to obtain funding to attend the conference. Students whose papers are accepted and who will present the paper themselves are encouraged to apply if such assistance is needed. Requests for stipends should be addressed to one of the General Chairs. Those interested in becoming a sponsor of FC97 or in purchasing exhibit space, please contact the Exhibits and Sponsorship Manager. A workshop, intended for anyone with commercial software development experience who wants hands-on familiarity with the issues and technology of financial cryptography, is planned in conjunction with FC97, to be held during the week preceding the conference. For information, please contact one of the General Chairs. Send Submissions to: Rafael Hirschfeld FC97 Program Chair CWI Kruislaan 413 1098 SJ Amsterdam The Netherlands email: ray(a)cwi.nl phone: +31 20 592 4169 fax: +31 20 592 4199 Program Committee: Matthew Franklin, AT&T Laboratories--Research, Murray Hill, NJ, USA Michael Froomkin, U. Miami School of Law, Coral Gables, FL, USA Rafael Hirschfeld, CWI, Amsterdam, The Netherlands Arjen Lenstra, Citibank, New York, NY, USA Mark Manasse, Digital Equipment Corporation, Palo Alto, CA, USA Kevin McCurley, Sandia Laboratories, Albuquerque, NM, USA Charles Merrill, McCarter & English, Newark, NJ, USA Clifford Neuman, Information Sciences Institute, Marina del Rey, CA, USA Sholom Rosen, Citibank, New York, NY, USA Israel Sendrovic, Federal Reserve Bank of New York, New York, NY, USA General Chairs: Robert Hettinga, Shipwright, Boston, MA, USA <mailto: rah(a)shipwright.com> Vincent Cate, Offshore Information Services, Anguilla, BWI <mailto: vince(a)offshore.com.ai> Conference, Exhibits, and Sponsorship Manager: Julie Rackliffe, Boston, MA, USA <mailto: rackliffe(a)tcm.org> Workshop Leader: Ian Goldberg, Berkeley, CA, USA <mailto: iang(a)cs.berkeley.edu> Financial Cryptography '97 is held in cooperation with the International Association for Cryptologic Research. A copy of this call for papers as well as other information about the conference will be available at URL http://www.cwi.nl/conferences/FC97.

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[NEWS] Crypto-relevant wire clippings
by dlv＠bwalk.dm.com 17 Dec '03

17 Dec '03

New York Times, Tuesday, September 17, 1996 Intuit Selling Bill-Processing Unit For $227 Million By LAURIE J. FLYNN Intuit Inc., the United States' leading seller of personal-finance software, announced Monday that it would sell its electronic bill-payment processing business to its main competitor in that field, Checkfree Corp., for $227.6 million in stock. Intuit, which also announced widening financial losses Monday, now intends to focus on its core software businesses, while expanding its services over the Internet. The deal with Checkfree comes as Intuit is under pressure from the banks it works with, which want to expand their options for electronic bill-processing. Currently, banks wishing to provide electronic services to consumers using Intuit's popular Quicken personal-finance software have had to operate through Intuit's bill-processing subsidiary, Intuit Services Corp. Lately, consumers and financial institutions have shown a preference for conducting business over the Internet rather than over proprietary networks like Intuit Services. But while Intuit had come to view bill processing as a costly distraction, Checkfree said that adding Intuit's operations would be a cost-effective way of expanding its own main line of business. Checkfree, based in Columbus, Ohio, markets its electronic transaction-processing services exclusively to banks and other financial institutions. Those customers use Checkfree's services to provide home banking and bill payment to consumers. Unlike Intuit's network, Checkfree's operations will work with a variety of personal-finance programs. With the acquisition of the Intuit Services unit, Checkfree gains Intuit's relationships with 39 banks and more than 300,000 electronic bill-processing customers, bringing its total number of bank customers to 181 and its consumer base to nearly 1.2 million. The companies, both of whose stocks surged on the news, said they expected to close the deal by the end of the year, pending regulatory and shareholder approval. Intuit's stock rose $2.125 a share Monday, to $32.25; Checkfree gained $3.1875, to $21.25. Wall Street analysts applauded Intuit's decision to withdraw from what they said amounted to the back end of the transaction-processing business, at a time when more full-fledged electronic commerce may finally be catching on. In the future, analysts said, Intuit's best on-line opportunities will be in providing a consumer ``interface'' to the Internet, rather than getting bogged down in the pipes and plumbing of transaction processing. And while Intuit remains the leader in its core business - personal financial-management software - the company is facing increased competition from Microsoft Corp., maker of a program called Microsoft Money. Microsoft had agreed to acquire Intuit in October 1994 in a deal worth roughly $2 billion, but abandoned that plan last year under antitrust scrutiny from the justice department. ``It's a strategy shift,'' Lise Buyer, an analyst at T. Rowe Price in Baltimore, said of Intuit's announcement. ``But it's impressive that Intuit is willing to reverse course so quickly.'' Scott Cook, founder and chairman of Intuit, which is based Menlo Park, Calif., said that transaction-processing had become a distraction. ``It was a sizable investment of dollars but also of management time and resources, in a business that is not central to our core competencies,'' Cook said. As a result of the deal, which includes the transfer of 12.6 million shares of Checkfree stock, Intuit will acquire a 23 percent stake in Checkfree. Intuit executives said they planned eventually to reduce the company's share to 19.9 percent, in order to operate as a minority shareholder and not have to carry Checkfree's results on Intuit's books. Intuit also announced widening losses for its fiscal fourth quarter ended July 31, which it attributed to recent acquisitions of companies that included Interactive Insurance Services Corp. Including charges, the fourth-quarter net loss grew to $22 million, or 48 cents a share, from $1.4 million, or 3 cents a share, a year earlier. That was in line with analysts' expectations. Checkfree's chief executive and chairman, Peter Kight, said that his company would lose money in 1997 as a result of the Intuit Services acquisition. But he called it a necessary step, as banks step up their on-line efforts. While the Checkfree acquisition may be subject to government scrutiny, neither analysts nor the companies expect any antitrust delays - primarily because there are other large competitors in the electronic check-clearing business. Last week, for example, IBM added itself to that list, with the announcement of Integrion, a venture with 22 banks to provide electronic bill-processing and other transactions. The Checkfree deal will enable Intuit to concentrate on its growing array of Internet-based on-line services. Bill Harris, Intuit's executive vice president, said Intuit would begin to offer ``front-end'' banking services over the Internet by late next year. American Banker: Tuesday, September 17, 1996 Rumors of MasterCard's Plans To Buy Mondex Nearing Reality By VALERIE BLOCK MasterCard International is nearing an agreement to acquire Mondex, the stored value smart card technology developed by National Westminster Bank of London. The deal, which has been the subject of months of negotiations and rumors, was hinted at in a speech that MasterCard president H. Eugene Lockhart made in China 10 days ago. Officially, MasterCard and Mondex refused to comment, but sources inside both companies confirmed that a deal is imminent. Mr. Lockhart said in his speech that MasterCard would announce a major acquisition in the chip card sector in the next month. According to Reuters, he said the acquisition "would be global in scope and involve an alliance of 20 major banks." He also said MasterCard would own the "intellectual property rights stemming from the deal." National Westminster spun off its smart card unit in July, creating Mondex International Ltd., a joint venture with 17 bank partners worldwide. With three Japanese banks close to announcing Mondex franchises, the 20 banks referred to by Mr. Lockhart would be accounted for. Mr. Lockhart also told Reuters that People's Bank of China is considering a smart card launch. He may have mentioned the pending agreement to entice the bank. Mr. Lockhart was in China to promote Maestro, MasterCard's on-line debit brand, which will now be available through the Agricultural Bank of China. Industry observers thought Mondex's incorporation in July laid to rest rumors of a MasterCard takeover, which were circulating all summer. But it may have served to make the smart card company more attractive. "Before the announcement, Mondex looked a little tenuous," said a knowledgeable source. "After the (incorporation), it looked like something of value." The source also said that MasterCard's smart card strategy, which began with considerable fanfare more than two years ago, has fallen short of expectations, prompting Mr. Lockhart to seek a remedy. MasterCard's major smart card venture has been a pilot in Canberra, Australia, which started nine months ago. Visa, by contrast, is running several tests of its stored-value system globally. Several executives responsible for MasterCard's early efforts, including Philip Verdi and Robin Townend, have left the company in recent months. The deal would be a boon to both companies, sources said. While Mondex has increased its clout with incorporation, it's still facing "an uphill battle" to achieve worldwide acceptance, said the source. "Distribution is what you could assume Mondex is after," he added. National Westminster retained ownership of Mondex patents and trademark. It stands to recoup its substantial investment in the technology -- on top of a potential $150 million from Mondex franchise owners -- if the MasterCard deal is consummated. The bank remains a minority shareholder in Mondex International. Though the industry pooh-poohed National Westminster's initial efforts to put the fledgling payments system on the map, persistent marketing -- coupled with a strong technological base -- seems to be paying off. Electronic wallets, smart phones, and card-to-card monetary transfers set Mondex apart from some less ambitious smart card programs. With powerful investors like Wells Fargo & Co. in the United States, Royal Bank of Canada, as well as Hongkong and Shanghai Banking Corp., the new brand has gained credibility as a major contender in the chip card market. "Mondex blazed a trail," said Peter Hall, PSI International's managing director of consulting in London. MasterCard would be "buying into a pool of knowledge, buying into the partners," he added. Card industry sources said MasterCard and Mondex have many details to address before they can conclude a deal, including corporate structure and governance. One of the biggest issues will be whether to retain the Mondex trademark or "go with the strength of the MasterCard brand," said a source close to the deal. That decision will be made "down the road," he added. The deal is expected to close within three months. No papers have been signed to date. American Banker: Tuesday, September 17, 1996 Chase to Offer Dealerships Auto Loan Decisions Over Internet By DREW CLARK Chase Manhattan Corp.'s auto financing division has begun using the Internet to provide dealerships with loan-approval decisions. The bank is the first of eight financial institutions that have committed to using the system, developed by International Business Machines Corp. By computerizing loan applications and sending data electronically, Chase officials said the bank can grant approvals in as few as two minutes. "It reduces my costs and adds to dealer satisfaction by getting a quick turnaround," said James B. Brew, president of Chase Automotive Finance Corp. Up to 50% of the division's auto loans will be running through the system within the next 18 months, he said. Chase, the largest car lender not affiliated with a car company, is connected to six dealerships currently using the system and will establish connections to 100 dealers with the official introduction in October. Other financial institutions planning to use the on-line system include NationsBank Corp., Charlotte, N.C.; GE Capital Auto Financial Services Inc., Barrington, Ill.; Regions Financial Corp., Birmingham, Ala.; and Citibank Puerto Rico. The auto finance program, residing on the dealer's personal computer, features a user-friendly screen display with step-by-step instructions and error checks. Auto dealers can manually override the screens. The dealer's computer is connected to the Internet through the IBM Global Network, which is also used to retrieve an encrypted report from a credit bureau. The dealer's pre-established "key" decodes the report and causes the screen to display one, two, or three stars - representing poor, fair, or good credit. This gives the dealer an idea of which financial institutions are most likely to approve the loan. "If the consumer is looking over the dealer's shoulder, they don't see the word 'loser' flash on the screen," said Neil Lustig, manager of the project for IBM, explaining the rating system. Although Chase currently is the only bank with a direct Internet connection to the system, the dealer can still send loan applications to other institutions by adding their fax numbers to the screen display. "We piloted this in our Saturn dealership, and it lent to the customer- friendly atmosphere perfectly," said John Burns, a dealer in Hempstead, N.Y. The system costs about $700 a month, but it can also replace existing printers and fax machines. "The old system involved faxing applications which came back with the credit worthiness in a few hours," Mr. Burns said. Now, "the information is going in immediately and is analyzed immediately. If there is a glitch, you can discuss it." IBM said it plans to extend connections for peripheral services like auto insurance and extended warranties. In about a year, the company plans to publish a World Wide Web site offering auto insurance directly to individual customers, said Mr. Lustig. "When enough people use the Internet, the economic model will change," he said. "If we did that today, we would just disintermediate the dealerships." News Release (Wired): Tuesday, September 17, 1996 Citibank's Retired CEO Walter Wriston on the Future of Money SAN FRANCISCO Though he's in his 70s, Walter Wriston may be the world's most wired banker. As chairman and CEO of Citibank in the '60s, '70s and '80s -- a time when money began turning itself into digital bits and bytes and flowing around the world via satellite transponders and fiber-optic cables -- Wriston was a major force in the creation of the modern, global, technological financial system. Wriston retired in 1984, but his vision of banking is still cutting-edge. In an interview with Thomas Bass in the October issue of Wired, Wriston talks about digital money, the new economy, and prospects for the nation-state in an increasingly borderless, networked world. During Wriston's reign, Citibank became the banking industry's technology leader, guiding its customers away from the local teller window toward a new way of banking -- automated, online, checkless, and international, based on distributed networks of computers and ATMs. When Wriston retired, Citibank was the largest bank in the country, and its investment in computer hardware and software approached US$1.75 billion. In a revealing exchange, Wriston doubts whether banks will be running the financial supermarkets of the future as they continue to lose ground against non-bank financial powerhouses, such as Merrill Lynch and General Electric. Wriston says the future of cash lies in smartcards. Already in wide use in France, Japan, and Germany, smartcards can be secure and rechargeable, protected by digital photographs or DNA signatures. According to Wriston, the creation of an international standard for encryption is inevitable "because it's necessary for the safety of the world." What about the export controls on strong encryption imposed by the U.S. government? Wriston says to lift them: "You can buy better stuff in Europe than you can here. We don't have a monopoly on brains." As for censorship on the Net? "There is no way on God's green Earth the government can exercise censorship of the Net in any meaningful way." On the nature of markets, Wriston believes the spread of economic freedom leads to the spread of political freedom. "Markets are self- correcting. That's why I trust markets more than governments. Governments usually aren't self-correcting, until it's too late." Find out why the value of money is hooked to nothing other than the information that flows through it -- in the October issue of Wired. Thomas Bass is the author of "The Eduaemonic Pie." His latest book, "Vietnamerica: The War Comes Home," is published by Soho Press. Wired 4.10 is available on newsstands for US$4.95, by calling 800/SO WIRED, or by sending email to subscriptions(a)wired.com. Fortune: September 30, 1996 What's New About Digital Cash? By Justin Fox E-money is coming, and it's about time. The advance of "smart cards," digital checks, and Internet cash will change how people shop and do business. Banking should become more efficient and less aggravating. It may even become possible to make money on the Net. But don't let all the conferences, cover stories, and alarmist pronouncements on the subject get you too excited--or scared. E- or no e-, it's still just money. For currency traders and others dealing in huge sums, who have long been able to zap billions of dollars across the globe in seconds, money as electrons isn't anything new. Nearly 90% of the money that changes hands in the U.S. every day does so electronically. It's that other 10%, which slouches along in the form of cash and checks, that e-money promises to change. And why not? Would anyone wax nostalgic about today's unbearable slowness of check clearing, in which banks that do their bookkeeping on computers hire fleets of airplanes to fly bundles of paper checks around the country every night? It will be years before the planes are grounded, but there are already signs of hope. Lots of regular transfers, like paychecks, are already handled electronically; banks are offering checklike debit cards; and Visa is testing utility bills that are sent out and paid online. Visa, Mastercard, and a British multibank venture called Mondex are rolling out chip-based smart cards that can store digital cash. The card companies, banks, and assorted startups are on the verge of making it easy and (relatively) safe to pay for things over the Internet. These e-money peddlers smell huge opportunities in the $ 4 trillion of U.S. consumer purchases that are still paid for each year with cash and checks. "If we can just electronify a small percentage of that, you can see what that will do to our business," says Carl Pascarella, CEO of Visa USA. A few problems need solving before e-money achieves ubiquity--like fraud and consumer resistance. But credit cards overcame similar problems in the 1960s, and like credit cards, e-money is too compelling not to take off. E-money costs much less to handle than paper cash or checks, and it offers consumers the ease and safety of credit cards without many of their limitations. (Credit card transaction costs make small payments uneconomical; they can only be used to buy things from merchants who are part of the card network; and they do not offer the protection of anonymity.) When e-money does hit it big, it will profoundly change--and greatly expand--electronic commerce. Software could be paid for on a per-use basis--a tenth of a cent a time, say. Journalism could be bought by the article. Anybody could set up an online business and instantly rake in revenue. What e-money probably won't do, however, is fundamentally transform the nature of money, although a lot of technoprophets think it will. Auguries tend to vary on a theme: Money and central banks as we know them will disappear, national currencies will become extinct, etc. A particularly alarming Web tract on the topic predicts we'll all be tattooed with something akin to a universal pricing code to make sure we're not using someone else's smart card. Hidden in the code will be the numbers "666." And we all know what that means. Mainstream economic theory has no answer for the 666 contention, but the other concerns (or hopes, depending on who's talking) are pretty easily dismissed as overheated hoo-hah. The one truly revolutionary change in money over the past couple of centuries has been the switch from coins made of precious metals to notes made of paper. It was in 1971, when the world's major currencies threw off their last remaining shackles to gold, that money became imaginary stuff, its value derived purely from trust. Compared with that, switching from paper imaginary money to digital imaginary money simply isn't that big a deal. It won't expand the money supply. It won't of itself make national currencies irrelevant. Digital money can indeed move faster, over mountains and across borders, than paper checks or cash--hence reducing governments' ability to control its flow. But the big money started moving this way in the 1970s, at the time setting off all sorts of alarms about the loss of central bank power. "The striking parallels give the distinct impression that 'we've been here before,' " Fed governor Edward Kelley said at a recent conference. "Then as now, the potential impact on monetary policy of new electronic payment products has been greatly exaggerated." Fed governors can be wrong, of course. But since much economic activity will remain forever off line, it's hard to see how e-money could entirely supplant national currencies in the real world. Unless technology makes it possible to digitally pay for and deliver, say, a pizza. When that happens, there will be no denying it: E-money (and e-anchovies) will have transformed the world. --Justin Fox --- Dr.Dimitri Vulis KOTM Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps

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Public Apology
by Chip Mefford 17 Dec '03

17 Dec '03

A feller let me know this afternoon that I have been posting with a really irritating .sig I didn't know that sucker was on there. I'm really sorry

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[NEWS] Crypto-relevant wire clippings
by dlv＠bwalk.dm.com 17 Dec '03

17 Dec '03

Washington Post: Monday, September 16, 1996 Players With Paperless Money By Michelle Singletary Banking via personal computer is expected to increase 600 percent in the next two years, according to a 1996 technology report by the American Bankers Association and the Ernst & Young accounting firm. Telephone banking is predicted to grow 50 percent over the next two years and some experts estimate that 30 percent of U.S. households will be banking electronically by 2000. Little known to most consumers, the Washington area is home to a small but burgeoning subset of the electronic banking industry. The companies in this emerging market, many of them clustered in Northern Virginia, are helping to build the technological infrastructure that is rapidly changing how, when and where consumers bank. Companies such as US Order, Online Resources & Communications Corp., Transaction Network Services (TNS), Visa Interactive and CyberCash Inc., all based in Northern Virginia, are members of a group of start-up technology companies that are helping facilitate the delivery of electronic and phone banking services. "The D.C. area has a nice cross section of aggressive and innovative home banking players," said Phoebe Simpson, an analyst with New York-based Jupiter Communications Co., a market research firm for the on-line industry. Banking and technology experts agree that these Northern Virginia companies have become integral partners with banks in building the infrastructure that will support electronic commerce. They are selling the software, hardware, processing services, communication linkups and back-office support systems that enable financial institutions to interact with their customers outside of bank branches. While bank offices are not in danger of disappearing, bankers are increasingly looking for lower-cost delivery channels. Most are turning to outside electronic commerce companies to help them set up their own on-line or phone banking systems. "What we have now is banking without boundaries. Banks now need to cooperate and collaborate with a whole new source of channel operators," said Richard Crone, vice president and general manager of CyberCash. "Our charter is to empower customers to do their banking anywhere, any time or with anything." One reason many of these companies have set up shop here, said company executives and banking consultants, is to be near such technology firms as Washington-based MCI Communications Corp., Dulles-based America Online Inc. and PSINet Inc., an Internet access company based in Herndon. "We are the de facto Silicon Valley for on-line information companies," said John J. McDonnell Jr., president and CEO of TNS of Reston. The company has developed a low-cost system for facilitating high-speed, point-of-sale transactions, such as those made with credit or debit cards. Many company executives said they decided to launch their firms in Northern Virginia because of its proximity to banking regulators and lawmakers, who are trying to determine how electronic banking technology will affect consumers and what laws might be needed to protect customers. "This industry is important and will have a lot of regulatory need," said David Weisman, director of money and technology strategies for Forrester Research Inc., a consulting firm in Cambridge, Mass. But chief among the reasons for the growing number of electronic banking companies is the Washington area's highly skilled labor force, Weisman said. The labor pool in the area is overflowing with engineers and others with telecommunications and software experience, said Matthew P. Lawlor, chairman and CEO of Online Resources in McLean. For the most part, the on-line technology companies in this region don't compete with one another, experts said. Instead, each has positioned itself to fill certain niches in the electronic banking industry. In fact, many of the companies are linked financially or have developed partnerships. For example, TNS got its start-up capital of $ 1.5 million from William N. Melton, CyberCash's co-founder. US Order sold its core on-line banking operations to Visa Interactive, and 50 of its employees went to work for the newly formed company. Now the two companies market each other's services. "This is a monstrous market and no single organization is going to dominate," said William Gorog, chief operating officer of US Order. Gorog said CyberCash's concentration on developing secure payment systems for electronic commerce on the Internet is good for US Order's business. CyberCash, based in Herndon, currently uses encryption technology for secure transmission of credit-card data. Online Resources has decided to go after small and medium-size banks to sell its home banking services. Online's services include home banking via computer, bill-paying software, screen-based telephones and interactive voice response systems for touch-tone telephones. "A company like Online Resources allows a small bank like us to get into this technology at a much more reasonable rate," said Frank Bentz, vice president of communications for Sandy Spring National Bank, an Ol ney-based banking institution with assets of $ 920 million. Visa Interactive of Herndon, which offers some of the same services as Online Resources, has signed up some of the nation's largest financial institutions including Banc One Corp. of Ohio, Barnett Banks Inc. of Jacksonville, Fla., and the Pentagon Federal Credit Union, the second-largest credit union in the Washington area. "These companies are the pioneers in this industry," said James Wells, managing director for electronic commerce at Washington-based Furash & Co., a financial services consulting firm. "By and large, the technology and innovation that is facilitating electronic commerce is not coming out of the banks." Although experts said the electronic commerce companies in Northern Virginia are still relatively small, they are creating a significant base of high-paying technical jobs. Software developers at TNS earn $ 50,000 to $ 85,000 annually, according to McDonnell. "This is not minimum-wage work," McDonnell said. "We have not spawned a lot of jobs but you have to look at the trickle-down effect. We pay big salaries so our employees can buy big cars." In just two years, CyberCash has quadrupled its employment to 160, half of whom work in the area. TNS has 110 employees, up from 45 just two years ago. Online Resources, which had 50 employees at the end of last year, now has 80. In the next several months, the company expects have 100 employees. "I think that the idea of creating brand-new companies and employing a hundred-plus people, especially at high-end salaries like what engineers make, will have a definite impact on the area," said Magdelena Yesil, one of the founders of CyberCash who recently left the company to start another technology firm. "People are beginning to see Virginia as an area similar to Silicon Valley, an area for launching technology companies. There is a sense of excitement." Transaction Network Services Like many entrepreneurs, John J. McDonnell Jr. was working for another company when he came up with the idea for TNS. McDonnell had been president and CEO of Digital Radio Network Inc., a Tysons Corner firm that used radio waves to carry point-of-sale transactions. McDonnell discovered that a fast-dial service could be created to carry the signal using the 950 dial-up access offered by local telephone carriers. McDonnell said he took this idea to Digital Radio's directors, but they weren't interested. So, he asked if he could trade in his stake in Digital Radio -- 4 percent of its stock -- in exchange for the right to start up a company using the idea for the transaction-oriented system. He left Digital Radio in 1989. In less than five years, TNS has become one of the biggest players in this electronic banking niche. TNS processes about 2.2 billion point-of-sale transactions a year and has captured about 30 percent of the market. The company was profitable after its first year, McDonnell said. For its most recent quarter, ended June 30, TNS reported net income of $ 1.5 million (12 cents a share), a 36 percent increase from income of $ 1.1 million (10 cents) for the same period a year earlier. The company had a year-over-year increase of 66 percent in transaction volume from its point-of-sale division. On June 3, 1991, the first day of of its operation, TNS carried 43 transactions from two Sizzler steakhouses in Arlington, McDonnell said. At 3 cents a transaction, the company generated $ 1.29 in revenue that day. On June 3, 1996, the company handled 5.6 million transactions at an average cost of 2 cents -- taking in $ 118,000 for the day. "I am a happy man," McDonnell said. Online Resources & Communications Corp. Matthew P. Lawlor views Online Resources as a one-stop shop for banks that want to provide electronic banking options for their customers. "My vision is that there will not be a single device that will be the winner in on-line banking," Lawlor said. Instead of guessing which new electronic banking technology consumers will embrace, the chairman and chief executive of Online Resources has decided to offer a full range of services to banks. Lawlor sees a future in which consumers will want to link up to their bank via touch-tone phone, personal computer, a specially designed screen-based telephone, television set or other devices that have not yet been designed. "In essence, the technology is moving so fast, half of what we do is keeping up with it," Lawlor said. Lawlor said he has positioned Online Resources to provide small and medium-size financial institutions with any of the applications and support systems they need to market interactive bank services. In a year, privately held Online Resources has gone from a client list of seven financial institutions to 42 today, including Washington-based Riggs Bank, First Virginia Banks of Falls Church and Baltimore-based Harbor Bank. "In the very beginning, we focused on the big guys but many of these big banks have their own technology people," he said. "Many of the small and mid-size banks need our skills." CyberCash Inc. CyberCash executives are quite clear on their company's role in electronic banking: It is a contractor building the "infostructure" that will allow banks to link up to their customers in cyberspace. "If you asked a banker 10 years ago what business he was in, he would say loans, deposits and transactions," said Richard Crone of CyberCash. "That's like saying Amtrak is in the railroad business, when they are in the transportation business. Banks today are in the information business," he said. "The value they have, for example, is informing someone that their loan has been prequalified." Crone thinks the personal computer is the bank branch of the future, through which hundreds of thousands of customers will want to conduct their banking and bill-paying business. "Consumers are going to be looking for the electronic connections that will let them reach out to the banks any time and anywhere," he said. To help move that process along, CyberCash has developed and will soon begin to test software that would allow credit card firms, utility companies and other businesses to securely receive their bills over the Internet. CyberCash is banking that consumers will want to review their bills this way and that with a double-click of a mouse will access an account and pay their creditors electronically. "We want to provide the ability to fund value in an electronic wallet," Crone said. Visa Interactive In 1994, Visa Interactive, a subsidiary of Visa International, entered the on-line industry by purchasing the electronic banking and bill-paying operations of US Order. Now, experts are predicting that Herndon-based Visa Interactive, with its credit-card ties to thousands of financial institutions, could catapult ahead of competitors such as Online Resources. The company has signed up more than 90 financial institutions for its remote banking services. Visa's goal, like those of other remote banking firms, is to build a network of services that preserve financial institutions' identities and customer relationships, much like its parent does with its credit-card services. "I think you will see, two years down the road, that Visa Interactive will have a rich offering of services and they will be among the major players in terms of revenue," said Simpson of Jupiter Communications. US Order Although Herndon-based US Order sold a core part of its home banking services to Visa International two years ago, it is still a key player in the electronic commerce industry. "We are right in the middle of the electronic banking business," said John C. Backus, US Order's president and chief operating officer. Among its services are bank-branded customer service, centers that handle calls for phone banking, touch-tone telephone voice recognition hardware and software systems for home banking. It also sells PC-based remote banking technology and screen-based telephones, which at a retail cost of $ 299 can dial into a consumer's bank, provide stock quotes, sports scores, news and weather information or a nationwide directory assistance service. "We enable the banks to open up the whole range of electronic commerce," said Gorog, US Order's CEO. Gorog said he's excited that his company and other Northern Virginia firms are part of an industry redefining consumer banking. "The opportunity to change the banking business is exhilarating," Gorog said. "It's so exciting that we are changing people's banking habits." Time: September 23, 1996 Cashless, Not Bankless By Adam Zagorin After watching everyone from Microsoft to Meca Software gobble up online-banking customers, banks have become eager to prove that they're not headed for extinction. Last week IBM and a group of 15 U.S. and Canadian banking behemoths, including Bank of America, Banc One and Mellon Bank, unveiled a venture that aims to provide a full range of financial services to the banks' 60 million customers at the touch of a telephone button or the click of a mouse. Called Integrion, the partnership will phase in such activities as bill paying, electronic lending and stock and bond trading beginning next year. "If we are dinosaurs," says Robert Gillespie, the chief executive of Cleveland-based KeyCorp, "then we're putting competitors on notice that a new breed has evolved with a voracious appetite for expanded market share." Perhaps so, but the new predators have some catching up to do. Fewer than 300 U.S. banks have set up Internet sites. Most analysts give the holdouts four years to either get wired or get left far behind. Consumers can already pay bills and check balances through computer networks like America Online and CompuServe. Microsoft, too, has been signing up banks to provide electronic financial services. Integrion plans to battle the software giant by linking consumers to accounts through the Internet, and with financial software like Intuit's Quicken. The partners will also set up interactive kiosks that act like bank branches for home banking away from home. "With this new venture," says IBM chairman Louis Gerstner, "electronic commerce will take its biggest step forward to date." The ambitious project will join a host of so-called E-money experiments that are popping up around the globe. The goal is to replace cash and checks with electronic transactions that cost just pennies to process. Citibank, a leader in this push for a cashless society, is developing what it calls an Electronic Monetary System that will permit consumers and companies to make payments electronically anywhere in the world. Visa, fresh off a test of 300,000 smart cards--plastic embedded with a cache of electronic cash--at the Atlanta Olympics, will soon launch similar projects in 14 other countries, including Canada, Australia and in Hong Kong. E-money devotees like Valerie Baptiste, a San Francisco secretary, think cash is passe. Baptiste pays for her morning bagel and decaf with a smart card designed by Britain's Mondex and being tested in the U.S. with partners that include Wells Fargo and AT&T. As other customers fumble with change, Baptiste hands her card to a cashier who takes less than five seconds to punch it into a machine that deducts $ 2.15 from the stored-up funds. "This is the beginning of the end of cash," Baptiste says. Unless banks charge swiftly into the E-money era, it could be the end of many of them too. Associated Press: Tuesday, September 17, 1996 Merchants Like Smart Cards to Keep Tabs on Customers By PATRICIA LAMIELL Merchants are attracted to "smart cards" as a way to gather information about their customers, according to a survey released Monday by a group promoting the plastic cash cards that are embedded with a computer chip. Results were released at the opening of the two-day convention of the group, the Smart Card Forum, which also is trying to to convince the public that smart cards are protected and confidential. Customers can use smart cards like debit cards or automatic teller cards, to pay for anything from gas to groceries. Because the card also has a computer chip, it can keep track of what consumers buy and when, and how much they spend. "A smart card can store data about customers, such as product preferences, spending history, and important information that can help provide improved personalized customers service," said Cliff Wilke, vice president for business development at Mobil Oil Credit Corp. Polls done by the Harris organization and the forum have shown that consumers are receptive to using smart cards but concerned about storing personal data on them. In a 1995 forum study, 70 percent asked what safeguards exist to prevent unauthorized access to their personal, financial and medical information. Merchants surveyed by the Smart Card Forum said the cards made transactions quicker and cheaper for them. They also said the cards made it easy to gather information on customers for use in marketing and promotional programs, and for loyalty programs like frequent flier miles. Most merchants surveyed said they believed consumers spend more when they pay with a credit or debit card than when they pay with cash. The study found other benefits to merchants such as theft prevention. The study also indicated that the cards don't have to be used that much to make them cost-effective for the merchant. "Grocery stores, convenience stores, movie theaters and gasoline retailers indicated that a mere 2 to 10 percent - an extremely low threshold of consumer demand - is required for them to realize the benefits of smart cards," the group said. While the survey results released by the forum highlighted selling points for the cards, recent tests have revealed obstacles to be overcome to win merchant and consumer acceptance. Consumers were frustrated when they found some merchants listed in smart card directories either had not installed equipment for using the cards or stopped using the equipment because of malfunctions, according to an independent study of the Visa Cash Card tests at the Olympics in Atlanta. But that study, released earlier this month by Brittain Associates Inc., also reported that most smart card users said they found the card attractive and would use it in the future if the number of merchants accepting it increased dramatically. The Smart Card Forum interviewed 65 major merchants in 11 categories, such as grocery, gas, convenience stores, drug stores, restaurants and theaters. Established in 1993, the forum has more than 225 corporate and government members including Chase Manhattan Corp., Citibank, MCI Communications Inc., MasterCard, Visa, International Business Machines Corp., Microsoft Corp., Mobil and Delta Air Lines Inc. Federal agency members include the Postal Service, the Federal Reserve, and the treasury and defense departments. --- Dr.Dimitri Vulis KOTM Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps

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CDT Policy Post 2.32 - FBI Surveillance Demands Rejected on Privacy Grounds
by editor＠cdt.org 17 Dec '03

17 Dec '03

----------------------------------------------------------------------------- _____ _____ _______ / ____| __ \__ __| ____ ___ ____ __ | | | | | | | | / __ \____ / (_)______ __ / __ \____ _____/ /_ | | | | | | | | / /_/ / __ \/ / / ___/ / / / / /_/ / __ \/ ___/ __/ | |____| |__| | | | / ____/ /_/ / / / /__/ /_/ / / ____/ /_/ (__ ) /_ \_____|_____/ |_| /_/ \____/_/_/\___/\__, / /_/ \____/____/\__/ The Center for Democracy and Technology /____/ Volume 2, Number 32 ---------------------------------------------------------------------------- A briefing on public policy issues affecting civil liberties online ---------------------------------------------------------------------------- CDT POLICY POST Volume 2, Number 32 September 20, 1996 CONTENTS: (1) FBI Demands for Broad New Surveillance Power Rejected on Privacy Grounds (2) CDT Background Memo on the FBI Demands (3) How to Subscribe/Unsubscribe (4) About CDT, contacting us ** This document may be redistributed freely with this banner intact ** Excerpts may be re-posted with permission of <editor(a)cdt.org> ** This document looks best when viewed in COURIER font ** ----------------------------------------------------------------------------- (1) FBI Demands for Broad New Surveillance Power Rejected on Privacy Grounds A telecommunications industry standards body on Thursday voted to reject a demand by the FBI to create a national tracking system out of the wireless telephone network. CDT applauds this decision as a significant victory for privacy and condemns the FBI's blatant efforts to subvert the specific requirements of the Communications Assistance for Law Enforcement Act (CALEA, also known as "Digital Telephony"). "The FBI is demanding that every cell phone double as a tracking device, providing instant and continuous location information not just when a subject is talking but whenever a cellular phone is turned on. " said CDT Executive Director Jerry Berman. "The FBI is demanding real-time tracking of anyone suspected of committing a crime. This is a clear violation of the statute and the Fourth Amendment." Berman added At issue are technical standards currently being drafted to implement the 1994 law. The FBI, which holds an influential position within the industry standards process, has demanded that the wireless telephone network be designed in a way that would allow real time tracking of individuals suspected of a crime. Specifically, the FBI is demanding that wireless networks be designed to facilitate: * Tracking of the physical location of a subject any time a cellular phone is turned on (even if no call is being made or received) * Tracking of the physical location of a subject when a cellular phone moves within a service area or moves to another carrier's service area * Tracking of the physical location of a subject when a cellular phone makes or receives a call * Delivery of this information to law enforcement in real time (within 500 milliseconds) Although law enforcement currently has the authority to obtain certain location information through a search warrant, the standards proposed by the FBI would have allowed access to far more detailed location information under a lower standard. "The law was designed to freeze the FBI in time, not as a blank check to the FBI to design the telecommunications network any way it pleased." Berman said. "The FBI's demands go far beyond what's permitted under CALEA and contradict statements by Director Freeh before Congress 2 years ago." The drafters of CALEA specifically stated that the statute was not designed to expand law enforcement surveillance authority. The Committee report on the legislation notes: "The FBI director testified that the legislation was intended to preserve the status quo, that it was intended to provide law enforcement no more and no less access to information than it had in the past. The Committee urges against over broad interpretation of the requirements." -- House Judiciary Committee Report to Accompany H.R. 4922. Rept. 103-827 Part 1, Page 22 NEXT STEPS In order to ensure public oversight and accountability over the FBI's surveillance authority, CALEA requires the government to reimburse the telecommunications industry for the costs of meeting the statute's requirements. Congress is currently considering a mechanism to fund the implementation of the law. CDT urges the Congress to exercise its oversight role to determine whether the FBI is seeking to use CALEA to expand current surveillance capabilities contrary to the specific intent of the law. Unless and until the FBI clarifies its intent and justifies its demands, Congress should not allow the expenditure of any funds to implement CALEA. CDT and a ad-hoc task force of other privacy organizations and telecommunications industry representatives are currently conducting a review of electronic surveillance issues at the request of Senators Patrick Leahy (D-VT) and Arlen Specter (R-PA). The task force report will cover the implementation of CALEA and will be released within the next few months. CDT stands ready to intervene again at the standards setting process and before the FCC if necessary in order to ensure that privacy is protected as CALEA is implemented. The Center for Democracy and Technology is a Washington DC based non-profit public interest organization focusing on free speech and privacy issues in new computer and communications technology. CDT can be found on the World Wide Web at: http://www.cdt.org/ ----------------------------------------------------------------------- (2) CDT BACKGROUND MEMO ON THE FBI DEMANDS FBI SEEKS TO USE CELLULAR TELEPHONES AS TRACKING DEVICES The FBI is demanding the telecommunications industry design cellular telephone networks in a way which would allow law enforcement to track the physical location and movements of individuals in clear violation of the law. This effort by the FBI raises grave privacy concerns and must be rejected by the telecommunications industry. In ongoing discussions with a Telecommunications Industry Association committee established to set technical standards to implement the Communications Assistance for Law Enforcement Act (CALEA, P.L. 103-414, also known as the "Digital Telephony" statute), the FBI is requesting surveillance capability far beyond current law enforcement capabilities and in clear violation of the scope of the law. CALEA was not designed as a blank check from Congress allowing law enforcement to design the telecommunications network to expand existing surveillance capability. Rather, the statute was carefully balanced to ensure that law enforcement maintain the status quo. This overreaching by the FBI raises serious privacy concerns and clearly violates the balance struck by CALEA. CDT strongly urges Congress to refrain from approving any funding for the implementation of CALEA until the FBI makes its intentions clear. FBI Demanding Location Information In Clear Violation of the Statute The FBI's request is contained in a proposal called the Electronic Surveillance Interface (ESI), which specifies the design of the interface between the telecommunications network and law enforcement's own surveillance equipment. The FBI has refused a formal request by CDT to view a copy of the ESI. However, documents obtained from a meeting of the FBI and the telecommunications industry on September 12 indicate that the FBI is demanding that cellular networks be designed to deliver location information to law enforcement. Specifically, the ESI states that cellular networks must be designed to provide the geographic location of a particular subject: The ESI states: R7-62 The SSM (Surveillance Status Message) shall be delivered to the LEA (Law Enforcement Authority) whenever the subject changes location or between systems and this location is available to the IAP (Intercept Access Point) In short, the FBI is requesting that the cellular network be designed to report the geographic location of an individual subject: 1. When a cellular phone is turned on (even if no call is made) 2. When a cellular phone moves within a service area or moves to another carrier's service area. 3. When a cellular phone makes or receives a call. The FBI claims that location information has to be provided to law enforcement under CALEA because it is part of "call setup information." However, in his testimony before a joint hearing of the House and Senate Judiciary Committees on March 18, 1994, FBI Freeh director stated exactly the opposite: "Several privacy-based spokespersons have criticized the wording of the definition (of call setup information)... alleging that the government is seeking a new, pervasive, automated 'tracking' capability. Such allegations are completely wrong.... In order to make clear that the acquisition of such information is not... included within the term 'call setup information' we are prepared to add a concluding phrase to this definition to explicitly clarify the point: '*** except that such information [call setup information] shall not include any information that may disclose the physical location of a mobile facility or service beyond that associated with the number's area code or exchange.'" (Testimony of FBI director Louis Freeh before a joint hearing of the House Judiciary Subcommittee on Civil and Constitutional Rights and the Senate Judiciary Subcommittee on Technology and the Law, March 18, 1994. S. Hrg 103-1022). The drafters of CALEA noted in the Committee report that the statute was not designed to expand law enforcement surveillance ability: "The FBI director testified that the legislation was intended to preserve the status quo, that it was intended to provide law enforcement no more and no less access to information than it had in the past. The Committee urges against over broad interpretation of the requirements." (House Judiciary Committee Report to Accompany H.R. 4922. Rept. 103-827 Part 1, page 22) The FBI's demand that all wireless communications equipment provide the physical locations of a subscriber at all times goes raises obvious privacy issues and goes well beyond the scope of CALEA and the explicit statements of the FBI. No Funds Should Be Appropriated to Implement CALEA Until This Issue is Resolved In passing CALEA, Congress sought to preserve law enforcement's ability to conduct electronic surveillance as new communications technologies are developed. At the same time, Congress was very clear that the law was designed to preserve the status quo and not to expand law enforcement surveillance authority. In addition, Congress took the extra step of including substantial Congressional oversight and public accountability to the implementation process in order to ensure that law enforcement did not overreach and that privacy interests would be protected. The law requires the telecommunications industry to set standards for meeting the FBI's general requirements in an open process, allows interested parties to challenge any standard before the FCC if it fails to protect privacy, and requires Congressional oversight and accountability over the implementation of the law by mandating government reimbursement for expensive capability upgrades. We urge Congress to exercise its oversight role to determine whether in fact the FBI is seeking to use CALEA to expand its current surveillance capabilities contrary to the intent of the law. Unless and until the FBI clarifies its intent and justifies its demands, Congress should not allow the expenditure of any funds to implement CALEA. We look forward to discussing this issue with you further. If you have any questions please contact: Center for Democracy and Technology +1.202.637.9800 Danny Weitzner, Deputy Director <djw(a)cdt.org> Jonah Seiger, Policy Analyst <jseiger(a)cdt.org> ----------------------------------------------------------------------- (3) SUBSCRIPTION INFORMATION Be sure you are up to date on the latest public policy issues affecting civil liberties online and how they will affect you! Subscribe to the CDT Policy Post news distribution list. CDT Policy Posts, the regular news publication of the Center For Democracy and Technology, are received by nearly 10,000 Internet users, industry leaders, policy makers and activists, and have become the leading source for information about critical free speech and privacy issues affecting the Internet and other interactive communications media. To subscribe to CDT's Policy Post list, send mail to policy-posts-request(a)cdt.org with a subject: subscribe policy-posts If you ever wish to remove yourself from the list, send mail to the above address with a subject of: unsubscribe policy-posts ----------------------------------------------------------------------- (4) ABOUT THE CENTER FOR DEMOCRACY AND TECHNOLOGY/CONTACTING US The Center for Democracy and Technology is a non-profit public interest organization based in Washington, DC. The Center's mission is to develop and advocate public policies that advance democratic values and constitutional civil liberties in new computer and communications technologies. Contacting us: General information: info(a)cdt.org World Wide Web: URL:http://www.cdt.org/ FTP URL:ftp://ftp.cdt.org/pub/cdt/ Snail Mail: The Center for Democracy and Technology 1634 Eye Street NW * Suite 1100 * Washington, DC 20006 (v) +1.202.637.9800 * (f) +1.202.637.0968 ----------------------------------------------------------------------- End Policy Post 2.32 9/20/96 -----------------------------------------------------------------------

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Re: CIA hacked
by dlv＠bwalk.dm.com 17 Dec '03

17 Dec '03

>From DMiskell(a)envirolink.org Fri Sep 20 10:26:25 1996 Received: by bwalk.dm.com (1.65/waf) via UUCP; Fri, 20 Sep 96 11:09:09 EDT for dlv Received: from uhost1.servtech.com by uu.psi.com (5.65b/4.0.061193-PSI/PSINet) via SMTP; id AA16770 for dlv(a)bwalk.dm.com; Fri, 20 Sep 96 10:26:25 -0400 Received: from mocha.hotliquid.com (mocha.hotliquid.com [204.249.118.9]) by uhost1.servtech.com (8.7.6/8.7.3) with SMTP id OAA03565; Fri, 20 Sep 1996 14:26:20 GMT Received: from [150.160.45.150] by mocha.hotliquid.com (SMI-8.6/SMI-SVR4) id KAA03490; Fri, 20 Sep 1996 10:21:30 -0400 X-Sender: darius(a)hotliquid.com Message-Id: <v01540b02ae685d525f6c(a)[150.160.45.150]> Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Fri, 20 Sep 1996 09:41:54 -0500 To: dlv(a)bwalk.dm.com (Dr.Dimitri Vulis KOTM) From: DMiskell(a)envirolink.org (Daniel Christopher Miskell) Subject: Re: CIA hacked Cc: tcmay(a)got.net >>From remailer(a)mailhub.bart.nl Thu Sep 19 13:18:03 1996 >Received: by bwalk.dm.com (1.65/waf) > via UUCP; Thu, 19 Sep 96 16:10:20 EDT > for dlv >Received: from spoof.bART.nl by uu.psi.com (5.65b/4.0.061193-PSI/PSINet) >via SMTP; > id AA03960 for dlv(a)bwalk.dm.com; Thu, 19 Sep 96 13:18:03 -0400 >Received: (from remailer@localhost) by spoof.bart.nl (8.7.5/8.6.8) id >TAA28972 for dlv(a)bwalk.dm.com; Thu, 19 Sep 1996 19:19:58 +0200 (MET DST) >Date: Thu, 19 Sep 1996 19:19:58 +0200 (MET DST) >Message-Id: <199609191719.TAA28972(a)spoof.bart.nl> >To: dlv(a)bwalk.dm.com >From: remailer(a)2005.bart.nl (Anonymous) >Comments: Please report misuse of this automated remailing service to ><remailer-admin(a)remailer.nl.com> > The contents of this message are neither approved or > condoned by nl.com or our host bART Internet. > *** Replying to it will not send your reply to the sender *** > There is no way to determine the originator of this message. If you wish >to be blocked from receiving all anonymous mail, send your request to the ><remailer-operators(a)c2.org> mailing list. The operator of this particular >remailer can be reached at <remailer-admin(a)remailer.nl.com> >Subject: Re: CIA hacked > >Return-Path: <cypherpunks-errors(a)toad.com> >To: cypherpunks(a)toad.com >Subject: Re: CIA hacked >From: dlv(a)bwalk.dm.com (Dr.Dimitri Vulis KOTM) >Comments: Dole/Kemp '96! >Date: Thu, 19 Sep 96 08:08:39 EDT >Organization: Brighton Beach Boardwalk BBS, Forest Hills, N.Y. >Sender: owner-cypherpunks(a)toad.com > >Mike van der Merwe <mikev(a)is.co.za> writes: >> I'm sure we will find out in a few years that Microsoft invented the >> Net. Or brought it to the masses. Or saved it from a certain and >> early demise. Or all of the above. >> JAMES SEYMOUR > >>Dr. John M. Grubor created the 'net. > >Who created you? You tub of shit? Dude, why do you even bother? It is simply not constructive to keep insulting and stabbing at people. You gripe about the non-crypto-relevent stuff, then you go and create it repeatedly. If you don't like what people have to say, take your potty mouth to another list. Daniel. -- If in fact we are the only intelligent life on this planet, why the fuck are we in this goddamn mess? -- Find my public key on the World Wide Web -- point your browser at: http://bs.mit.edu:8001/pks-toplev.html

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Paradox: NO OPPRESSION IN AMERICA
by Douglas B. Renner 17 Dec '03

17 Dec '03

Those of you who took Logic 1001 will recall the paradox known as "The Heap" which goes like this: 1. A single grain of sand does not constitute a heap of sand. 2. You can create a heap from a non-heap by adding a single grain of sand. 3. Therefore, there is *NO SUCH THING* as a heap of sand. You with me here? Okay, this is important, because the public actually does think like this: 1. Our current society in America is not oppressive. (generally accepted) 2. You cannot change a non-oppressive society into an oppressive society by removing one liberty from its citizens. (also generally accepted) 3. Therefore, it is not possible for America to become an oppressive society. Sleep well, Douglas B. Renner

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