December 2003 - cypherpunks-legacy

Re: Encrypting Hard Disks
by edgarswank＠juno.com 17 Dec '03

17 Dec '03

-----BEGIN PGP SIGNED MESSAGE----- FCri Kaljundi wrote: > Tue, 22 Oct 1996, Michael B Amoruso kirjutas: > >> Are there any good programs out there that can encrypt my HD?? Since >> there probably are, please mention some and where I can get them. Also, >> no one mention PGP. > >F-Secure Desktop from Data Fellows is pretty good. It uses Blowfish >algorithm which means it is very fast on 32-bit Windows machines. > >More information at http://www.datafellows.com/f-secure/ - - From a quick perusal of the above web site, it appears as though F-Secure Desktop offers encryption by file, much like PGP does, only a little more automatic. But an entire encrypted file must be decrypted before you can process it and the entire file must then be re-encrypted if it is updated. - - From http://www.datafellows.com/f-secure/desktop/ With the built-in AutoSecure(TM) feature, you can define sets of files, directories, and Windows 95 folders that will be automatically encrypted and decrypted every time you start or close Windows. - - From this, it appears encrypted files are decrypted while windows is open. Obviously if Windows crashes a lot of plaintext files can be left lying around! I prefer the methods of SecureDrive http://www.stack.urc.tue.nl/~galactus/remailers/securedrive.html or Secure Device ftp://utopia.hacktic.nl/pub/replay/pub/disk/secdev14.arj in which data is decrypted "on-the-fly" as it is transferred from disk to memory. The data is -always- encrypted on the disk. Both of the above use strong IDEA encryption (same as PGP) and both are free for non-commercial use. (Commercial use is possible by paying a small royalty to the holders of the IDEA patent; see http://www.ascom.ch/systec In contrast, F-Secure Desktop is $99 a copy. Edgar W. Swank <EdgarSwank(a)Juno.com> (preferred) Edgar W. Swank <Edgar_W._Swank(a)ilanet.org> Edgar W. Swank <EdgarSwank(a)Freemark.com> Home Page: http://members.tripod.com/~EdgarS/index.html -----BEGIN PGP SIGNATURE----- Version: 2.6.2 iQCVAwUBMnjI9t4nNf3ah8DHAQHS0AP/WBYwqv2mJFJgBSIm9XUXMHPhi5WXSsXO YkOvyWh2XScQNLUhpYc91eaoJakBIsvREPDA5MIFa7CF3UmSKHagBNuoHxOuy3ZP x/eZpHykZyMrIzB/+eg65PFxo9ILaHMBog+qzTKqvCmAOGukegCzo3xbh1rpKswU P4WhnYvkQOo= =IGk8 -----END PGP SIGNATURE-----

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Invitation: Please Post
by Center for Cryptography Computer and Network Security 17 Dec '03

17 Dec '03

OOO PPPP EEEEE N N IIIIIII N N GGGGG O O P P E NN N I NN N G G O O P P E N N N I N N N G O O PPPP EEE N N N I N N N G O O P E N N N I N N N G GGG O O P E N NN I N NN G G OOO P EEEEE N N IIIIIII N N GGGGG OF THE CENTER FOR CRYPTOGRAPHY, COMPUTER AND NETWORK SECURITY Electrical Engineering and Computer Science College of Engineering and Applied Science University of Wisconsin - Milwaukee November 21, 1996 SCHEDULE: 10:45 Welcome 11:00 Friction in Secret Sharing and Key Escrowing by G. R. BLAKLEY, Texas A&M University. co-inventor of secret sharing 11:45 Break 13:45 The State of the Art in Computational Number Theory by ERIC BACH, University of Wisconsin, Madison. co-author of "Algorithmic Number Theory, Vol. 1" 14:30 Coffee 15:15 Opening ceremony and introduction of keynote speaker. 15:30 The Importance of Cryptography to Industry by WHITFIELD DIFFIE, Sun Microsystems co-inventor of public key 16:30 Reception Related event: Friday November 22, Computer Science Seminar Series Lecture. 15:30 Robust and Efficient Sharing of RSA Functions by TAL RABIN, IBM T.J. Watson Research Center You are cordially invited to attend the opening. For upcoming information, such as the vitae of the speakers, the location of the event, the Center's faculty members, driving instructions, consult: http://www.cs.uwm.edu/~cccns Free registration requested. Please register by e-mail to cccns(a)cs.uwm.edu Indicate whether you also plan to attend the lecture of Tal Rabin on Friday November 22. Include your name and address. George Davida Yvo Desmedt Rene Peralta Professor Professor Associate Professor Director The Center's purpose will be to advance knowledge in the areas of cryptography, computer security, network security and related areas from theoretical as well as practical viewpoints. For more details see: http://www.cs.uwm.edu/~cccns

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Montgolfiering Spoof
by nobody＠replay.com 17 Dec '03

17 Dec '03

At 10:47 AM -0500 10/31/96, Rabid Wombat wrote: >On Wed, 30 Oct 1996, Bill Frantz wrote: > >> Gee, I put that post in the same place I carefully keep my back issues of >> the Cypherpunks Enquirer. >> > >Bill, you must be humor-impaired. That piece was a great send-up of >Woods. I was laughing 'til tears spilled down an shorted out my keyboard. >I dunno who posted that, but I'm in awe. Thanks. I know the author rather well, and he assures me he dashed off this satirical piece in about as much time as he takes to write his normal articles. He tells me that once he had "grokked" the inimitable (not) style of Don Wood, it was easy to write a screed that echoed Wood's wackiness. Of course, for people who read satire on this list, the initials at the end are a clue. But don't publish who you think it is, as KVFP doesn't want a lawsuit from Wood for hurting Wood's feelings. --KVFP -- --

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Re: When did Mondex ever claim to be anonymous?
by nobody＠cypherpunks.ca 17 Dec '03

17 Dec '03

Re: When did Mondex ever claim to be anonymous? Derek wrote: <Snip> > They say: "In everyday use Mondex transactions are private, like cash" >at http://www.mondex.com/faq.htm#anon > > Thus they are making two claims: > 1. Cash is anonymous. > 2. Mondex is like cash. Along with one proviso: "In everyday use" ^^^^^^^^^^^^^^^^^ Clearly, to them, the IRA (or possibly the local hash dealer) is not an "everyday use" situation. The value of provisos like this, to companies and politicians, is hard to understate. Bill Clinton really meant to "End welfare as we know it." ^^^^^^^^^^^^^^ Voters saw the statement, ignored the proviso, and liked it; hardly any of them imagining that his proviso could include plans for a drastic _increase_ in the size and scope of the U.S. welfare state.

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Re: 'what cypherpunks is about'
by Hard Media 17 Dec '03

17 Dec '03

Message 1/40 From Timothy C. May We mine the copper they have no money to mine and pay them with worthless trinkets like penicillin, schools, and roads. We are exploiting them. Yep, they are better off in a state of natural grace, eating grubs and with a life expectancy of 35. --Tim May I can't believe I'm hearing this. Buddy can you even READ? Have you forgotten that the Americas was doing fine until the Europeans got there and "civilised" it? Go and read a few books, try "Bury My Heart at Wounded Knee" - J Dee and then try "Blackfoot Physics" by F David Peat. Roads? Hell the longest tarred road in the world existed in India before the Americas was colonised, I have a list of Chinese inventions made 10,000 years ago longer than your arm. Oh yeah, the average life expentency for a male on the streets of LA is about 35. Then go and read some Chinese history, (Go and read Joseph Needman's history of ancient China.) then try some Arab and Indian history. Maybe that'll give you some idea of who was eating grubs when eh? Anyways who the hell is talking "natural grace" if anything Europe during the Dark Ages is a reflection of a "Western" heritage...and I can't remember when I mentioned that living in a "natural" state was better than being civilised, it's just that you seem to think that the "West" has a monolpoly on "civilisation". Which is pretty damn apathetic considering the access to historic records and books you must surely have. Honetly I'm just astonished that you insist on holding on to these ideas before you'v had the chance to check them out. What are your ideas based on anyways?CNN? I suppose I should know better than to ask, the many times I'v been in the States reminded me of Soviet Russia and the "Iron Curtain", there seems to be a complete news blockout about the rest of the world, enforced because intelligent people like you are content to base your ideas and perceptions of the rest of the world on a mistaken belief that the the universe revolves around the USA. Just to clearify a this. You might not being doing this, but don't lump me as being anti-Western. I was born and live in London in the UK, and there are a huge number of things that the West can be credited with achieving, but on the most part the role of the West, mostly the USA, has been overblown. In the UK and most of Europe there is a much greater understanding when it comes to the rest of the world. Very few, if any, Englishmen today will claim that our past colonial and imperial history is something to be proud of. On the whole it isn't. The only place where these ideas florish are in the USA. Which is a shame. Zaid Hassan

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Re: 'what cypherpunks is about'
by Hard Media 17 Dec '03

17 Dec '03

Oh Oh. I said bad things about Americans...in trouble now. Anyways. Here are some figures: "In the 20 year period between 1970 and 1989, the external debt of developing nations grew from $68.4 billion to $1 283 billion, an increase of 1846 per cent. Debt service payments increased by 1400 per cent and were in excess of $160 billion by the end of the 80s." by the way most of this debt is concentrated in South American. Zaid

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Primer on WIPO Treaty
by John Young 17 Dec '03

17 Dec '03

From: notes(a)igc.org ----------------------------------------------------------------- Info-Policy-Notes - A newsletter available from listproc(a)tap.org ----------------------------------------------------------------- October 29, 1996 A Primer On The Proposed WIPO Treaty On Database Extraction Rights That Will Be Considered In December 1996* James Love, Consumer Project on Technology Introduction The World Intellectual Property Organization (WIPO) will consider in December 1996 a new treaty that would require most countries (including the United States) to severely curtail the public's rights to use pubic domain materials stored in "databases." Some experts say it is the "least balanced and most potentially anti- competitive intellectual property rights ever created." The U.S. Patent and Trademark Office (PTO) is accepting public comments on this treaty, and a digital copyright treaty that is also troubling. Comments are due by November 22, 1996, and can be submitted by electronic mail to: diploconf(a)uspto.gov. Copies of the treaty, commentary, and the PTO federal register notice is available from http://www.public-domain.org. This memorandum provides background information on the treaty and the problems it presents. [Snip balance of excellent paper] James Love Consumer Project on Technology http://www.essential.org/cpt email: love(a)tap.org *HTML version at http://www.essential.org/cpt/ip/cpt-dbcom.html Ascii version formatted with 11 pt courier with 1 inch margins. This is my first take on the treaty, and I would appreciate comments and corrections. This is a very important matter that hasn't received much attention. jl ---------- We've put this primer at: http://jya.com/wipoprim.txt Thanks to James Love.

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Bernstein hearing, Nov 8, 10:30AM: injunction against export controls
by John Gilmore 17 Dec '03

17 Dec '03

Watch the noose tighten around the scrawny neck of the vile crypto export controls! Be part of reclaiming your freedom to teach cryptography and to share your crypto expressions worldwide! Garb yourself in a ritual costume used by powerful and famous people! See the smooth Justice Department minion who lost the Communications Decency Act case once again fail to suppress free speech! Meet renowned East Coast lawyer Robert Corn-Revere, who helped Phil Zimmermann face down ITAR prosecution! Next Friday, 8 November 1996, at 10:30AM we will join forces at Yet Another Hearing in the case of Dan Bernstein v. Large Government Agencies. Convene at the Federal Building in San Francisco, 450 Golden Gate Avenue, in the courtroom of Judge Marilyn Hall Patel. We'll recognize each other because we'll all be dressed like lawyers. We will follow the formal proceedings with a group lunch at Max's Opera Plaza, a block away at Van Ness Avenue and Golden Gate Avenue. Or come prepared to suggest a walkable alternative eatery more to your liking, and we can go there instead. Dan would like to teach a class in cryptography in the upcoming winter semester, but is afraid that teaching it in the ordinary way (posting his class materials on the Web, etc) would violate the ITAR. He thinks that the ITAR is unconstitutional, and that altering his ordinary teaching because of a threat of ITAR prosecution is a "chilling effect" on his constitutional rights of free expression and academic freedom. Because it's not clear whether the earlier, broader, motions that we argued in September will be decided by the time of his class, he has asked the judge for a "preliminary injunction", a court order in the following form: 2. Defendants are ENJOINED from investigating or prosecuting under the Arms Export Control Act (AECA) 22 U.S.C. 2778 et seq., and the International Traffic in Arms Regulations (ITAR), 22 C.F.R. 120 et seq., or any export control statute or regulation which would require prepublication licensing of any teaching or scientific exchange activities, the following persons: a. Plaintiff, and b. Plaintiff's students, and c. Any person who receives technical data, cryptography software or defense services from Plaintiff or his students; when such technical data, cryptography software or defense services were given or received as part of teaching or scientific exchanges during or in preparation for the cryptography course to be taught by Plaintiff during the Spring, 1997 semester at the University of Illinois at Chicago. 3. Defendants are further ENJOINED from requiring licensure, approval, registration, reporting or the fulfillment of any requirements of the AECA, ITAR or any export control statute or regulation which would require prepublication licensing of any teaching or scientific exchange activities, the [same] persons... We tried to get the Government to agree to this without getting the judge involved, but despite their protests that they don't control academic activities, they would not agree. So here we go with another "Cypherpunks Dress-Up Day" on a Friday morning in San Francisco. Robert Corn-Revere <rcr(a)dc1.hhlaw.com> has recently joined the Bernstein legal team. He wrote the excellent arguments for this motion, and will attend the hearing. Here's a sample of his prose. Despite repeated denials that the Government is restricting academic freedom, Defendants display a striking enthusiasm for defining the limits of "appropriate" academic inquiry and communication. Without directly disputing the fact that computer software and source code *is* speech, or that access to such software is essential to Prof. Bernstein's course on cryptography, or that consultation with other researchers in the field (generally via the Internet) is part of the normal academic process, or that posting such materials for students on the World Wide Web is standard academic practice, Defendants baldly assert that such activities have "nothing to do with teaching a class in Chicago." PI Opp at 1. Indeed Defendants state categorically that "the principle of 'academic freedom' does not authorize Plaintiff to transmit abroad [cryptographic software], *even if his own purpose is merely to convey some theory implicit in the software*." Id. at 22-23 (emphasis added). ... ...The Government's argument essentially collapses to the proposition that if it is not restricting speech in *all* cases, it is not engaging in censorship in *some* cases. Yet in every case with which the Plaintiff is familiar in which cryptographers have consulted the Government (or otherwise been brought to the Government's attention), the officials who administer the ITAR scheme have counseled caution, have initiated investigations and have subjected publications to the CJ process. In this respect, Defendants have instituted a kind of "don't ask/don't tell" policy for cryptography. ... If anything, such an informal approach causes greater concern, since the law is clear that sporadic or discretionary enforcement of a policy that restricts speech creates a more significant First Amendment problem than does uniform enforcement. ... The Government's Opposition borders on the schizophrenic. Defendants repeatedly assert that teaching a class on cryptography or making software available to students are not "regulated by the Government", PI Opp at 1, yet just as repeatedly describe the conditions under which the very same activities are regulated by the ITAR. The Government maintains that it "is not threatening to prosecute Plaintiff or anyone for teaching cryptography," Id. at 2, yet continues to argue that the course plan Prof. Bernstein is proposing would violate the export controls. As background, Dan Bernstein, ex-grad-student from UC Berkeley, is suing the State Department, NSA, and other agencies, with help from the EFF. These agencies restrained Dan's ability to publish a paper, as well as source code, for the crypto algorithm that he invented. We claim that their procedures, regulations, and laws are not only unconstitutional as applied to Dan, but in general. Full background and details on the case, including all of our legal papers (and most of the government's as well), are in the EFF Web archives at: http://www.eff.org/pub/Privacy/ITAR_export/Bernstein_case. [Actually, not all the paperwork for this Preliminary Injunction is online yet, but we hope it will be by the time you read this...] Like Phil Karn's and Peter Junger's cases, this lawsuit really has the potential to outlaw the whole NSA crypto export scam. We intend to make your right to publish and export crypto software as well- protected by the courts as your right to publish and export books. It will probably take more years, and an eventual Supreme Court decision, to make it stick. But perhaps at this hearing we can make it legal for one teacher to teach crypto using the Web this winter. Please make a positive impression on the judge. Show her -- by showing up -- that this case matters to lots of people. Most court cases have nobody in the audience. Demonstrate that her decision will make a difference to society. That the public and the press are watching, and really do care that she handles the issue well. We'll have to be quiet and orderly while we're in the courthouse. There will be no questions from the audience (that's us), and no photography, but the session will be tape-recorded and transcribed. You can take notes if you like. So, here's your excuse to put on a nice costume, take the morning off, and pay a call on the inner sanctum of our civil rights. See you there! John Gilmore PS: If you can't come, you can still contribute. Become an EFF member; see http://www.eff.org/join.

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RE: Discrete logs 1
by James A. Tunnicliffe 17 Dec '03

17 Dec '03

[...Interesting discussion of logarithms deleted...] The discrete logs used in crypto have very different mathematical properties than regular logarithms, but I thought this bit of history would spark some memories in old-timers and give a new perspective for younger people. Hal As an apparent old-timer (calculators weren't common until my college days, which puts me a couple of years before you, I guess) I enjoyed the retrospective, and I even recall the joke that goes with the punchline you quoted. It's amazing to realize that only a few years ago, we were calculating orbital trajectories using logarithms by lining up marks on little sticks of wood! I have to admit, though, that I was a little disappointed after your opening paragraph, because what I was really hoping to hear was a straightforward explanation of discrete logs, which, as you say, are entirely different. A simple layman's explanation of what they are and how they're useful in crypto would be nice, especially since PGP is moving toward this (just when I was beginning to get a handle on RSA!). Now that I have an interest in all this, I wish Rich Schroeppel still worked here (he worked at Inference when I started here in '88, and has since done a lot of pioneering work on discrete logs). Me, I'm still trying to figure out what sort of seed is best to plant in a Galois field... Tunny ====================================================================== James A. 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Eggregatious Copyright Violations
by alzheimer＠juno.com 17 Dec '03

17 Dec '03

Smart Card Bulletin: October 1996 To Regulate or Not to Regulate? By Theodore Iacobuzio US banking regulators are seeking comment on whether, and under what circumstances, it should take action over electronic money. Though US banking regulators are focusing more and more of their attention on smart cards, most insiders both at banks and at advocacy groups say they are not overly concerned with the degree of scrutiny the new technology attracts. In fact, contradicting recent alarmist press reports, they told CI they were glad the federal government has decided to call for comment. Through a process of public hearings and forums beginning last month, two powerful federal agencies sought to air important regulatory issues involving all aspects of electronic money, with a special emphasis on smart cards as among the most mature technologies. It is all part of an effort to find out more about the new payment system now, rather than later, when it is up and running. This way, according to the government, the industry can both educate the regulators and address their concerns before the market has become too established to change easily. "The regulatory agencies are actually working quite well to understand the technology and not to rush to regulate," said Catherine Allen, president of the Santa Fe Group, a New Mexico-based electronic commerce think-tank and the former head of Citicorp's smart card initiative and board member of the Smart Card Forum. "The hearings are being held to get the issues into the open," Allen said. "I don't sense heightened concern from the industry." In fact, many smart card insiders more suspicious than Allen were considerably mollified having heard Treasury Secretary Robert Rubin address an agency-sponsored forum on electronic money on September 19. The forum, which attracted some of the nation's top bankers, concentrated heavily on smart cards. In his keynote speech, Rubin explicitly sought to restrict government's role in the new technologies to issues of law enforcement: fraud, money-laundering and privacy. "As we think about these concerns, let us put aside our ideological views with respect to regulation and take an intensely practical approach to finding the right balance so that we can minimise impediments to growth and at the same time meet the needs that I just described," Rubin said. "It seems to me that as we look at the benefits and ask the questions, we must achieve two objectives at the same time: minimising impediments to the growth of electronic money, but at the same time, address the difficult issues it raises in an appropriate fashion. "To some extent, there may be trade-off judgements that will have to be made, but I believe to a large extent the meeting of these two objectives will be complementary." Rubin said that electronic money should increase, rather than decrease, access to financial services and the mainstream economy for those in the inner cities or poor rural areas. "This is a great challenge and I think an absolutely critical challenge given that these groups lack access to computers, financial services and many of the benefits of our modern economy". But his comments were so vague as to limit any discussion of possible US government intervention. While the Treasury Department meeting was also notable for Citicorp chairman John Reed's assertion that the Internet is not yet secure enough for banking transactions, its major effect was to reassure most smart card insiders not to expect any aggressive move by the US government to regulate smart cards. On the contrary, they felt the federal government's hitherto hands-off approach is a textbook example of how regulation of a new technology should proceed. The latest efforts at regulatory clarification come not from the Treasury Department, but from the Federal Deposit Insurance Corporation (FDIC), the US banking agency established during the Great Depression that both insures bank deposits of up to $100,000 and oversees the safety and soundness of banking practices. The agency has sought comment on whether the funds underlying smart cards are deposits and hence insurable under the law. It has also issued its own opinion that for most purposes, funds underlying smart cards are not in fact insurable. So eager is the FDIC to air the issue, that it took the unusual step (for a bank regulatory body) of calling a public hearing on September 12 in Washington. There, banks, technology vendors, card associations and industry groups aired their opinions. And indeed, most of the bankers commenting pleaded with the government to let the market grow before imposing any kind of rigid regulatory structure. The Federal Reserve Board raised a thornier issue when it recently sought comment on its effort to exempt from Regulation E those stored- value cards bearing less than $100 in value. Reg E, as it is called, establishes banks' responsibility for providing an audit trail for money moving through the electronic funds process. "This is sort of technical bank-lawyer stuff that people are going to have to know about but that is going to have very little effect on how the market develops as a whole," said John Wright, vice president and senior counsel with Wells Fargo Bank and head of the legal and public affairs policy arm of the Smart Card Forum, the leading industry advocacy group. Regarding the FDIC request for comment, he said:"It depends how you structure it. I dont think that at the level of what consumers are going to do, they would be deposits." Wright added that as it was proposed, he did not think the Reg E piece represented something people ought to worry about. New York Times: Monday, October 28, 1996 Regulators Vexed By Gambling Over Internet By JAMES STERNGOLD There are few patches of legal turf the states guard more fiercely than gambling, which is why it seemed strange this summer when the National Association of Attorneys General urged the federal government to seize control of wagering on the Internet -- even though hardly anyone was doing it. Even more bizarre was that the recommendation, including an alarming proposal for arresting gamblers from in front of their computers, was turned down by the Justice Department. ``The department does not agree that federal law should be amended so broadly as to cover the first-time bettor who loses $5, particularly when Internet gaming is expected to mushroom and federal resources are shrinking,'' John C. Keeney, an official in the criminal division at the Justice Department, wrote the states. The episode highlighted the growing anxiety and confusion over one of the least developed, but potentially most vexing areas of Internet business - gambling. The reach of the World Wide Web is erasing not only borders but also the ability of the authorities to control wagering (not to mention their ability to tax it). And gambling over computer networks is still new enough that it remains unclear exactly what is legal and what is not. ``We built it to be Russian-proof, but it turned out to be regulator proof,'' said Craig I. Fields, the former head of the Pentagon agency that helped create the Internet during the cold war, and who is now vice chairman of Alliance Gaming, a Las Vegas concern developing on-line gambling. In principal, gambling by computer sounds promising, placing an increasingly popular habit, which can quickly become a compulsion for some individuals, within just about anyone's reach. Indeed, nearly every worker in the country with a personal computer and a few minutes to spare will soon be able to slip in some blackjack, poker, slots or baccarat for money at almost completely unregulated, virtual casinos. To give some notion of the potential, Americans wagered $550 billion last year at traditional operations, from lotteries and horse races to bingo and casinos, and gambling companies had revenues of $44.4 billion. The Internet operators need to take only a fraction of that business to produce explosive growth - or explosive scams. ``In my view, gambling is the fastest way to destroy the credibility of the Internet system,'' said John Kindt, an economics professor at the University of Illinois at Champlain and a gambling critic. ``If you lose you'll lose, and if you win you could lose because there's no way to collect from these offshore operations.'' He added that with personal computers now ubiquitous the on-line casinos could prove a devastating temptation for the growing numbers of compulsive gamblers. ``People will be trapped,'' Kindt said. ``They won't be able to get away from it.'' All that is driving some law enforcement officials crazy, especially since the business, though made up of a tiny number of marginal companies operating from offshore havens like Antigua, Belize and Monaco, is on the cusp of a major expansion. A showdown, in short, is looming in the one area of the Internet that may well produce billions of dollars of commerce in just a couple of years. Minnesota has sued Granite Gate Resorts, a Las Vegas company preparing to offer sports betting on-line, called Wager Net, as a test case, claiming that it is a consumer fraud because the service says, improperly, it is legal. The state court hearing the suit has yet to rule on whether the state has jurisdiction. California is attacking by threatening the telephone companies with prosecution if they do not cut off service to Internet gambling concerns in the state. Several states are also insisting that they will not recognize the use of offshore sites if the companies are attracting American gamblers. ``We're going to take an aggressive stand on this and we'll interpret the law as broadly and prohibitively as we can, and there will be no havens,'' said Tom Gede, a special assistant to the attorney general of California. Sen. Jon Kyl, R-Ariz., offered a bill earier this year that would have made all Internet gambling explicitly illegal. Although it was killed in committee, he has insisted he will offer it again. A National Gaming Commission was established by the Congress this year and a big focus of the study it will be conducting will be on-line wagering, which could also lead to legislation. And there is an even trickier issue, some believe. ``There's another I-word that really scares the government, Indian gambling,'' said I. Nelson Rose, a professor at the Whittier Law School here and a gambling law expert. ``If the Indian tribes get involved in this then the way the law is written all sorts of sports betting and other kinds of on-line betting could take place from Indian lands in an unregulated fashion.'' That has left many state officials worried, but unwilling to just wait for the explosion. ``The federal government is either going to want to get into it now or they'll be drawn into it later,'' insisted Hubert Humphrey III, the attorney general of Minnesota and a prime mover behind the request this summer for federal involvement. ``This is moving so fast that we have to get out in front of it.'' All these worries are over a business that is, at the moment at least, underwhelming. Sue Schneider, managing editor of Rolling Good Times On-Line, an e-zine that tracks the industry, said that there are fewer than a half dozen virtual casinos that are taking real bets at the moment, and many of the games are frustratingly slow. There are also unresolved concerns over the security of on-line transactions and whether an unlicensed casino would maintain fair odds on the games. In fact, the established casino companies, while watching warily, appear unfazed. ``My personal view is it's not very interesting,'' said Stephen Bollenbach, chief executive of Hilton Hotels, the country's largest casino concern. ``It's a different business than we're in.'' Nevertheless, about 40 prospective operators have set up Web sites and many offer games that, at some point in the future, could easily be transformed into gambling for real money. Ms. Schneider said that as many as a dozen more on-line casino or bookmaking operations may open for business within the next few months. While all the companies are seeking essentially the same thing - to get into the lucrative gambling business without the costs of building casinos or having to pay dealers or other high-priced staff - they are taking many different approaches because of the murky legal status of the business and the uncertainty over just who will really want to spend their money this way. Virtual Vegas is one of the more active on-line casinos, and one of the most cautious. The company's formula is simple: treat Internet gambling as another type of computer game, and leave the money out of it for now to avoid hassles with the police. David Herschman, chief executive of the company, which is based in the hip Venice district of Los Angeles, said Virtual Vegas had already spent $3 million developing its technology, and would spend another $10 million. It has created twists on traditional games to make them more like computer games, and therefore more appealing to the people who already spend perhaps more time than they should in front of their personal computers. Virtual Vegas offers Turbo Black Jack and Assault Poker, which is like combining Doom and five card stud. Virtual Vegas will be available on Time Warner's cable on-line service. Peter Demos Jr., president of World Wide Web Casinos, which is based in Orange County, said his company had decided to trust the idea that having an offshore computer location will keep it out of jail. World Wide Web Casinos has acquired a tiny casino on Antigua, the St. James Club. ``It does provide us with a little credibility,'' Demos said. He added: ``We want to be a huge grind joint. We're not going to attract high rollers. We're looking for someone who will blow $20 or so in an hour and a half.'' World Wide Web Casino, which will offer black jack, five kinds of video poker and slots, is in testing and hopes to open around Thanksgiving. Internet Gaming Technologies Inc., based in San Diego, is also using an offshore strategy: It has a gambling license in Ecuador, acquired through a company registered in Monaco. Joseph R. Paravia, president of the company, said he is less confident in the offshore loophole, so the company will offer its games only to people outside the United States, which he insisted is technically feasible. Paravia said the company plans to pursue known gamblers, giving them computers if necessary. ``We didn't want to take a propeller-head and have to teach him how to gamble,'' Paravia said. ``We want to go after a known market.'' You Bet International Inc., however is what might be called an anti-Internet Internet gambling company. The company, which will operate through the New York Racing Association, offers a horse race bookmaking service that makes only tangential use of the Internet: to register accounts and download software. ``The Internet as it exists is the wrong place for this kind of application,'' said Stephen A. Molnar, executive vice president of the company. ``The biggest problem is political. We believe that at some point the government is going to come down on this.'' You Bet, which expects to begin taking bets in February 1997, has constructed a private on-line service over which its account holders will get information and place their wagers. And it appears to be legal, since it operates within New York state parimutuel betting laws. ``It's all interesting, but most of what is being bandied about is hocus pocus at this point,'' said Jason Ader, an analyst with Bear Stearns & Co. ``It's a very scary situation. There's no regulation. There's tremendous potential for abuse out there, and maybe a little fun until then.'' News Release (NationsBank): Friday, October 25, 1996 NationsBank Announces Service For Trading New And Used Stored Value Cards Antiques are too dusty. Model cars are old news. The hot collectible today? Stored Value Cards. NationsBank (NYSE: NB) today announced it will establish a collector service to support an open, free and knowledgeable marketplace for buying, selling and trading new and used NationsBank Stored Value cards. "Many of our customers have told us that they wanted to collect our stored value cards," said Richard F. Shaffner, NationsBank Senior Vice President. "We want to respond by providing a professional service that our customers and the marketplace can count on for accurate information regarding the production and availability of new and used NationsBank cards." The NationsBank Collector Service will provide a variety of services to collectors: -- information about NationsBank cards and designs; -- card reproductions; -- information about how and where new and used cards may be purchased. The service will also facilitate the sale of new and expired NationsBank cards to dealers and collectors. The bank has also established a set of Stored Value Card Principles that it plans to follow in producing and distributing its stored value cards. "NationsBank was the first bank in the United States to introduce VISA Cash to the public in 1995, and now is the first card issuer to establish and communicate principles designed to protect customers who are card collectors," said Shaffner. NationsBank Stored Value Cards provide customers the opportunity to collect the first samples of an entirely new payment system. The cards include the first VISA Cash card, the series of commemorative VISA Cash cards from the 1996 Summer Olympic Games, and the FANCash cards introduced by NationsBank at the 1996 Carolina Panthers home games. "These cards are generating a great deal of interest among collectors," said Shaffner. "Some $5 cards are already trading for as much as $300. We want to make sure that card collectors know that NationsBank's principles for the collection of stored value cards are solid and well thought-out." NationsBank's principles for the issuance of stored value cards state the bank's position regarding the availability, production, and the dissemination of information about each card design. NationsBank Card Services, with more than $8.3 billion in outstanding loans, is the llth largest issuer of Visa and Mastercard credit cards. NationsBank is the fifth-largest banking company in the U.S. with primary retail operations in nine states and the District of Columbia. As of September 30, 1996, NationsBank had total assets of $188 billion. Sunday Times (London): October 27, 1996 Banks Move into Online Robbery By David Hewson There are only two things you can guarantee of a British clearing bank. First, that avarice will be its primary motivating force. And second, that it will pursue this avarice with such naked stupidity that a three-year-old could spot it with his eyes closed. The announcement that Barclays has decided to enter the world of online banking is a case in point. In principle, the idea of handling your finances through a home PC is an interesting one. Provided the security is tight and there are enough advantages to justify the time online, I might even try it myself. But, not in several million years, the way Barclays has the cheek to suggest. If you want to join the game, here is what the bank demands that you -- the customer, if I am not mistaken - will need. First, a computer capable of running Windows 95 -- #1,000 will do nicely if your otherwise adequate 3.1 machines is not up to snuff. Second, a modem. Third, a copy of Microsoft Money 97 -- #29.99, thanks very much. And fourth, a benign desire on your part to save Barclays internal transaction costs by doing the work yourself and adding the ensuing phone charges, probably long distance, to your BT bill. And what do you get in return? Well, you can check balances, transfer money between accounts, settle bills and change standing orders -- all of which is already possible through 24-hour, voice-based phone banking down an ordinary line, for a local-call charge, and with someone who is paid to tap the keyboard. Oh, yes. You can also "analyse and display account history using the in-built graphics packages". Oh joy. Forget Doom. Let's watch the gas bill turn from bar graph to pie chart, all with a click of the mouse. So now you know why you bought a home PC... If more than a thousand or so deluded souls sign up for this package of dross I will be truly surprised. The general public may be happily ignorant of the more obscure parts of the personal computing world but they do understand that there are just two reasons to run financial matters on a home PC. It has to make life easier, and it must extend your choice. All Barclays offers over 24-hour phone banking is the marginal curiosity value of transferring your account information straight into a personal-finance package. And in return? You are locked into them with a proprietary communications package that works with no other bank, and one, moreover, that forces you to pay the Microsoft tax -- for Money 97 and Windows on top. It is difficut to decide whether this is pure ignorance or simply misguided greed on Barclays' part. Even the banking industry must have heard of the Internet. The ostensible reason Barclays has eschewed the Net is that it is inherently insecure. This is rather like saying aircraft are inherently prone to crash, regardless of how well they are maintained or flown. There is clear proof that the Net can be made sufficiently secure simply in the huge number of American banks now racing to open online services. Take a look at the beautifully organised Bank of America service (www.bankamerica.com) and judge for yourself. What's more, Net banking activities run through a Web browser, can talk to Microsoft Money as well as the more popular Intuit Quicken in ex actly the same way as Barclays' proprietary code. You get all the bar charts of your Visa bills and lose those leg-irons along the way. Only a bank could believe that it is offering some added value by allowing you access to your own money through a PC. The real service online banking will offer is beyond the understanding of Barclays. One day the Net will act as an active, independent, intelligent agent of choice. It will shop around for the cheapest loans, mortgages and savings accounts across a broad spectrum of providers. The inertia selling of bill-paying, insurance and other financial services that featherbeds the clearing banks today will be gone once you find the magic button marked "Find cheapest..." on your Net browser. Barclays would do well to try to work out how it will survive in that newly competitive era instead of trying to enslave further its hapless, captive customers just as the walls that imprison them start to come down.

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