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Re: Voice/Fax Checks
by hfinney＠shell.portal.com 17 Dec '03

17 Dec '03

Robert Hettinga writes: >As someone who's been thrashing this a little bit, I've gotten stuck on >exactly how to "*undercut*" the transaction costs of existing methods. Got >any ideas? Are those transaction costs as a percentage of total cost >meaningful enough to embue digital cash with the rocket-like competitive >advantage we hope for? It's pretty clear that credit cards don't work for some of the transactions people want to do: 1) one-cent and fractional-cent charges for connecting to a useful Web page or ftp site. A useful resource like this wouldn't have to charge much on a per-user basis to fund the equipment and people. 2) Transactions with individuals or small companies who are not VISA clients. It's not that easy for a mail-order shoestring startup to get the ability to accept VISA cards. Because of the danger of fraud, the credit card companies like to see a storefront and/or some previous history. Someone who writes a nifty PGP shell and wants to sell it for $10 per will have this problem. 3) People who don't like giving out their credit card numbers to an unknown email address. This is the flip side of the above. The danger of fraud is always present, and the more people I've given my card number to, the more chance that I'll get burned. Of course most states have protection laws in place, but it's still going to be a major hassle. Now, 2 and 3 can probably be addressed by electronic checks, and I think the secure Mosaic announcement included that possibility. I suspect that echecks are a considerably stronger competitor to ecash than today's credit-card infrastructure. For one thing, an echeck can be sent in the clear, while ecash has to be sent encrypted; an eavesdropper can spend ecash but not an echeck. Example 1, the fractional-cent transaction, will be tough to address by any technology IMO. Even with ecash, there are a lot of questions. Is it on- line or off-line? Does the server actually try to validate each half-cent or does it just trust people? If the latter, how much fraud is likely, and how would we track down and penalize the half-cent counterfeiters? Solving these problems is going to add overhead which will make it hard to deal with such small sums efficiently. How many cash businesses sell low-value items for pennies today? Not many. >Light dawns on Marblehead. (Massachusetts joke). Isn't the point of >digital cash that you *can* send it through unsecure mail and buy things? No, I don't think you can. Ecash can generally be cashed by the bearer so it has to be sent through secure mail. That is why I was saying that echecks might be better for those purposes. I don't understand the Telescript agent world well enough to judge whether it would drive a market for ecash. I have the impression that at least with the initial implementations the agents will not be on the Internet as we know it but rather on a separate AT&T network of special servers. So they may not have much impact for a while on the "net" as we know it. Hal

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clipper and export
by Jonathan Rochkind 17 Dec '03

17 Dec '03

Is anyone else distrubed by the way that encryption export policy and the clipper chip seem to be linked {in administration policy, and in the press? The letter from Gore to Cantwell certainly indicates this. He got her to refrain from trying to liberalize export by saying that he'd look into relaxing clipper. This seems awfully insidious, for a variety of reasons. I think everyone has got to make greater efforts to seperate these two issues in the public s mind. If we need to prevent encryption export for national security reasons, as the administration alleges, then that doesn't neccesarily have any relation on whether we need to adopt key escrow too.And if key escrow is neccesary for law enforcement, as they allege, that doesn't say _anything_ about whether encryption export should be liberalized or not. Of course, scrutinizing administration policy revelas the link without too much dificulty. They want to make clipper a de facto standard, and the only way they're going to be able to accomplish this is by refusing to allow exportation of anything _but_ clipper. But the administration isn't publically giving this line of reasoning, because it makes them look bad, and shows that they are mis-using the legislation that allows them to ban exportation of encryption for their own pro-Clipper strategies. But they still manage to link the two issues, as in the "compromise" with Ms. Cantwell, without giving any good reason for the two issues to be related! I don't think we should let them get away with this. If the two issues are going to be linked like this, we the public have got to demand and explanation or rational for doing this. Why did the administration basically offer to re-think clipper _if_ Cantwell didn't try to liberalize export? And when they can't give a good answer, we the cypherpunks have got to offer our explanation. As it is, they're getting a tactical olitical freebie. They've managed to link the issues of export restrictions and clipper such that Joe Public sees how the policies are linked, _without_ giving any actual reasons for the link, because those reasons would make them look so bad.

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e$: a long enough lever...
by rah＠shipwright.com 17 Dec '03

17 Dec '03

> >Not true. Teleflora is a company that sells automatic processing software > and also will be a front-end to credit card companies. You pay 'em, you > get your merchant ID and go, and start getting checks every so often. This is kind of like the "internet drive-up window" ATM gateway idea my cronies and I were throwing around. The funds transfer happens between the vendor and buyer's banks through an ATM/internet gate, probably owned by a bank. The WWW/secure mosaic "wallets" and "cash registers" would be given away. >I see a lot of great ideas for e$ out there, but I think they all suffer > from a central fault: there's no easy transition from the way people do > business in the real world to an e$ model. IMO, you've got to base a system > in the way people are used to working and make a gentle transition, or > it's simply going to fail purely on the learning curve. I keep insisting that an ATM gate offer the option of ecash in the transaction, with us as the underwriter of the cash, even though my more "practical" associates offered your rationale for not doing it... They seem to be winning the argument at the moment. ;-). Cheers, Bob Hettinga ----------------- Robert Hettinga (rah(a)shipwright.com) "There is no difference between someone Shipwright Development Corporation who eats too little and sees Heaven and 44 Farquhar Street someone who drinks too much and sees Boston, MA 02331 USA snakes." -- Bertrand Russell (617) 323-7923

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Re: Voice/Fax Checks
by Hal 17 Dec '03

17 Dec '03

JWS writes: >Well here are the answers that I'm working with in my model: >First, what you set up has to work off-line. At the same time, validation, >by its very nature, is a process that can only be accomplished online. The >part of my code that I am in the middle of right now (and strugling with) >uses a distributed dynamic hashing scheme (with some attempt at periodic >space minimalization [this is what is making it tricky]) whereby information >is recorded in the public system such that if one part of a bill is used >twice, the cheat's identity is revealed. >[...] >For types of small transactions that will be executed frequently, the >best idea is to establish accounts. In my system, when ever an agent >enters somebody else's computer, it gives the local wizard (the agent >with the final say on computational cycles, storage space, and >communications) a deposit which neither the agent nor the wizard can >cash without agreement by both [do public validation and recording >but hold off on the last steps which allow the wizard to use the money]. >The money is thus recorded globally as having been spoken for. Then, for >all transactions on the local machine, the agent simply uses its local >account, just as anybody would in a much simpler bank-based protocol, >like the ones we have now. This seems like a good approach for a lot of cases. You end up having three classes of transactions: small, medium, and large, with slightly different strategies for each. For large, you do on-line checking; for medium, you detect double-spending after the fact and use crypto to find his identity; and for small you set up an account and dip into that a bit at a time. I am curious about whether you are focussing more on some size range in your plans. One problem I still see is the small transaction where you don't tend to use the same provider again and again. On the net there are a few sites (well, quite a few, I suppose) which are heavily used, but there are a lot of places I might like to just browse through. Paying a penny per site isn't going to bother me much, but if I have to set up an account for each one ahead of time I'm probably not going to bother. So I still think there are problems with the fractional-cent-per-web-site model which I have been hearing about. >I don't agree on this point. I prefer license based e-cash which is modified >on each transaction (and unfortunatelly gets slightly bigger -- the downside >of this method). If we're going to make the conversion to ecash, we might >as well make it as powerful as mathematics will allow. Is this an approach where you determine to whom you will be sending the cash, then make it into a "check" which can only be spent by that recipient? Doesn't that require the bank's (cash issuer's) help? Or is this something else? Hal

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Re: by the way...
by Claborne, Chris 17 Dec '03

17 Dec '03

Perry writes: << For those who believe "the NSA can do ANYTHING" or some such, an article in the New York Times claims the annual black budget now seems to be hovering around $28 Billion per year, for ALL secret government work. >> That's all the money that you KNOW about :) 2 -- C --

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EFF Analysis of Vice-President Gore's Letter on Cryptography Policy
by Stanton McCandlish 17 Dec '03

17 Dec '03

EFF Analysis of Vice-President Gore's Letter on Cryptography Policy ------------------------------------------------------------------- July 22, 1994 Two days ago, Vice-President Al Gore signaled a major setback in the Administration's Clipper program, and a willingness to engage in serious negotiations leading to a comprehensive new policy on digital privacy and security. Many questions remain about the future, but one thing is certain: Clipper is a dead end, and those of us who are concerned about digital privacy have won a new opportunity to shape a better policy. The Vice-President's letter to Rep. Maria Cantwell (D-WA) made it clear that while Clipper might have a small place in the telephone security market, it has no future in the digital world. "...[T]he Clipper Chip is an approved federal standard for telephone communications and not for computer networks and video networks. For that reason, we are working with industry to investigate other technologies for those applications.... We welcome the opportunity to work with industry to design a more versatile, less expensive system. Such a key escrow system would be implementable in software, firmware, hardware, or any combination thereof, would not rely upon a classified algorithm, would be voluntary, and would be exportable." Clipper does not meet most of these criteria, so, according to the Vice- President, it is a dead end. END OF THE LINE FOR CLIPPER -- LONG-RUN EFFORT TO DRIVE MARKET WILL FAIL The premise of the Clipper program was that the government could drive the market toward use of encryption products which incorporated government-based key escrow agents. A series of subtle and not so subtle government actions would encourage private citizens to use this technology, thus preserving law enforcement access to encrypted communications. Clipper was originally announced as the first element of a family of hardware-based, government key escrow encryption devices that would meet security needs for both voice and data communications on into the future. Clipper itself was purely a voice and low-speed data product, but other members of the Skipjack family, including Tessera and Capstone, were to be compatible with Clipper and were intended to lead the way from escrowed encryption in voice to escrowed encryption for data. Plans are already announced, in fact, to use Tessera and Capstone in large government email networks. At the time, the hope was that government use of this technology would push private sector users toward key escrow systems as well. Now, the announcement that the Administration is re-thinking plans for data encryption standards leaves Clipper a stranded technology. No one wants to buy, or worse yet, standardize on, technology which has no upgrade path. As a long-run effort to force the market toward government-escrowed encryption standards, Clipper is a failure. WE STILL MUST WORK FOR VOLUNTARY, OPEN, EXPORTABLE STANDARDS The fight for privacy and security in digital media is by no means over. Though the Administration has backed away from Clipper, and expressed willingness to talk about other solutions, we are pursuing serious progress on the following issues: * Improved telephone encryption standards For the reasons listed by the Vice-President, in addition to the inherent problems of making copies of all your keys available, Clipper is a poor choice for telephone encryption. Industry should develop a standard for truly secure and private telephones, make them available from multiple manufacturers worldwide, and make them interoperate securely with audio conferencing software on multimedia PC's. * Truly voluntary standards Any cryptographic standard adopted by the government for private sector use must be truly voluntary. Voluntary means, to us, that there are statutory guarantees that no citizen will be required or pressured into using the standard for communications with the government, or with others. No government benefits, services, or programs should be conditioned on use of a particular standard, especially if it involves government or private key escrow. * Open standards Standards chosen must be developed in an open, public process, free from classified algorithms. The worldwide independent technical community must be able to create and evaluate draft standards, without restriction or government interference, and without any limits on full participation by the international cryptographic community. * No government escrow systems Any civilian encryption standard which involves government getting copies of all the keys poses grave threats to privacy and civil liberties, and is not acceptable in a free society. * Liberalization of export controls Lifting export controls on cryptography will make the benefits of strong cryptography widely available to our own citizens. U.S. hardware, software and consumer electronics manufacturers will build encryption into affordable products once they are given access to a global marketplace. Today's widespread availability of "raw" cryptographic technology both inside and outside the United States shows that the technology will always be available to "bad guys". The real question is whether our policies will allow encryption to be built into the fabric of our national and international infrastructure, to provide significantly increased individual privacy, improved financial privacy, increased financial security, enhanced freedom of association, increased individual control over identity, improved security and integrity of documents, contracts, and licenses, reduced fraud and counterfeiting, the creation of significant new markets for buying and selling of intellectual property, and a lessened ability to detect and prosecute victimless crimes. These benefits are not free, however. EFF does recognize that new communications technologies pose real challenges to the work of law enforcement. Just as the automobile, the airplane, and even the telephone created new opportunities for criminal activity, and new difficulties for law enforcement, encryption technology will certainly require changes in traditional investigative techniques. We also recognize that encryption will prevent many of the online crimes that will likely occur without it. We further believe that these technologies will create new investigative tools for law enforcement, even as they obsolete old ones. Entering this new environment, private industry, law enforcement, and private citizens must work together to balance the requirements of both liberty and security. Finally, the export controls used today to attempt to control this technology are probably not Constitutional under the First Amendment; if the problems of uncontrolled export are too great, a means of control must be found which does not restrict free expression. CONGRESSIONAL LEADERSHIP TOWARD COMPREHENSIVE POLICY FRAMEWORK IS CRITICAL The efforts of Congresswoman Maria Cantwell, Senator Patrick Leahy, and other members of Congress, show that comprehensive policies on privacy, security and competitiveness in digital communication technologies can only be achieved with the active involvement of Congress. Unilateral policy efforts by the Executive branch, such as Clipper and misguided export control policies, will not serve the broad interests of American citizens and businesses. So, we are pleased to see that the Vice-President has pledged to work with the Congress and the private sector in shaping a forward-looking policy. We see the Vice-President's letter to Congresswoman Cantwell as an important opening for dialogue on these issues. The principles of voluntariness and open standards announced in the Vice- President's letter, as well as those mentioned here, must be incorporated into legislation. We believe that under the leadership of Senator Leahy, Reps. Cantwell, Valentine, Brooks and others, this will be possible in the next congress. EFF is eager to work with the Congress, the Administration, along with other private sector organizations to help formulate a new policy. EFF is also pleased to be part of the team of grass roots activism, industry lobbying, and public interest advocacy which has yielded real progress on these issues. FOR MORE INFORMATION CONTACT: Jerry Berman, Executive Director <jberman(a)eff.org> Daniel J. Weitzner, Deputy Policy Director <djw(a)eff.org> For the full text of the Gore/Cantwell letter, see: ftp.eff.org, /pub/Alerts/gore_clipper_retreat_cantwell_072094.letter gopher.eff.org, 1/Alerts, gore_clipper_retreat_cantwell_072094.letter http://www.eff.org/pub/Alerts/gore_clipper_retreat_cantwell_072094.letter

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Gore's "new and improved" key escrow proposal
by mpjohnso＠nyx10.cs.du.edu 17 Dec '03

17 Dec '03

Just think how easy it would be to comply with software key escrow requirements: imagine a new PGP option -- +encrypt_to_escrow_agents=on The escrow agent's PGP public key could be shipped with every copy of PGP... naturally, every PGP user will be required by law not to override this option if the Vice President gets his way. --- sound of tongue being removed from cheek --- I have tried to think of a positive use for key escrow. The only thing that I have come up with so far is kind of like having local key escrow within one company, or something like that. Kind of like having a master key that fits all the offices in one wing of a building, or something like that. That could be good in some business uses, provided you could pick your own trusted master key holder. I don't think that is what Al Gore has in mind.

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Re:
by shamrock＠netcom.com 17 Dec '03

17 Dec '03

Conrad wrote: >Could they write code that could fabricate notes from giberish? >What if you encrypted a love letter and they 'decrypted' a drug deal? > That would be rather easy to acomplish with a secret algorithm. Still possible, but not quite as easy with a published one. I am sure it will be done. >Also, on the national ID card issue, I was involved in bar codes >(machine readable labels) and came across really small (grain of >rice sized) transponders with ID number encoded. These could then be >machine (transducer) readable. They were glass coated and had >various industrial applications. I have since read that they have >implanted them in pets to identify them if they run away. Next step >would be implanting them in people. You would then have an absolute >way to ID people (short of surgery). > I think this is the real problem that awaits us. While I do not believe that society is quite ready for it to be broadly deployed, I think that it inevitably will happen. First to monitor conviced criminals (to make sure that rapist really stays away from schools), then children (in case they get abduced), soon afterwards everyone else. And you know what? The public will _ask_ for it. Picture of happy shopper. "Citibank transducer (TM). Now nobody can use my account without my knowledge and best of all -- I don't have to remember to bring a card. I can't understand why not everyone is doing it." Jingle. -- Lucky Green <shamrock(a)netcom.com> PGP public key by finger

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Cypherpunks = soc.women.... ?
by rishab＠dxm.ernet.in 17 Dec '03

17 Dec '03

The Newsweek cover on sexism on the Net may have basis; there may be a need to discuss these issues; an occassional post on the subject may be useful on this list -- but 40k? Please move this to soc.women.attitudes or alt.fan.true-lies or something. Funny. Our resident editor, Perry, is usually pretty quick on the draw with scathing "what's this to do with crypto" messages. ----------------------------------------------------------------------------- Rishab Aiyer Ghosh "Clean the air! clean the sky! wash the wind! rishab(a)dxm.ernet.in take stone from stone and wash them..." Voice/Fax/Data +91 11 6853410 Voicemail +91 11 3760335 H 34C Saket, New Delhi 110017, INDIA

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Re: Voice/Fax Checks
by Pierre Uszynski 17 Dec '03

17 Dec '03

A couple of pointers on current outfits trying to undercut the "transaction cost", none of them the ultimate we all root for, but nonetheless. hfinney(a)shell.portal.com writes > Robert Hettinga writes: > > >I've gotten stuck on > >exactly how to "*undercut*" the transaction costs of existing methods. Got > >any ideas? > > It's pretty clear that credit cards don't work for some of the transactions > people want to do: > [...] > It's not that easy for a mail-order shoestring startup to get the ability to > accept VISA cards. Because of the danger of fraud, the credit card companies > like to see a storefront and/or some previous history. Someone who writes a > nifty PGP shell and wants to sell it for $10 per will have this problem. It's actually getting easier. Small card service outfits have noticed the problem. They have looked at the danger of fraud, and when accepting a new company, still conduct a sufficient investigation (so they claim :-). They have also looked at the way small outfits operate. The result is that it seems it is now possible for "home businesses" like BBS's or software sellers to get cheaper service than store fronts. It comes out to something like $25 a month + 2.5-3% per charge ($0.20 minimum per charge, $25 minimum per month) + equipment, roughly, for VISA and Mastercard. As an example, in the San Francisco area, try ... errr... <grumble>... (Darn it, I buried that guy's card... try the phone book :-) > 3) People who don't like giving out their credit card numbers to an unknown > email address. Or to a small random unknown business... Which is a problem even if everybody could accept VISA, as you mentioned. Others already mentioned on the list the 1-900 phone based "netcash" <shrug> service described in July 1994 Boardwatch Magazine. You call the 900 number with your modem, you get a random string for it, and your phone company bills you $10 (info at netbank-info(a)agents.com) You then can get change (down to $0.25 strings), do on-line validation of transactions, and eventually redeem the strings, minus a 20% redemption fee. In addition to that one service, I already heard of two others that cater in particular to BBS's, similar system where you get billed $10 for a 900 call, and get a random string to use as a voucher. These two don't let you "get change" or any similar facility, but they let small businesses get rid of the "collection" process, for a fee. In all these cases, the fee is around 20-25%, so there may be space for competition (I don't have the coordinates for these, just know where to ask). That was/is actually the strong point of the French Minitel system (as much as I can't stand that piece of plastic ****): Minitel services are accessed (mostly) through 900 style numbers, and France Telecom handles all the billing and collection for the Minitel service providers, allowing charges as low as 7 cents per call to a service (most are much higher, WAY higher). We already discussed the "phone check" idea, even Western Union advertised it, and maybe even provides it :-) Clearly all these systems have disadvantages, and are some way from what some of us want, but they show that the current "billing" services are not standing still, and are working on this access barrier to credit card payment. Clearly too, they don't seem to be working in the direction we want. Pierre. pierre(a)shell.portal.com

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