From: KDAGUIO@aba.com Welcome to cypherpunks, Mr. Daguio. Steven's article was unclear (to me, at least), about just what you do for the ABA. Could you provide a more lengthy introduction? Whoa! Much of content of the discussions I had with Mr. Levy concerned the importance of protecting privacy and security for everyone. None of those comments made the cut. Yes, I have concerns about fully anonymous digital cash, but while I am not a full on crypto-anarchist, neither am I a crypto-facist. There are two senses of the phrase "protecting privacy and security for everyone". The first, that I favor, construes the context strictly, that is, privacy and security with respect to only the transaction system in question. The second construes the context broadly, taking into account anticipations external to the system to arrive at a judgement of what constitutes protection. It appears that you, Mr. Daguio, are much closer to the second than the first; if this is inaccurate, please correct me. I believe these two notions of protection are irreconcilable with each other. Protection of privacy to me means that only me and my counterparty know that we have transacted and how much we have transacted. Digital cash techniques address the first of these and my own Remote Auditing protocols can be used for the second. Note that I did not say that the bank need know, because both these technique allow the bank to remain willfully ignorant and yet have an assurance that they, the bank, are not at risk. Protection of security means protection against fraud and assurance of continuity of service. On the other hand, if we assume that protection of security means that the populace should be protected against narcoterrorists by denying them a conduit for funds, then the strong privacy referred to above cannot b maintained. Nor even, in fact, can the security be maintained, as a recent seizure of funds in transit inside New York indicates. (Very delicate work; the window of opportunity for the feds was on the order of an hour, as I recall, and even though they needed a court order, they hit it.) I am partial to the first because, at a deep level, it can be stated exactly what the requirements are, and relatively concisely. The second interpretation requires any number of assertions about the outside world and its chains of causality. Moreover, the second interpretation includes a significant amount of discretion by public officials who are not directly accountable to the public. Not one of the executive branch officials in charge of financial matters, however construed, is elected. Congress has ceded discretionary authority to regulators and has largely left the task of interpretation to them. This discretion with respect to what constitutes security is, to me, a Very Bad Thing. At the whim of a department, it may suddenly be declared that something new is now disapproved of. The color of law is used to justify these changes, but they coincide neither in necessity nor in sufficiency with the law. To my knowledge, there was no intensive and large scale investigation into Rostenkowski's affairs, much less the Clintons's commodities, questionable activities, if true, certainly constitute bribery. In a parallel issue, the FBI is known to have intercepted (legally, mind you) credit card purchases for grow lights, unquestionably legal even if associated with one of the least significant forms of drug use. So not every illegal thing is followed (not even the most serious) and legal things are. Let me ask you a question. If people can communicate over the net anonymously, tranmit unreadable messages, and transfer unlimited amounts of fully anonymous money, haven't you, in addition to protecting some of the interests of minorities, also perfected a mechanism by which people with evil intent can engage in criminal activities completely unobserved and with no fear of prosecution? No, we have not. What we have perfected (assuming your hypothetical) is a system where anybody with whatever intent can move money around with a strong assurance of predictability. This is manifestly _not_ the same as engaging in criminal activities completely unobserved. To pick only the most obvious examples, drug organizations still need to manufacture and distribute, and these will always remain very tangible activities. I have always believed that people won't come outside to play with you unless they feel safe. We want electronic commerce to work everywhere in the world. Well we want it to work everywhere in the world, too, because that increases the opportunity for regulatory arbitrage. A parallel with eurocurrency markets is instructive. If England allows an anonymous system and the USA doesn't, then I'll open up a eurodollar account in England and transact there. If England doesn't want to allow the system to operate there, but is willing to hold dollars for another bank in, say, Hong Kong and Hong Kong allows anonymous transaction, I use a dollar account there. In fact it's because of the ability to perform transactions of this nature at arbitrary points in the globe that anonymous systems will be very difficult to prevent in the long term. There will be money in it, you see, and military protection and fiber optic cable is not particularly expensive for a national government which wants a new industry, like, say, India or South Africa or Vietnam. There's a distinct possibility that the first country to deploy these systems will set up a new world financial center, and that's playing for the big time. Eric