FEB 17 CYPHERPUNKS TRANSCRIPT Crypto-anarchy: How new developments in cryptography, digitial anonymity, and untraceable digital cash will make the State a thing of the past. [an anarchist's forum.] With cypherpunks Dave Mandl and Perry Metzger. Thursday Feb 17,1994 7:30pm, NYC. Copyright (C) 1994, cypherpunks@toad.com All Rights Reserved. This article may be redistributed provided that the article and this copyright notice remain intact. This article may not under any circumstances be sold or redistributed for compensation of any kind. MODERATOR: In any event, again this is part of a monthly series we've been doing for -- close to twenty years now. The announcements of our March forum, which is (inaudible) with people like Judith Molina and Hannah Resnikoff from the theater, Richard Kostelanetz and (inaudible) and such -- announcements are on the table back there, some information about the book club you might be interested in, and our mailing list. Sign up for our mailing list and you will never get off it again. Unless you send us a contribution and become a life member. Then we take you off right away. We have lots of -- certainly lots of anarchist literature for sale in the back. Please feel free to peruse and spend a lot of money. At some point, usually after the speakers finish, we get into questions and discussion. We're going to pass a donation box around. We've got the door locked so you can't sneak out. Just to let you know in advance, the suggested donation is $5, more if you can, less if you can't. MALE: Much more if you can. MODERATOR: Right. Let's see. Here we have some souvenir flyers. Anyone who gives more, they can get a souvenir copy or have their program tonight autographed by the speakers. Let's see. Before I introduce them, a couple of sort of "for your information" announcements. Let's see. All right. One, old friend and book club participant Bruce Caton does a regular series of radical walking tours. Next one is Saturday, March 12th, 1:00 p.m. in Chelsea. I have the material. If anyone is interested in the literature, take one back. This Saturday, 2:00 p.m., we're going to be having a first gathering of anarchists in the lower Hudson Valley, Westchester-Rockland area. And yes, there are anarchists in the Westchester-Rockland area. You're looking at one. Anyone who's interested, see me in the back. I can give you the details of when and where and so on. Coming up in April is the Socialist Scholars Conference, April 1st through 3rd. Despite the name, anarchists do participate in this thing. We've had anarchist panels in the past, and we'll probably have both anarchist panels and literature tables at the event so, again, see us if you're interested. So -- without further ado, our subject tonight is Crypto-Anarchy, and for those of you who saw the original flyer that's the Scandinavian version for the Olympics Kripto-Onarchy. And our speakers tonight are Cypherpunks Perry Metzger, long-time cryptographer and lots of other stuff, and Dave Mandl, long-time book club member and Cypherpunk. So -- I'll let them take it away, and just enjoy it. * * * DAVE MANDL: I'm gonna start off with just sort of a general overview of some of the issues and techniques and stuff. Then Perry is going to -- if anyone is taping this, by the way, if anyone out there besides this guy is making an audio tape I'd appreciate it if you'd let me know afterwards, because I think people, some of them, might want to get copies from you eventually. Okay. I'm going to start off with just a -- sort of a general overview of what this stuff is all about. Then Perry is going to talk about some more specifics, and then we hope --hopefully we can get that over relatively quickly and then we can have a discussion, question and answer, whatever. But first Perry is going to say something. PERRY METZGER: Yeah. Just trying to get a sense of how much people know about this topic already. How many people here have any real knowledge about what Cryptography is? Just raise your hand. Okay. Call it about -- one quarter, one third maybe. No, less than a quarter. Okay. How many people here know what the National Security Agency does? And I don't mean just to the level of knowing what "National Security" might mean. So we're talking, again -- a couple more. Okay. How many people -- well, actually that already more or less says it. This should be interesting for you. Go on. DM: Okay. Perry and I are involved with a group called the Cypherpunks, which I'm sort of hesitant to say just because it's a very loose-knit group of people very -- anarchically constructed, and there are no official spokesmen or leaders or anything like that. Just mentioning it for informational purposes only, as they say on all those petitions and stuff. Cypherpunks is a pun obviously on Cyberpunk, with "Cypher" being a reference to codes and cyphers. More on that in a second. If the Cypherpunks have a particular philosophy, party line, approach, we generally refer to it as Crypto-Anarchy. Crypto-Anarchy is a term that was coined by Tim May, one of the founders of the group, Cypherpunks, and it's a reference to like Crypto-Fascist or Crypto-Authoritarian or whatever, and the pun being in -- "Crypto" because the core of what the Crypto-Anarchists or Cypherpunks do is cryptography. That's the basis of everything we're going to be talking about tonight, basically achieving anarchy or sort of working towards anarchy using cryptography and other things. So let me just briefly for the whatever -- twenty- seven percent of you who don't know what cryptography is, let me just give a brief explanation. MALE: Seventy-seven. DM: Seventy-seven. Sorry. Cryptography is -- I guess a dictionary definition would be the study -- the science of codes and cyphers. Hiding, encrypting, encoding information so that other people can't read it. Cryptography in one form or another has been around for probably thousands of years, probably more than that -- as long -- as far back as people had things they needed to hide. Let me just give you some really simple examples of what crypto- graphy might be. Let's say that we're planning on doing a bank job tomorrow (ridiculous) and I want to pass along to my friend over here the name of the guy who's going to be going in and opening the vault, who happens to be Perry, let's say. So I'm going to hand him a slip of paper with Perry's name on it, but I don't want to write "P-e-r-r-y" and give it to him because someone else may grab the piece of paper away or see it over his shoulder or something and then to the -- to the pokey with Perry. So what I might do is instead of writing "Perry" on a piece of paper maybe I'll scramble the letters up and write "Y-p-r-e-r" and he knows based on some previously agreed upon formula that I take this cryptic message here and move this letter here and move this letter here and lo and behold there it is --"Perry". And if anyone else intercepts it they just see a bunch of junk, and they don't know who it is that's gonna be opening the bank vault. Another way I might hide this information from enemy eyes would be to substitute the letters, so instead of writing "Perry" I might write "Xwssp" where X represents the letter P and W represents the letter E and so on, and again we have some previously agreed-up code or formula that says when you see X substitute P and so on, and again you put it together and there it is, "Perry". Okay. So that's the most basic kind of cryptography. In fact codes that simple haven't been used for probably many centuries, and -- especially in I guess the last forty years cryptography has made tremendous, tremendous leaps forward so now it's not just a matter of shifting letters around. If you look in Newsday, the newspaper, every day they have a little puzzle called the "Cryptoquote" where they have a quote by some famous guy and you have to figure out which letter is substituted for which. So that's baby stuff now basically. In the last forty years it's changed so that now it's not based on just jumbling letters around but it's based on higher mathematics -- extremely, extremely advanced, sophisticated mathematics, so sophisticated that the strongest -- the codes that are widely used today by like the government or even banks would require all the computer power in the world and more to crack. So cryptosystems have gotten much, much, much, much, much more sophisticated. So a couple of new developments that are of interest to us: Well, the main thing is this ultrastrong state-of-the-art cryptography has become available to the hoi polloi, people like us. With advances in computer technology, just a simple PC that a lot of you, maybe even most of you, have, in your bedroom, you can run software that does extremely sophisticated crypto- graphy, in fact so sophisticated that even the NSA, we think, can't break it. So military strength -- for obvious reasons, military strength is generally the name they use for the strongest cryptosystems in the world, because those are the ones that would be used by the President for the codes to the nuclear weapons or something like that. Perry and I are going to be giving those codes out a little later on in the evening. [LAUGHTER] Another thing which Perry is going to talking more about is the N.S.A., National Security Agency. That's the super tip-top-secret U.S. government agency that specializes in cryptography. For years they had a complete monopoly on cryptography. Well, not complete, but effectively a monopoly on cryptography. That's sort of changed now, or that has changed now, and like I said jerks like us have access to extremely powerful cryptography, which is a good thing. Okay. So what does this mean? Who cares? What do we need crypto- graphy for? Who gives a damn? Well, I'll tell you. There are a whole bunch of different things you can do now with this extremely strong cryptography, and I usually just arbitrarily for no parti- cular reason; just to make it easier I usually split it up into two different categories: defensive applications of cryptography, and offensive applications. Let's start with the defensive stuff, or passive as opposed to active. First of all, more and more -- a lot of you probably know this. Some of you haven't really seen it yet maybe. Everything's moving more and more into digital form, and moving to the Net. We're probably going to be throwing the term "the Net" around a lot. People say the Net they're usually referring to the Internet, which you probably have heard, most of you, because it's plastered all over magazines every day now. The Internet basically in a nutshell is a massive international network of computers that is --basically is totally anarchic. It spans the whole world, probably just about every country at this point? PM: No, but every industrialized country at this point. DM: A whole shitload of countries. And over the Net, using these amorphous connections to computers around the world, you can send information almost instantaneously anywhere in the world at the push of a button. That also means that as time goes by more and more of your personal information let's say is going to be stored on the Net and stored in electronic form. So it's -- we're still at the very, very early stages of this happening and it's a really important time because first of all while before this infra- structure is fully developed the government wants to sort of slip by certain laws. The Net, as I said, is still basically anarchic, and the govern- ment doesn't like that, and while we're still at square one they want to slip in laws that will restrict this ultimate freedom of movement that people have on the Net. Okay. Let me get into some of these applications. First of all, electronic mail. Over time -- I mean you'll still be sending mail in envelopes to your friends, but more and more mail will be sent over the Net. E-Mail. Electronic Mail. Electronic mail is completely insecure. I don't mean it has an inferiority complex. [LAUGHTER] I mean basically it's completely unprotected. So we -- a lot of you here probably use electronic mail every day. It's growing by leaps and bounds. If I send an electronic mail message to someone out here: "Hi. Meet me tomorrow night at 7:30." That message goes out over the Net. It may be passing through several other machines on the way from me to him, and it goes out in the clear as cryptographers would call it, meaning it's not encrypted. It's not protected in any way. Anyone who taps into the line, anyone who has the appropriate access to the computer system I'm using, can just pick it right out, read the text of the message I'm sending, no problem. That's that. That's not good, especially if I'm sending sensitive messages over the Net. So using cryptography -- this is the most obvious use of cryptography -- what you can do is take the message you're going to send, encrypt it so that it's scrambled and cannot be read by anyone except the person it's intended for, and then send it out. Someone intercepts the message, someone reads it, fine. Go ahead. Do whatever you want. It's a bunch of junk. You can't make sense of it unless you have the key. I guess I sort of skipped over that. In cryptography, it depends on keys, so ... PM: I'll get into that. DM: Okay. So basically if I send you a message that's encrypted and it's intended for you, you will have the key to read it. No one else will. And like I said, this stuff is basically uncrackable, unreadable by anyone, including the N.S.A. as far as we know. So -- you want to send E-mail to somebody, you encrypt it, send it out, that's it. That problem is solved. No one can read it. No one. There's another problem, however, and that's what cryptographers call traffic analysis. For example if the Chase Manhattan Bank on Seventh Avenue in Park Slope is knocked over every Monday evening and they see that every Monday afternoon an E-mail message passes from me to Perry even though they can't read it 'cause it's encrypted they may say, "Hmm. Something fishy's going on here. There's E-mail going from Dave to Perry every Monday. Ten minutes later the bank gets knocked over." So without actually being able to read my message, they still can sort of infer some information by using what's called traffic analysis, by the mere fact that mail is going from this person to that person. So you want to be able to hide that also if you can. The main technique that people have been using and talking about and developing to foil traffic analysis is something we can anony- mous remailers, which are like mail drops [OR MAIL FORWARDING SERVICES]. Most of you know what mail drops are. Any criminals in the audience? They're like the electronic -- the Net version of mail drops. The way an anonymous remailer would work is -- it might be out in Berkeley, California, let's say. There actually are a lot of them out in Berkeley. There's one in Finland that's really heavily used. I might take my E-mail message saying, "Perry. Chase Manhattan Bank. The usual. Seventh Avenue." Send it to this remailer in Berkeley with instructions to the remailer, which is an automatic machine -it's a computer program -- saying, "Take this message and forward it over to Perry Metzger." Okay. So now what happens? What's going out from me is an encrypted, that is completely unreadable message, out to Berkeley. A minute later, ten minutes later, an hour later however we set it up, a message goes from Berkeley over to Perry. Okay? So no one can read the mail because it's encrypted. No one can do traffic analysis because it's -- it's blurred. I can even -- without getting into too much painstaking detail I can bounce it off ten different remailers. I can send it to Berkeley, to Finland, to here, to there, to there, and then to Perry. No one looking at this -- where the mail is going can possibly figure out what's going on. Okay. That's number one. More applications for cryptography, more of these --what I'm calling defensive applications. Let's say you have people on the Net a lot of times asking embarrassing questions. Let's say --there are groups, there are discussion groups out there for -- to discuss sex or to discuss like -- you know people who were sexually abused when they were children, all kinds of stuff with all kinds of personal information. You don't necessarily want to send out E-mail saying, "Oh, you know, I've never slept with a woman. Can anyone tell me about, you know, how?" That's the kind of thing you see all the time and you don't necessarily want your name attached to that, so, again, you can -- you can use encryption to hide the contents of what you're sending out. You can bounce it off these remailers so no one is the wiser. Tim May mentioned this next one, actually. You can actually lead several lives. Let's say you're like a high government official. This is sort of unlikely. Let's say you work for the Defense Department or you're the Vice President or something like that but you actually have some -- or you're a fancy straight respected scientist but you have some bizarre views that you don't want your name to be tainted with. Let's say you're a fancy scientist and you have an interest in UFO's or crop circles or something like that. Using cryptography, anonymous remailers and all this stuff you can lead a double or triple life, and, you know, lead your straight, respected Nobel Prize life and at the same time discuss crop circles with some lunatics over in England. [LAUGHTER] And -- you see that all the time. You see people on the Net who use pseudonyms, and actually establish reputations under a particular pseudonym. There's someone in the Cypherpunks group --there have been several people in the Cypherpunks group -- there was a guy -- he used the name "The Wonderer" and he would ask -- you know, he was asking like very simple, basic questions, and for all we know he might have been -- it might have been Perry? And he was embarrassed to say, like "What's cryptography?" You know? [LAUGHTER] So he used this pseudonym, "The Wonderer." PM: You found me out. DM: I always suspected. You can't fool me. [LAUGHTER] DM: Okay. You might want to hide certain political activities. We're going to go over to the Federal Reserve and knock it over tomorrow. Whatever. What else? Purchases. Over time people will be making purchases over the Net. You may be buying and selling stuff over the Net. You don't want The Man or The Woman -- Janet Reno, I guess -- to know that you buy $300 worth of sex toys every month. Or you send out your credit card number over the Net to buy stuff and you don't want people grabbing your credit card number, which, as I said, is very easy to do. So, again, you can encrypt this stuff and that's the end of people being able to track these purchases or rip off your credit card number. All kinds of other personal information. Again, more and more of this stuff's going to be stored in electronic form. Medical records, credit history, stuff like that. If you use cryptography to send all the stuff around then you have a little bit less of a worry about people being able to just circulate it around freely. Okay, that's some of the basic -- what I'm calling the defensive stuff. Basically just, you know, protect your privacy because your privacy is going to be in more and more jeopardy as the Net grows, as Big Brother grows. Okay, but let's get on to the fun stuff. There's what I call offensive, not defensive, tactics, but more fun offensive stuff. For example: Whistle blowing. You may work for some government agency that's doing some particularly horrible thing and you want to blow the whistle on them. Or they ripped someone off or they did LSD experiments or something like that. You can use crypto- graphy, anonymous remailers, to blow the whistle on people. Anonymous transactions. Again, as more and more people are doing business over the Net you can conduct transactions with complete untraceability. Perry, I think, I hope, will be talking a little bit about digital cash. PM: I will. DM: Digital cash is another application of cryptography, where people can buy, sell, do banking on the Net without anyone knowing anything -- like an electronic Swiss bank account. People can buy and sell stuff from each other without even knowing who the parties are -- a drug deal, let's say, or whatever, and no one will know who either party is. Underground economy, that falls into the same category. Digital cash. Again, if all this stuff is encrypted then it's basically untraceable, untrappable by the government, the I.R.S., whomever. Sending illegal information. The safe example that Tim May used when I interviewed him on my radio show was, "RU-486?" Is that still illegal? Or what's the deal? TM: Yes. DM: So let's say you want to get information out to people on RU-486, the abortion pill, which is illegal in the U.S. Again, you can encrypt it, send it anywhere in the world, completely untraceable. Okay. That's basically it. What this means is -- and this is where the anarchy part comes in. Borders, national borders, are Swiss cheese. Basically as things move more and more over to electronic form, borders -- whether they like it or not, the governments -- territorial gangsters as a friend of mine calls them -- borders become Swiss cheese. They become completely irrelevant. At the push of a button you can send anything you want basically anywhere in the world. No one will know what you're sending, where you're sending it, nothing. There's a quote. There's a quote in a Cypherpunks article in "Whole Earth Review." You can hide encrypted information on a DAT, a music cassette or a digital audio tape, so, for example, Anyone carrying a single music cassette bought in a store could carry the entire computerized files of the Stealth Bomber and it would be completely and totally imperceptible. Nothing anyone can do about it. Again, basically what this does is sort of renders obsolete a lot of the laws, or most of the laws, or the whole basis for laws that are in place now. Borders can't be enforced, taxes can't be enforced, and so on and so on. You get the idea. So to cut to the chase, the main goals of crypto-anarchy, the main goals of the Cypherpunks, are: (1) to spread the use of strong cryptography. Everyone should use encryption. You should send all your E-mail encrypted. People say, "Why do I need to encrypt my E-mail? All I'm doing is saying, you know, meet me for lunch at 12:30. I don't need to encrypt it." The answer we usually give is most of the mail you send out isn't that secret either, but you wouldn't send it all on postcards. So sending your E-mail unencrypted is like sending all your mail on postcards. Encrypting your E-mail is like putting all your mail in envelopes. One further reason for that is, again, this traffic analysis thing. If you send all your mail out unencrypted, hundreds of pieces of E-mail a day, and then all of a sudden tomorrow at 5:00 p.m. you send out an encrypted piece of E-mail, people might get a little suspicious and look a little further into things. That's one reason that we promote the use of encryption all the time. If everything is encrypted-- if things are just flying all around the world, no one knows anything. Half of them may be, "Meet me for lunch at 12:30," and the other half may be, you know, "Let's make a drug deal," or whatever. So the more people use cryptography the more the lines get blurred and the more powerless the authorities become. There is a dark cloud which Perry is going to talk about in a second, that unfortunately -- I would prefer it if we could just stick to this stuff, but actually there have been developments recently mainly with some- thing called the Clipper Chip that is really, really, ugly and -- the Clipper Chip, and also the Digital Telephony Bill that -- sort of bring a dark cloud in over all this stuff. One thing I'm always talking about is how in the last few years anarchists or anarchist activists have sort of maybe been getting an inferiority complex, because it seems like the cops don't care about us that much anymore. As much as I don't want to be a martyr, you know that if the cops are tapping all your phones you at least know that you're probably doing something right. But I sort of get the impression lately a little bit that, you know, the cops just think "Fucking anarchists Who cares? They're not doing anything." Well, you can put those fears to rest, because this stuff is actually of great interest to the government, and the government is going to tremendous lengths to stifle this stuff. It definitely has the government's undivided attention, and I guess Perry is going to tell you more about that now. PM: All right. Now I was touching on this a little bit earlier, but -- this gives you a little bit of motivation, why this is so interesting. It's one thing to say that the government is interested in this, but does anyone -- I know that some people in the audience already know the answer to this, but do most of you -- if most of you are asking yourself what's the biggest and most secret agency that the United States government operates, you probably think the Central Intelligence Agency. MALE: National Reconnaissance Office. MALE: The Federal Reserve. PM: No. It is the not the N.R.O., either. The N.R.O. is bigger than the C.I.A., but it is not bigger than the N.S.A. MALE: Is DISCO more secret than the N.S.A.? PM: Pardon? MALE: DISCO? PM: DISCO? MALE: I guess it is. PM: It must be. The National Security Agency -- spends more money and has more employees than all of the other intelligence organizations the United States government operates combined. Okay? It spends over $30 billion a year only on signal intelligence operations (SIGINT). I'm about to get into what those are. This is something that the government cares about extremely passionately. They spend vast amounts of money on it. You should ask yourself why. Now what exactly is the business of the National Security Agency? The business of the National Security Agency is signals intelligence. Most people aren't aware of it, but signals intelligence is considered by most intelligence analysts to be the most important form of intelligence. Signals intelligence played incredibly important roles all through World War II. How many people here knew that the Battle of Midway was won entirely because of signals intelligence intercepts? Okay. A couple of people. MALE: Seven percent. PM: How many people in this audience knew that the Battle of the