-----BEGIN PGP SIGNED MESSAGE----- At 8:57 PM -0500 on 11/20/01, Declan McCullagh wrote:
I don't mean to take issue with much of what Anonymous writes, but some of the examples mentioned can be taken care of adequately by existing payment systems.
Using Amazon's payment system (they have two types, voluntary and pay-for-content), a webmaster can charge as low as $1, I believe, for content, and Paypal is another option.
Naturally, they don't do micropayments, and they don't offer the type of anonymity that other systems do, but the early-cypherpunk-archive- editing project, for instance, wouldn't require anon payments in ha'pennies either.
In other words, the cost of anything is the foregone alternative? You get what you pay for? :-) The risk-adjusted transaction cost of a new payment mechanism, or of any market using those payments, has to be significantly cheaper than anything it replaces or nobody will give a damn. Think of the enormous cost differential between batch or interactive book-entry settlement and the former physical delivery of paper bearer certificates if people want a good example of that kind of supply-push phenomenon. Path dependency, is, of course, a crock, or we wouldn't have progress. The reason that Windows, or VHS, or QWERTY won is because they're the same cost, or cheaper to use, than Mac, or Betamax, or Dvorak, and just simply because everyone uses them already and they're too 'stupid' or 'lazy' to change to something 'better'. Nonetheless, the accumulated comparative advantage of a currently-universal transaction method like book-entry settlement can become considerable over time, which is why I don't think simple anonymity, even in specialized internet markets, like those for information goods and services -- or illegal transactions -- is going to ever sell very well all by itself. In order for the adoption of anonymous payments, universal or otherwise, those payments have to be valuable to *everyone* in a given marketplace. Even if early adopters might have special circumstances for trying them in the beginning, those transactions have to be cheaper, and less risky, than any other way of exchanging, clearing, and settling a given transaction. That's for each and every single user of that transaction, and not on some nebulous, transfer-priced "social-cost" basis, but in the raw reduction of transaction cost at the time of the transaction's execution, and in the reduction of risk in the period between the transaction's execution and its clearing and settlement. Fortunately, there are lots pieces to the transaction-cost calculation, and they are all breaking our way at the moment, hard though that may be to see right now through all the smoke and debris and panicked attempts to maintain order at the expense of personal freedom. As we saw during the multi-day NYSE "holiday" in September, the risk of *not* having an instantaneously-settled, internet-dispersed transaction mechanism has gone up considerably in the past month or so. The resulting market distortion and its economic effects would probably have even been worse if the NYSE had actually been up and trading at the time. Millions of shares worth of transactions would have executed, but might not have then been unable to clear or settle, which could have caused damage to the entire planet's financial system, collapsing float times and inter-market custodial links being what they are these days. This is nothing new for long-time subscribers to this list. As Eric Hughes kept saying when I first got here in 1994, it is immediate and final settlement that attracts the capital and payment system markets to cryptographic protocols like Chaum's blind signatures, and not particularly anonymity. Of course, as cypherpunks probably knew even back then, if you set out to create an instantly-settled network-dispersed transaction settlement mechanism, you converge, quite rapidly, to the use of internet-based financial cryptography protocols which create a pre-authenticated bearer asset transfer, a transaction which executes, clears, and settles all at once, and which, as a result, is completely identity-independent. In fact, it's so secure that you can do the transaction anonymously, which, not entirely coincidentally, is what the best of those protocols were designed to do in the first place. So, ceterus parabus, it's cheaper to operate these anonymously than it is to operate them "transparently" by adding on ledgers and audit trails to something that already works without them. And, anonymity is what we end up with, whether it's what nation-states want or not. Physics causes finance, which causes politics, and not the other way around. That, I believe, will be the great, thumping paradox in all of these erstwhile constrictions on personal freedom. The steadily increasing requirement for absolutely secure, transaction-risk-free robust transactions using the internet will eventually create transactions that regulators can't use at all in law-enforcement, much less repression, and precisely at the time regulators intend to rely on increased transaction surveillance to accomplish their job the way they used to. Even more strangely, the use of those transaction protocols will be inexpensive because they don't require the supervision of regulators -- at all -- in order to prevent transaction fraud. Transparency, as a result, ends up increasing risk-adjusted transaction cost, instead of reducing it. So, that said, I disagree with the crypto-winter scenario, even though as late as last week, and, certainly looking around in September, I would have probably agreed with that distressing assessment. However, I do agree that it's probably time to crawl out from the rubble and make stuff happen again, though for other reasons than the crushing of individual liberty at the hands of a rapacious, totalitarian nation-state... There will almost certainly be further incidents of terrorism, but even now they're already part of the universal background radiation, as it were. If bin Laden and company had nukes they would have used them by now, for instance. If someone, Moslem or not, had figured out a way to aerosolize biochemical agents, rather than putting them into the mail, they would have done that by now as well. It doesn't mean that people won't try, or even succeed later, and maybe even on a larger scale than September 11th, but certainly things aren't going to all fall down immediately, and, in the meantime, making the world safer for freedom, or more properly using freedom to make the world better, is the same priority it has always been, and can be attended to much easier for the time being, with Al Qaeda undergoing a massive reorganization of its staff at the moment. So, as has ever been the case, whoever builds a robust, instantly-settled, identity-independent, internet-ubiquitous transaction mechanism that actually works in production for assets people want to trade in large quantity is going to do quite well for themselves by saving the entire economy a whole lot of money, and not just people suffering from the depredations of an increasingly powerful nation-state. In fact, it's probably safe to say that if further acts of terrorism do happen, they will only accelerate demand for such a system given the technological and economic paradox I talked about about above, and not just from criminals, revolutionaries, or any infocalyptic horseman in-between. It's certainly legitimate to argue, as some do, that freedom is some kind of quasi-religious inherent good. But, as LaGrange said to Napoleon's question about the place of god in celestial mechanics, we have no need of the hypothesis to get the result we want. To my mind, at least, freedom is a necessary and sufficient thing, but it's not *ethically* necessary, or, at least, the ethics of requiring freedom are more economic than mystical, which is as it should be. The reason free economies so dominate the landscape today is because they're more ferociously efficient than tyranny ever is at at developing and allocating resources, precisely because they make their citizens more money in the process. See Mancur Olsen's "Power and Prosperity", for some nice stuff on this idea. His first assumption, that a prince is a bandit that doesn't move, should resonate warmly with cypherpunks everywhere, for instance, and his description of exactly how Stalin was able to compel phenomenal industrial output from an enslaved Soviet labor pool -- and why it didn't matter in the long run -- is a warning to modern thinking Americans if there ever was one. So, seen that light, Britain was much more dangerous than Napoleon or Bismarck ever could have been. America was more dangerous than the Kaiser, Hitler, or Stalin, or Mao, or their successors. And, now, the emerging geodesic market, including America and the rest of the West, and, more important, an increasing number of meta-national businesses large and small, -- and in spite of a gaggle of quasi-governmental "non-profit" organizations, including, of course, all of Al Qaeda's organizational remorae -- is currently proving itself more dangerous than any neo-feudal totalitarian, national, trans-national, or otherwise. For lack of a better way of putting it, each of those oppressors, like King George and Caligula before them, were bad for business. The technology of economic liberty, including modern finance, ubiquitous internetworks, and secure anonymous cryptographic transaction protocols, will always win over oppression in any form -- political or theological. Cheers, RAH -----BEGIN PGP SIGNATURE----- Version: PGP 7.0 iQEVAwUBO/tRf8UCGwxmWcHhAQFYbwf/YSFTRIH4ikeIQQBZm+JcGZCrUNNj59Pl T9GABMCs2ad/V1Z04JYtZ909bIMdzEYhjQR+xAUkBfMu7hC5MvKUGJHgcI77Vtkw eoQvQnv56XvCHrACply6EO3X7Q+DDG42wWpPilSEOaYN4GNXvxYuSDgtL2pSyLSi xZF9PUud6xAoF+AeENkoHH4THhCqWXN1rOHBOIasPj5Chh0YapE8m1TxYVxyxbMh rWsiXMSSdiZoCPyokugHE35PSo/eueqdL81QE0961TLKPyxeei3Jn2EMFetwoxLc 7Jc9KQQycniIfLN/PAvN8zVUO1kVDcToDLQQ3JNIwC4pmyOypx/Irw== =Bp80 -----END PGP SIGNATURE----- -- ----------------- R. A. Hettinga <mailto: rah@ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'