Vince Cate has written several things in the past couple of days about the situation in Anguilla; actually, I think we've learned more about the operation of his service in the last few days than we have in the past year or so. Some instructive points, and some worries. This message contains: * discussion of the situation Vince describes * what I surmise to be some of the behind the scenes realpolitik * the role of physical vs. cyberspace data havens Rather than respond point by point to one of Vince's messages, I'll first make a few general points, free-form: 1. As I have said, I admire what Vince has done. Evolutionary learning can't happen without experiments and tests, so his experiment is important. 2. If Vince ends up moving in a direction different from that of operating a traditional (!) data haven, I will not be very surprised. Were I in his position, I might well do the same thing. (Lots of reasons, issues....)\ 3. Vince seems to be a in a somewhat precarious position, awaiting renewal of a one-year work permit. In any country, this is a shaky basis for continuing a project. I certainly don't know what his relationship is to the local authorities, but I sure know I'd feel constrained if I were up for renewal like this. (Consider how the U.S. refuses to renew visas for "undesirables," including writers whose writings the establishment dislikes, AIDS activists, anarchists (!!!), etc.) 4. The small size of Anguilla--I surmise and feel--works against operating the kind of "data haven" many of us feel could exist. Given that data havens will have all sorts of unusual, undesirable, and subversive materials, this "small community" will probably react unfavorably to any publicity generated. (And it's in the nature of some of these customers to "advertise" themselves flamboyantly--unlike Swiss banking--so as to generate customers...this pretty much guarantees that there will be stories like "Anguilla--New Source for Neo-Nazi Material!") 5. In the U.S., there are 250 million people, extensive support networks for protecting free speech (much as we like to focus on the suppression cases), and a legal system that really does make it pretty hard for a bureaucrat or even the President to pick up a phone and have a business he doesn't like shut down. I surmise, given the size of Anguilla and the non-constitutional basis of its government, etc., that it _might_ be a lot easier for a bureaucrat or the Governor-General, or whomever, to seriously disrupt any business by a few phone calls. I don't know this for a fact, but I suspect it to be true. (The closest I've been to Anguilla is the Bahamas, and it is reported to be seriously corrupt. I can't imagine a data haven surviving there if the Ruling Families decided they didn't like it.) 6. So, what does this mean? It means, I believe, that small Carribbean islands are likely to be poor choices for data havens. The more "civilized" they are, ironically, the poorer a choice they are. (Think: pirate islands, where "anything goes," so long as the right payoffs are made.) 7. Multidimensionality. With banking havens, there is basically only a single degree of freedom to consider, at least insofar as deciding which policies to consider. That is, over a period of many decades a banking industry arises in some country (Switzerland, Austria, Lichtenstein, etc.), with bankers, vaults, protocols for deposit and withdrawal, etc. And with lots of fees to lubricate the whole system, provided payoffs to various officials and royals, etc. Contrast this with a small data haven (a new industry) in a small country, with operating margins that are razor-thin (given the pricing structure Vince announced, I doubt Taxbomber and other customers were paying enough to ensure a flow of payoffs to the Ruling Families of Anguilla and the various officials that need to look the other way). 8. That is, how will a data haven handle situations where diverse "threats" and "abominations" are traced to the haven? Bomb information, pornography, child porn, trade secrets, pyramid schemes, and so on? (Vince can of course say to each of these: "Not what I want," but he may find that such ad hoc declarations chase away most of his business...) 9. In summary, I applaud Vince's experiment. But I wouldn't call it a data haven, based on what I've seen. Maybe a tax haven, but even this I have yet to see much evidence for (Vince is not free to disclose who his customers are, of course, so we are somewhat isolated.). I will say that if the only goal is to avoid sales tax and/or income taxes, operating out of Anguilla may not be ideal. After all, suppose there's a dispute (a la Taxbomber): is one supposed to fly to Anguilla, hire local attorneys, and sue in the local courts? The tens of thousands of dollars this would cost would likely swamp any tax savings.....depends on a lot of factors, but I think you all see the point. Well, I've written enough. Vince asked me a few specific questions, so I'll briefly answer:

Tim, we would all be very happy if you were to locate a country that could be the site of the ideal datahaven, and finance a couple cypherpunks to setup there. It would be a big help to our cause. Could you do this?

Yes and no. Yes, if a good business opportunity presented itself, with reasonable payback, good ideological basis, and without too many entanglements (e.g., having to fly to Country A to check on my investment too often). No, in that there is no "liquid market" in such investment opportunities. That is, I can't just say "Send me your plans and how much money you want." I might consider partly funding a venture by people well-known to me, but, so far, no such possibilities have presented themselves.

In the mean time, people may have to exist in cyberspace (like www.taxbomber.com) without having a totally secure physical location. This is not the end of the world, or really even that painful. If done right you could be down for only an hour - just long enough for nameservers to change. Taxbomber is now setup to do it very fast next time, if the need ever comes. Tim, I think you have even advocated this approach, not stressing the physical location, just the cyberspace location. No?

Yes, I agree. I actually wrote my "Crypto Anarchist Manifesto" in mid-1988, just a month or so before reading Sterling's "Islands in the Net," which was focussed on physical data havens (he may've been the one to coin the term, actually). My thinking was already heavily influenced by Vinge's "True Names," and Chaum's work on untraceable digital cash (1985) was well-known to me (for reasons I've written about elsewhere), so I tended to view data havens as not being tied to physical communities where the local potentates could revoke work permits, visas, travel permits, business licenses, etc. The Anguilla Experiment is certainly not changing this opinion. (And Stephenson's "Snow Crash." in 1992, further popularized this vision of cyberspace havens....I can't say he devised any new forms that some of us hadn't already been thinking about, but he sure did make it a more vivid vision through his evocative fiction.) What the form of these "cyberspace data havens" might take is unclear. Several pieces of technology are missing, just as they were missing four years ago when one of the early list members contacted me to tell me how easy it would be to set up a data haven with computers. (It wasn't easy then, and it ain't easy now. The pieces that are missing are the reifications of protocols we talk about a lot....mere encryption and authentication are only the starting points, and look at how hard it's been just to get _them_ deployed.) --Tim May Boycott "Big Brother Inside" software! We got computers, we're tapping phone lines, we know that that ain't allowed. ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay@got.net 408-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, Licensed Ontologist | black markets, collapse of governments. "National borders aren't even speed bumps on the information superhighway."