Re: e$: Cypherpunks Sell Concepts
At 5:41 PM 8/6/94 -0700, Eric Hughes wrote:
The obstacles are certainly not for electronic money, which the Fed's been using for some time now, but rather for electronic cash, which includes anonymity.
We've chased each other around a tree like this one before... Let's see what the differences are this time. I've been doing some thinking about this... Anonymity can come out of retail settlement of e$, if the transactions aren't tracked. We've talked here before about how you think that the tracking of those transactions at the retail level is pretty trivial, so the cost to the user of traceable e$ may be meaningless. I'm not so sure that that's the case, and I think (I hope!) I remember Perry agreeing with me on that point. But if we fiat the argument just to see where it takes us, we come to the sheer volume of transaction records themselves. Is it possible to accurately estimate the cash transaction load of an economy? I bet that if we could, you'd see that the data from each transaction would cause the problem news servers have by several orders of magnitude. The information would get dumped pretty frequently. This is probably the same problem the NSA has now picking out signals to listen in on, but running down an audit trail is different, it's a historical process. Since you don't know whose transactions you need, you need to keep them all. True, this doesn't keep TLAs from trying trying to drink from a firehose, or more to the point, to free-dive to the bottom of the Marianas Trench (if they could keep all of the data), or high-dive into a wading pool (if they couldn't). Hmmm...
The USA provides a fair amount of financial privacy to everyone but the government, particularly law enforcement. So the _business_ case for privacy is largely felt to be already satisfied by the regulators.
When *every* business transaction can be scrutinized (as much as physically possible, per above) at any time, for any reason the government deems necessary, it makes a sizable business case *for* traceable electronic cash. This is probably the place to put the lever on the business community.
The Treasury department, among others, really _doesn't_ want non-recorded transactions. Unless the banking community as a united front _does_, I don't think it will happen domestically (USA) before other deployments. If there's not a united front, it'll be divide and conquer.
Non-recorded transactions exist already. It's keeping them from dissapearing that we're really talking about here. It's quite possible to get banks to present a united front. They have one of the largest lobbies in Washington. They have fought reporting requirements tooth and nail with some considerable success, but every time they get greedy (S&Ls) the noose tightens. It might be the threat of international deployment and regulatory arbitrage which brings them around, and fires up the lobbying apparatus on our side of the issue. It has worked before (gold, et.al.). On the other hand if those reporting requirements are frictionless, they don't *need* to fight it, do they... It's time to leave the ring. Somebody tag me. My brain hurts... Now to plug the topic of the thread a bit, how receptive would people in the crypto community be to participating in an annual dog&pony/schmoozefest for the suits? Who should chair the morning "primer" session? *E-mail* me with your ideas, everyone. Thanks, Robert Hettinga ----------------- Robert Hettinga (rah@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
Robert Hettinga says:
Is it possible to accurately estimate the cash transaction load of an economy? I bet that if we could, you'd see that the data from each transaction would cause the problem news servers have by several orders of magnitude. The information would get dumped pretty frequently. This is probably the same problem the NSA has now picking out signals to listen in on, but running down an audit trail is different, it's a historical process. Since you don't know whose transactions you need, you need to keep them all. True, this doesn't keep TLAs from trying trying to drink from a firehose, or more to the point, to free-dive to the bottom of the Marianas Trench (if they could keep all of the data), or high-dive into a wading pool (if they couldn't). Hmmm...
It is perfectly feasable to track all financial transactions in the U.S., down to the "quarter for a phone call" level, without eliminating all capacity to use the data or placing more than, say, another several percent burden on the cost of all transactions. I know how to architect such a system, and I'm sure that I'm not the only one. It would be a big job, but not an impossible one, especially not with modern computer systems. A several percent burden on the economy would be devistating, but from the point of view of the bureaucrats it probably isn't such a bad thing. I feel that it is inevitable that the folks in Washington will eventually come to the conclusion that such systems are needed -- the boys at FINCEN will start bawling for them, and the drug warriors will want them, and the rest of us are all just a bunch of folks who are upset that we couldn't go to woodstock because we had to do our trig homework... Perry
It is perfectly feasable to track all financial transactions in the U.S., down to the "quarter for a phone call" level, without eliminating all capacity to use the data or placing more than, say, another several percent burden on the cost of all transactions.
Perry
Already, at least here in the northeast, virtually all credit card transactions are on-line verified - it would take relatively little additional effort to capture additional transaction details including ID from our spiffy new national ID card and a more specific description of what was bought. And many supermarkets around here now do a substantial part of their business via debit or credit cards and checks - the added burden of converting everything over to watchable on-line electronic transactions is probably not measured in percent per transaction but in fractions of a percent. The major investment in on line retail infrastructure has already been made in most cases, what needs to be added is just some additional software and a more legally binding ID card. One suspects that the cost of physically handling cash, providing security for it and so forth is actually quite comparable to costs of such a cashless electronic regime. Outlawing cash is indeed (unfortunately) quite practical. If I had to guess as to what *the major* domestic target of wideband electronic surveillance and monitoring by the TLAs is licit or illict, I would name the credit card authorization data streams. Probably that and interbank wire and check clearing transfers consitute much the largest cross section of data being watched regularly. And I am unclear as to whether such surveillance, with the tacit consent of the banks and credit card companies of course, is obviously and specifically illegal. Dave Emery
Is it possible to accurately estimate the cash transaction load of an economy? I have some 1992 USA figures on this. The number of checks was 58 billion (58 * 10^9). The number of card transactions was 12 billion. There were about 2 billion other electronic transfers. 72 billion total. Cashless transactions are about a tenth (roughly, this is from memory) of the total. So as a first cut, assume about one trillion (10^12) transactions to be tracked per year. Assume 1/8 Kbyte per transaction (that's a lot). If you stored transactions on 8 Gbyte tapes, that's 2^40 xact * 2^7 bytes/xact * 2^-33 tapes/byte = 2^14 tapes, or about 16 thousand. A robotic retreival device for 16 thousand tapes is certainly feasible; I've seen a similar system for about 2 thousand 9-track tapes -- it was feeding a Cray 2 at Livermore in their fusion center. Now that's just storage, not the whole system. But it's apparent from these estimates that a real system is certainly affordable, and, possibly, relatively inexpensive as such totalitarian devices go. Remember, "suspects" (10^-3 of the population) can be filtered out before hitting tape and stored on about 128 Gbytes of hard disk, for very fast retreival and realtime analysis. When *every* business transaction can be scrutinized (as much as physically possible, per above) at any time, for any reason the government deems necessary, it makes a sizable business case *for* traceable electronic cash. This is probably the place to put the lever on the business community. It might be, but remember that in making the case to business, the financial privacy, such as it exists today, is _not_ "at any time, for any reason". It might be in the future, but then you're making a perceived-weaker argument. Non-recorded transactions exist already. It's keeping them from dissapearing that we're really talking about here. The number of non-recorded transactions, however, is dropping. The largest class, cash, got some reporting requirements clamped on it recently. We are talking about both ensuring that the current non-recorded transactions stay that way and allowing for non-recorded electronic transactions in the future. It might be the threat of international deployment and regulatory arbitrage which brings them around, and fires up the lobbying apparatus on our side of the issue. With that in mind, shouldn't you have your first conference in London, invite a bunch of US bankers, and raise the issue explicitly? As soon as you can get different countries competing for revenue, you're more than halfway home. On the other hand if those reporting requirements are frictionless, they don't *need* to fight it, do they... Nope. And remember, the divide-and-conquer is likely already starting. The first bank to provide FINCEN with a live transaction feed will likely see some regulatory hurdles fall, no? Eric
participants (4)
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die＠pig.jjm.com -
hughes＠ah.com -
Perry E. Metzger -
rah＠shipwright.com