In this essay, quickly written, I'll address some points raised about the government and its "willingness" to let strong crypto and crypto anarchy develop, and how the Data Superhighway will require all data packets to have "license plates" on them (my biggest speculative leap). We're in an arms race, us versus them, and I think the government as we know it will ultimately lose. Mike McNally writes:

Given the material in the WiReD 1.6 article, how likely is it that a true anonymous digital cash system would be allowed? I know, I know; there's "no way to prevent it"; however, I think that concept is based on the premise that the Government proceeds rationally.

You mean, how likely is that the government will allow a system that makes taxation almost impossible, that enables black markets, that facillitates the transfer of illegal information, and that basically nukes the present arrangement? I don't think they'll "allow" it. But this doesn't mean it won't happen.

If somebody with an axe to grind gets hold of the "kidnapped baby" scenario described in _Applied_Cryptography_, plenty of public outrage and indignation could be generated. Imagine a made-for-TV docu-drama that shows teams of strange greasy little hackers hunched over their glowing workstations, wailing kidnapped babies piled in a corner.

Go on, reassure me that "all is well".

I can write more after I shut these babies up...maybe it's time to just sell a few or recycle my stock. My new babytender, a nice young girl named Polly Klaas I picked up a while back, is working out well, though. (This was politically incorrect humor, outlawed on the Data Highway in 1997. As President Hilary put it: "That's not funny!") The "crypto crackdown" Mike is alluding to is one that has be predicted for a long time. We are indeed in an "arms race": both sides are racing to cut the other off. Strong crytography means government can no longer do its thing, at least not has it's accustomed to. Strong crypto means untraceable payments, secure phone lines, information markets in what are now military and corporate secrets, liquid markets in illegal services, and of course a nearly total collapse in taxation abilities. On taxation, it is certainly clear that many folks will still be "visible" and will be taxed as heavily as other--I don't want to imply that the guy who works for Lockheed or behind the counter at Safeway is somehow going to be liberated from paying taxes by the onset of crypto anarchy. No, the effect will be more of an erosion of _support_ for taxation, as word spreads that many consultants, writers, information sellers, and the like are sheltering much of their income via use of networks and strong crypto. The tax system is already shaky--$5 trillion national debt, growing every year--and it may not take much of a push to trigger a "phase change," a tax revolt. This "crypto phase change" (a term I prefer to the term "Singularity," so beloved by the nanotechnology folks) is what I see coming. Whether the government can crack down first is the fly in the ointment. Note that the way strong crypto works means a successful crackdown could only come as the result of strong police state policies. That is, outlawing of unapproved encryption, on demand inspection of all data packets, strict regulation of across-the-border telecommunications, an end to the Internet as we know it today, and strict penalties merely for "conspiring" to use strong crypto. Eric Hughes' "Use a random number, go to jail" line is not so far from the truth. I oppose the government's plan for a "data superhighway" for two main reasons. First, there's no need and the free market is already giving us a multiplicity of lines, channels, satellites, etc. Anarchic development can produce a more robust system, actually. Second, I fear the involvement of government. Already the NII proposal is talking about the nice things it needs to ensure fair access, a nondiscriminatory system, and so on. These "nice" things also imply government restrictions on content. But I'll save this for another thread. Imagine this: to get on the Data Superhighway, which will likely be the only major lines if the government succeeds in making it the mandatory standard, every data packet must have a "license plate." Don't laugh! The idea of a license plate on data packets is coming. It would provide the kind of traceability that control freaks like Detweiler claim to want (I say "claim" because our pal LD is the largest user of pseudonyms we have.) It would provide for taxation of packets, much like road fees and truck charges, and it would generally make the Net an environment hostile to crypto anarchy. The forces of NIST/NSA and the National Information Infrastructure are moving in this direction. I'm moving in another direction, toward the overthrow of the present system. Over the past several years I've thought about these issues at length. I don't think they can crack down. Can they stop "dial-a-prayer" computer confessionals? (priest-confessor privilege, recognized at a deep level) Can they stop attorney-client computer communications? (To wiretap these would break open the entire legal system.) Can they place police monitors in every role-playing game or deep-immersion VR system? (Make no mistake about it, systems like "Habitat" and LambdaMOO, and many more are coming or already exist, will be full-fledged agoric marketplaces, with goods and services being traded. Read "Snow Crash" or "True Names" to remind yourself of this (I'm not endorsing the specific views of Stephenson or Vinge, who got some things "wrong"--no big deal, as their general vision was what was so important.) Can they tell people they can't compress their files? (compressed files look outwardly like encrypted files) Can they ban the use of steganography--if they can find it being used at all? No, too many bits are flowing already. Too many degrees of freedom. A Soviet-style crackdown is not in the cards. But we stil have to fight. Things like the Clipper still need to be fought, by ridicule ("Big Brother Inside" stickers), by lawsuits (not my specialty), by denouncement (as when industry groups denounce it), and especially by developing and promoting alternatives. The market is truly ripe for a Soundblaster-type voice encryption system---when will one of you budding entrepreneurs get one out? Having read the three main "position papers" on NII (the White House paper, the CPSR analysis, and the EFF "Open Platform" piece), I'm as convinced as ever that the Data Highway is largely about regaining control of the currently anarchic network system. It just isn't about giving ghetto residents access to Crays, nor is it about the government being benificent in expanding our cable choices from 50 channels of shit to 5000 channels. No, it is about taxing the commerce that is moving increasingly into cyberspace. It is about continuing to regulate and control. It is about the survival of Big Brother. The arms race is on. --Tim May -- .......................................................................... Timothy C. May | Crypto Anarchy: encryption, digital money, tcmay@netcom.com | anonymous networks, digital pseudonyms, zero 408-688-5409 | knowledge, reputations, information markets, W.A.S.T.E.: Aptos, CA | black markets, collapse of governments. Higher Power: 2^756839 | Public Key: PGP and MailSafe available. Note: I put time and money into writing this posting. I hope you enjoy it.