To: cypherpunks@toad.com In a recent post, Carl Ellison <cme@sw.stratus.com> opined:

Mr. Bennett is clearly a victim of the popular impression that privacy is somehow new. Anything which can be done with public key encryption can be done already with private communications (whispers, notes which are mailed and destroyed, secret mail drops, couriers, secret-key encryption,...>.

All the hype over cryptoanarchy is overblown. We are capable of anarchy, income tax evasion and secret bank accounts today. Look around you. How much of that do you see in your own life? What makes you think that you'll see any more of it in 10 years?

- Carl

PM has already responded pointing out that cryptography makes such things more convenient and this is certainly true. It is much easier to participate in real free markets if secrecy is cheap and easy. There is another aspect however that is tied up with crypto and telecoms. In traditional Black Markets, the transactions are illegal. In future Black Markets on the nets, most of the transactions will be legal. Legality certainly encourages transactions relative to illegality. If I am a non-US citizen resident in a tax-haven jurisdiction, I have no US tax liability for my non-US source income. I also have no tax liability in the haven jurisdiction as long as I wasn't working in that economy. This was OK in the past if you were a bank or a rich owner of passive income. You could accumulate it free in a tax haven. Most people couldn't participate, however. With commerce on the nets, however, it becomes much cheaper to arrange your affairs (if you are a non-US citizen) such that you have no tax liability. You may also be able to operate in a much looser regulatory environment. While it is true that you could accomplish all of the above using traditional technology, the nets mean that you can do it more cheaply (meaning it becomes economically appropriate for more transactions) and in a mainstream market not off to the side in a tropical pesthole. You can have all the benefits of forum shopping while not giving up access to the richest markets of the OECD countries. If a Brit or an American chooses to download a financial product, a video, a drug synthesis description file, medical advice, or some other bits of information from you (you being located somewhere on the nets) they may be breaking various laws (depending on the contents of their download) but you may not. Thus it is legal, today, for an American to purchase an unregistered foreign security but it is illegal for me to promote such a thing domestically. On the nets, we are all foreign and we are all domestic. It would be legal to promote the sale of an unregistered foreign security over the nets. What happens to the SEC? As I said in London in November (and *think* about this folks): "And what can we call this new form of social organization growing on the nets and in the modern fluid business environment? When two or more people can meet together and communicate freely and privately without interference by outsiders, they can trade -- they can form a market. If this trade on the nets is made free from even the *possibility* of external regulation, what we have is a free market and a free society." Unless you can block this communication, we've got a market since 90% of the economy will be in non-physical goods and services within a very few years. Sorry to repeat myself... DCF Frissell Glossary - OECD (Organization for Economic Cooperation and Development) AKA the 24 richest countries. (The 12 EEC Members, US, Canada, Japan, Aus, NZ, the non-EEC countries of Western Europe including Iceland, and Turkey.) --- WinQwk 2.0b#1165