The Privacy/Untraceability Sweet Spot

[Tim May]

On Sunday, August 26, 2001, at 09:13 AM, mean-green at hushmail.com wrote:

> Right on target.  There is one aspect to this loss of nerve not 
> mentioned: the correlation between those with the means and interest to 
> pursue these avenues and those with merely the interest.

There are a couple of points to make on this issue:

First, the "correlation of interests" situation is a well-solved 
problem. Those with the financial means (and maybe some 
political/technical interest) set up a company and hire those with the 
technical abilities and interest. The company may be self-funded by the 
founders, or outside investors may be sought.

However, this is not so easy to do when it comes to these technologies. 
ZKS did it and raised, we hear, something like $60 million. Quite a 
warchest for untraceability tools. ZKS has been much-discussed here.

There are some major obstacles with such a public company:

1. Patents and IP in general. Doing digital cash without using Chaum's 
blinding patent may be tough. (Some of the "agnostic" approaches 
discussed here may work, technically, but will probably still be 
litigated. A public company is a public target. The current owners of 
the Chaum patent, a Canadian company IIRC, will not look dispassionately 
on other companies doing an end-run.)

2. A public company or traceable group of developers will become 
targets. The attacks could be just simple legal ones, but could range up 
to RICO and beyond. "Pedophile-grade untraceability" is powerful stuff. 
How long before Mojo faces lawsuits analogous to what Napster faced?

(Napster is a good example of this. Utter traceability, of both music 
traders and the company itself. Those who downloaded or uploaded music 
got nastygrams and threats of civil action, and the company itself was 
sued and now faces extinction. It may be that anyone developing such 
tools should just give up on the idea of becoming a dot com tycoon and 
instead release products untraceably...perhaps benefitting in other 
ways.)

> One of this list's members shopped here and elsewhere a few years back 
> for participation in building a DBC-based payment and value system.  He 
> had assembled a team with the banking experience, needing the 
> technology implementors.  None were willing to put their talents to the 
> test.  They all nodded regarding the need for such a facility but none 
> would expend any efforts.

If you are talking about Bob Hettinga, there are many things one could 
say about his schemes and plans.

I'm more impressed with what another person is actually doing: Orlin 
Grabbe. Do some Web searches. Orlin has good banking credentials himself 
(Wharton, coined the term "regulatory arbitrage"), good libertarian 
credentials (a powerful newsletter for many years), some technical 
abilities (writes code), has been willing to move to places like Costa 
Rica, and, most importantly, he UNDERSTANDS the "sweet spot" argument.

Bob H., in my opinion, got too fixated on coining new acronyms and in 
flitting around to various lists and focussed in on the wrong end of the 
cost/benefit continuum. He kept claiming the DBC or E$bux or whatever 
would be cheaper to use than real money.

Anyway, it is not easy to create a public company, a public nexus of 
attack, and then deploy systems which target that high-value sweet spot. 
The real bankers and the regulators won't allow such things into the 
official banking system. (Why do people think the banking system will 
embrace "digital bearer bonds" having untraceability features when true 
bearer bonds were eliminated years ago?)

>
> They were all being courted by the failed dot.bombs which waved 
> generous salary and stock offers.  Now that the tulip market has 
> evaporated along with the dreams of quick riches I wonder if any these 
> pseudo-zealots were ever really interested or was it a merely a 
> childish fancy from the start?  As Tim demonstrates the opportunity is 
> still there it waits only for those with the right stuff to grab for 
> the ring.
>


I know several list members who started or joined Mojo. I know several 
who started or joined C2. I know several who joined ZKS. I know several 
who joined Digicash.

The problem has not been that Cypherpunks were so greedy they went to 
work for Pets.com instead of ZKS, C2, Mojo, or Digicash. The problems 
were with the ability of those companies to make money, for lots of 
reasons.

My interest is not in doing a "Cypherpunks Business Review" dissection 
of these companies and their (possible) failings.

Frankly, I don't think the "let's form a corporation!' model is the best 
one in all cases, particularly in this one. Maybe I'll say more about 
this in another post.


--Tim May