interview

[Ian Grigg]

Freematt asks question 1:  How do you describe yourself?  What is 
your world view?

Ian Grigg responds: I'm not sure how a paragraph could do justice to 
that question!

I'm Australian by passport, although I consider that to be just
part of the mix these days.  I've lived for many years in Spain,
Amsterdam, Britain, and now in Anguilla.  Each has its own
perspective, although Spain had the greatest formative influence
on me in my adult years.

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Freematt asks question 2: How have thinkers such as Menger, Von 
Mises, and or Hayek influenced your thinking?
Are there any fiction books that have had an impact on your ideas?

Ian Grigg responds:  Von Mises is a hazy influence.  His writings are 
hard to get to,
unlike Hayek, who is accessible to someone without an obsession
with deep economic thought.  Mises came with two big ideas that
I've found central.  One is the calculation argument, wherein he
argued that central planning could not work on any large scale,
simply because there is no way to calculate the outputs from the
number of inputs.  He said that Moscow needed too big a computer,
and he was eventually proven right.

Hayek believed that the market was about information.  In Misian
terms, Hayek's market is the great big free computer that saves
us from central planning.

The other big idea is that Mises questioned why it is that we
believe the government could solve problems.  Take a complex
situation, and decide as a populace to have the government sort
it out.  Well, he questions why it is that we believe that the
government would have the tools to do that?  Is it that we
believe that the government is somehow smarter than us?  Are
they better educated?  In some sense are they capable of being
more objective, more fair, more beneficial?

The answer to all of those is no.  Government people are generally
not smarter, if anything, the converse, smart people make more
money in industry.  Better educated?  Not really.  More objective?
Fair?  All of these things are just too impossible for words;  as
what is fair to one is inequitable to another.

When you think in those sort of Misian terms, it really is a bad
idea to pass the buck to government.  We have to sort out the
problems ourselves.  And, with government, probably the best we
can hope for is an honest bureaucracy.

Hernando de Soto has done some good work in Peru with the measurement
of corruption and costs in starting firms.  Harvard economists took
his idea and measured it across 75 countries and are now providing
the data to support a whole new view of government and bureacracy:
that it grows to create tollways, create chances for private benefit
out of public power.  We used to think that regulation was a barrier
to entry, that it arose to create easy conditions for big players.
Now, we're seeing some good data that supports the view that these
barriers are their for the ones who erect the barriers.

All of this thinking is coming out of Mises and Hayek.  If the
market is so good, why do we have such big governments?  It's no
longer a libertarian or crackpot debate, the serious part of
economic thought is looking at these questions deeply.  There's
a long way to go -- the Harvard work assumes too much when it
measures the formal economy and not the informal -- but we are
seeing a great change coming.  Out of Hayek, out of Mises.

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Freematt asks question 3: Do you still think financial crypto depends 
on cryptography, software engineering, rights management, accounting, 
governance, value, and finance?

Ian Grigg responds: Sure!  Well, it's a model, it's a simplification. 
There are
other things that go in there.  Since I presented that paper
in 2000, I've not heard any serious criticisms or ommissions.

On the other hand, this is only a small field, there aren't
that many companies or people actually testing and advancing
the art.  We've only had two successes in the field of FC so
far, being the PayPal and e-gold experiences.  So there's not
a lot of hard data to go on.

I think we are still at the point where we can compare and
contrast using the model, but we can't condemn.  The lower
layers are better done in e-gold, but it's always been clear
that PayPal understand the application better, that part
that I called the Finance layer.

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Freematt asks question 4: Are truly anonymous electronic cash systems 
the future or do you see governments viewing them as too threatening 
to the health of the state and too easy for untraceable blackmail, 
extortion, money laundering and asset protection?

Ian Grigg responds: The public perception of the "truly anonymous 
electronic cash
system" is a little rosy.  There are problems with that.  Every
money system has inbuilt protections against what we call "the
bank robbery problem."  No matter how we secure the system, we
as builders have to deal with the fact that we will be forced
to turn over the keys, the data, the money, some how some day.

Most of the knowledge of this is internalised or lost to the
current financial system.  It's like trying to ask a banker what
banking is, very few of them have the first idea.  How do we cope
with a system where one key can sign over millions of dollars on
demand?  Or the smart card world's nemesis, the evergreen card
that keeps debiting, debiting, debiting?

The answer is in a series of defenses, in a practical layered
defence rather than the one-big-idea approach that is the espoused
by the blinded school.  That means we build in the defences up
front that we can, but we also assume that it is going to happen
one day, so we build in the back up plans or the contingency plans.

Mondex did it for their cards, they called it the meltdown
scenario.  One of their ideas was that they could send signals
out to all the cards and have the cards switch algorithms, thus
anticipating a crack.  Technically, I think that's a bad idea,
but they thought about it, that's the important thing.

However you do it, a survivable system for money has to have an
ability to open up under system-threatening circumstances.  What's
the point in having truly anonymous cash if the cash suddenly
becomes worthless because the issuer goes broke redeeming the
stolen float?  For all the brave ideas of those who write about
freedom, anonymous trading, ownership, that all goes to pot the
moment the consumer realises that the system itself cannot
survive.  A system has to survive, elsewise it's not money.

But, if you make the system openable, this will result in a
privacy breach for the average user.  So, the trick is to make
it costly.  Come up with something that costs so much that fishing
trips are not plausible.  Something that assists good detective
work, but doesn't obviate the need for good detectives, doesn't
assist the current pass-the-buck philosophy so comfortably
prevalent in financial crime circles.

At Systemics we do it with a hybrid system of nymous light-weight
accounts.  The nymous approach implies that we can trace every
transaction in the system, but we cannot identify who is doing
what.  That's very powerful -- I can see that you might be spending
10c followed by $1000, or whatever, I just don't know who you
are.  Without some other, contributory information, your 10c is
just like any other 10c, and a certain pattern of expenditure
is just some random walk in the transactions of life.

But, when someone busts in and holds my daughter to ransom,
demanding the keys or an account stuffed with booty, we can
simply hand it over.  No fear.  When the dust settles, we'll
start the detective work and trace that value wheresoever it
went.

I'd feel comfortable about having a daughter under those
circumstances, but if I was guarding the keys to a fully
anonymous system, then I'd rather not have any external stimuli
attached to me at all!

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Freematt asks question 5: Which nations do you think are the most 
free and do you think borders will be more or less important in the 
future?

Ian Grigg responds: It's a tough question.  I hear over and over 
again that the US is the most free, and that the rich countries are 
free because
they are rich.  Or some such.

That view troubles me.  How can you consider a country free when
they hold jurisdiction over you wherever you are?  The US is so
powerful, the brand is so dominating, that they can stand alone
in the taxation world and insist that their citizens file for
taxes wherever they are.  That's not freedom to me.

Where it takes you 10 years to leave the country?  My neighbour
gave up his passport for crypto reasons, he's got another 8 years
or so before they release their hooks.

There was a wave of legislation in the early 90s whereby you
couldn't leave the country if you were in some way suspect.  In
Australia it was the deadbeat dads;  a database of fathers with
responsibilities stopped these people leaving the country.

That's not freedom.  Freedom is the right to cast aside your
responsibilities, leave the country and set up in a new land,
a long long way away.  It was this freedom that created most
of the new countries;  waves of immigration were perceived to
be a new life and a new workforce for growing nations, but
that's only the pretty side of the coin.  On the other side,
those people made the judgement that the time had come to cast
aside the taught view of responsibility.

As a society, we have to allow the escape valve to exist, elsewise
we abrogate our humanity.  Only the individual knows when it
is a lost cause, only he or she knows that it's time to start
over again with a new life.

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Freematt asks question 6:  What exactly does your company systemics.com sell?

Ian Grigg responds: Systemics primarily licenses its Ricardo Issuance Server,
which is a product that you can use to issue and run an Internet
currency.  Or a share, bond or other fungible thing of value.

The client side is the WebFunds.org open source group, and
program, that we are setting up.  Systemics tries to make
money on the issuance side, and we encourage all of our issuer
customers to pitch in and improve the software on the user side.

We also sell some applications.  The design goals for our value
architecture, Ricardo, was to support the specific application
of financial trading.  The buying and selling of stocks, bonds,
and other things.  We have an exchange and a user plugin to
WebFunds which enables those things.

For retail, we're working with Intertrader, a Scottish company that
provides interfaces for facilitating transactions.  They hope to
demonstrate at the Edinburgh Financial Cryptography Engineering
conference in a couple of weeks, we're hoping to see a seamless
transaction flow from retail side, into the financial system and
out again, back into the retail side.  All crossing from one
payment system to another.

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Freematt asks question 7: Where do you see yourself in ten years? 
What do you want to accomplish both personally and professionally?

Ian Grigg responds: I want to see this financial system built.  For 
that, we need
partners, lots of them, all acting as equals, as peers.  Intertrader
is a good example.  Their area is in facilitation software for other
people's transactions, our area is in the primary transactions for
trading.  Neither of us wants the other's patch, so we can work
together on a range of projects without egos and greed getting in
the way.

We need other partners that want to issue.  The Hansa Bank, here
in Anguilla, issues our Ricardian dollar.  We'll do the technology,
they do the contract that the users rely upon.

That's really as far as Hansa is prepared to go for the moment,
which is a double-plus for us.  Firstly, we get that critical
money instrument, and secondly, they are minding their knitting,
not trying to create a franchise in wool supply.

We're in the process of creating independantly issued instruments
for trading.  Some of the most exciting opportunities is based on
the work I mentioned above by Hernando de Soto.  We're looking to
take our efficient trading and value management into one of the
world's most inefficient but far-reaching financial systems, that
of microfinance.  I can't really talk about the details, they are
still under wraps, but I can talk about the obvious parts.

At the moment, microfinance is based on huge chains of volunteer
or otherwise soft labour.  Hundreds and hundreds of transactions
are needed to get a circle of five their first loan, in western
terms, the first ten transactions would swallow the principal,
let alone any return on investment.  We aim to change all that,
by giving them transactions and financial industry techniques
that work at their level.

To know that the ideas that we developed are pushing capital out
to small villages, that's a challenge!  Where I can get a $2
transaction in 100 milliseconds and $10 trade in less than a
second, efficiently.  And, do all this into a place where it
would take me 5 days to get there physically;  places with just
a single PC and a satellite dish, but with a repressed urge to
work and work and honestly build their way up and out.  Knowing
that our ideas helped that, that's where I want to be in 10 years.



-- 
iang

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