Assassination Politics

jim bell jdb10987 at
Sun Aug 29 12:06:31 PDT 2021

Yes, Sukumaran's essay is by far the most competent treatment of my Assassination Politics idea and essay.         Jim Bell 
  On Sun, Aug 29, 2021 at 11:45 AM, grarpamp<grarpamp at> wrote:

Sukumaran, R. (2004). "Cryptology, digital assassination and the
terrorism futures markets" (PDF). Strategic Analysis. 28 (2): 219–236.
doi:10.1080/09700160408450129. S2CID 154847137.

            Cryptology, Digital Assassination and the
                                        Terrorism Futures Markets

R. Sukumaran
    A recent news item indicated that the US Government had been planning
    a website that would enable people to place bets on the likelihood of
    terrorist events. It was hoped that a study of market trends would enable
    intelligence agencies to anticipate and prevent such events.
    The idea was mooted by Admiral John Poindexter, head of the Total
    Information Awareness Program and bears some resemblance to a
    scheme mooted by Jim Bell. Bell, an MIT graduate had proposed a
    scheme which uses cryptography and the Internet in order to eliminate
    corrupt public officials. His scheme rewards those who correctly predict
    the date of death of such officials. However, the identities of the
    successful predictors were to be kept secret by using public key
    encryption methods. Bell claims that his scheme, if universally adopted,
    would lead to the elimination of government itself. Society would
    regulate itself by the threat of assassination of those acting inimical to
    its interests. No other regulatory mechanism, he claims, would be
    This paper attempts to understand Jim Bell's concept which requires
    some knowledge of cryptology. It briefly discusses some concepts in
    cryptology and electronic banking which are essential to the working
    of the scheme. It also discusses the Iowa Electronic Markets which
    have been fairly successful in predicting US Presidential elections. It
    uses an approach similar to that proposed by Admiral Poindexter's
    group. The paper analyses the practicality of both Bell's and
    Poindexter's schemes.
    In late July 2003, the US media was rocked by news that the Pentagon was
planning to open a website that would enable investors to place bets on the
probability that a particular event -- a terrorist attack or
assassination -- would
Strategic Analysis, Vol. 28, No.2, Apr-Jun 2004
Revised paper received
© Institute for Defence Studies and Analyses                    on May 8, 2004
Cryptology, Digital Assassination and the Terrorism Futures Markets 219

take place.1 The programme, called the Futures Market Applied to Prediction
(FutureMAP), was part of the Total Information Awareness Program and was
coordinated by the Defence Advanced Research Projects Agency (DARPA).
The key figure in the plan was retired Admiral John Poindexter, a
prominent actor
in the Iran-Contra scandal that bedevilled the Reagan administration.
Its purported
aim was "to explore new ways to help analysts predict and thereby prevent the
use of futures market mechanisms."2
    The terrorism futures market bears a certain resemblance to a scheme called
`Assassination Politics', propounded by Jim Bell, a disgruntled
American cyberpunk
and MIT graduate.3 Jim Bell has used the ideas of cryptography and e-banking to
develop a concept he calls `Assassination Politics' or `DigitaLiberty'. He
conceives of an organisation that would assist in eliminating corrupt
officials and
oppressive politicians through a system of rewarding those who correctly predict
the date on which a particular official or leader will die. The
identities of the successful
predictors would be kept secret using encryption. Bell believed that
the successful
implementation of his system would result in the eventual abolition of
all forms of
state control and even war.
    Interestingly, Jim Bell was imprisoned in 1997 for threatening a US federal
agent following the publication of his scheme. This, coupled with his refusal to
pay tax demands he considers illegal, brought down on him the wrath of
the Internal
Revenue Service (the American equivalent of the Income Tax Department).4 The
apparent co-option of his scheme by the Pentagon therefore deserves
closer scrutiny.
The Basics of Cryptology
Codes, Ciphers and Frequency Analysis
    In order to understand Bell's system, we digress a little into
cryptology --
"the science of rendering signals secure and extracting information from them."5
This comprises both cryptography -- "rendering information unintelligible to
outsiders by various transformations of the alphabet", and cryptanalysis -- the
method of breaking down or extracting the message from the intercepted signal.6
    Technically, substitution at the word level is known as
encoding.7 Thus, if we
replace `I am here' by `1 2 3', where 1 represents `I', 2 represents `am' and 3
represents `here', we would have encoded the message. Substitution at letter
level is enciphering. This can be done by transposition, where the letters
constituting the message are re-arranged, thus forming an anagram or by
 220 Strategic Analysis/Apr-Jun 2004

substitution in which each letter of the alphabet is replaced by
another according
to a certain pattern.8 If we replaced each letter of a message by another in a
certain pattern, we would have enciphered it. Many encryption schemes use a
combination of transposition and substitution incorporated in a
specific pattern,
controlled by a key.9
    Encoding messages requires a code-book, which contains an equivalent for
every possible word that could be used.10 It would therefore be a fairly hefty
tome. Every person in the transmission-reception chain would need a copy. The
loss or capture of a code-book would be catastrophic and preparing and
a replacement would be a nightmare. Around the 16th century, codes
were therefore
replaced by ciphers. Ciphers need to cater only for the limited number
of letters in
the alphabet, instead of for the entire lexicon of words.11
    Around the 8th century, the Arabs discovered that some letters of
the alphabet
occur more often than others in any message.12 They also found that
the frequency
of the occurrence of these letters is independent of the message,
provided it is long
enough. In English, the letter `E' occurs most often, followed by `T'
and `I'. the
Arabs were possibly the first to use frequency analysis to decipher messages,
without knowing the `key'.
Mono and Poly-Alphabetic Ciphers
    The simplest form of substitution ciphers are called Caesar ciphers after
Julius Caesar who is believed to have used them.13 These involve replacing each
letter in the message by another a fixed number of places away in the alphabet
(called a Caesar shift). If `a', `b' and `c' were replaced by `d', `e' and `f'
respectively, we would be using a Caesar shift of three. The English alphabet
permits Caesar shifts of up to 25. The alphabet re-arranged according to the
Caesar shift is called the cipher alphabet. However, we need not stick to simple
Caesar shifting. We could also rearrange the letters of the alphabet randomly to
form different cipher alphabets. This would give rise to an enormous number of
permutations making deciphering much more difficult.
    Simple and even random substitution ciphers are however vulnerable to
frequency analysis. This led to the development of poly-alphabetic
ciphers.14 Here,
each letter of the message is enciphered using a different cipher
alphabet.15 This is
determined by the keyword chosen. Depending on its location in the message and
the length of the keyword, the same letter could be enciphered differently. This
form of encryption, known as poly-alphabetic encryption, is immune to normal
Cryptology, Digital Assassination and the Terrorism Futures Markets 221

frequency analysis. While the enciphering technique might be common knowledge,
how the process works depends on the keyword.
The Importance of the Keyword
    The 16th century de Vigenere cipher was poly-alphabetic. This
meant that the
cipher changed with every letter of the message. The pattern was decided by the
keyword. Keeping the keyword secret therefore became the cryptographic
problem. It had to be agreed beforehand by both parties. The keyword decides
which particular cipher alphabet of the de Vigenere Table will be used
to encrypt
each letter. The encrypted message thus contains as many cipher alphabets as the
number of non-repeating letters in the keyword. The longer the keyword, the
more secure the cipher. The receiver uses the keyword again to decipher the
message. The de Vigenere cipher was considered to be practically unbreakable
for the next four hundred years since it was invulnerable to simple frequency
analysis.16 When it was eventually broken by Charles Babbage and Friedrich
Kasiski in the 19th century, deciphering was made possible because of
imposed by the keyword selected.17 One possible solution was not to use
meaningful words as keywords. Another was to use keywords as long as the
message itself. However, there still remained the problem of informing
the receiver
what the keyword was.
    Many different approaches were used to provide strong encryption. The
German Enigma enciphering machine designed by Arthur Scherbius and patented
in 1918, used poly-alphabetic ciphering. The Enigma used three scramblers, which
meant that every letter went through three stages of substitution.
Interchanging the
scramblers further increased the number of possible scrambler arrangements. It
also had a plugboard, which interchanged six pairs of letters
(transposition).18 The
total number of arrangements possible on the Enigma was a staggering ten million
billion (1015).19 Despite all its features, the Enigma encipherment
was eventually
broken because it used a key for setting the scrambler positions.
Solving the Key Distribution Problem: The Advent of Public Key
    The main problem the sender and receiver had was that of agreeing on a key.
If the key were intercepted, the message could be read. The problem of how to
agree on a common key, without an eavesdropper being able to intercept the key,
is known as the key distribution problem.20
 222 Strategic Analysis/Apr-Jun 2004

    In 1976, Whitfield Diffie and Martin Hellman of Stanford
University, proposed
a solution to the key distribution problem involving the use of
one-way mathematical
functions. When a number is input, these functions produce a unique output.
However, the process is not reversible. Two persons, A and B, use a one-way
function of the form yx (modp).21 They agree on values for y and p over an open
line, but choose values for x that they keep secret. Both now insert
their values for
x into the one-way function and exchange their results. These values
are inserted
in place of y in the one-way function and the result again calculated.
The results
are identical. This becomes the key and it can be used to operate a symmetrical
cipher. A and B have therefore managed to agree, without meeting, on a common
key which they can use for enciphering and deciphering messages. To take a
simple example, an eavesdropper would know that A and B have agreed to use
the values y=7 and p=11, in the function yx (modp), but would be unable to work
out their respective values of x. The values of y and p actually used
are very large,
thus making life more difficult for any eavesdropper.
Asymmetric Keys
    Thus far, all keys had been symmetric -- the same key being used for both
enciphering and deciphering. Whitfield Diffie therefore visualised a
system which
would use an asymmetric key. One key, widely publicised, would be used for
enciphering and another key, solely in the possession of the receiver, would be
used to decipher the message. However, Diffie did not have an example of a
function that could work in the manner he envisaged. The problem was solved in
1977 by Rivest, Shamir and Adelman, who evolved what is now called the RSA
system, after their initials.
Public Key Cryptography -- the RSA System
    Rivest, Shamir and Adelman used a one-way function. One-way functions
are non-reversible. Just by knowing the function used and the output obtained,
one cannot work backwards to obtain the input. Rivest and his colleagues used a
one-way function based on modular arithmetic. The message is digitised and put
into the function which generates another number called the
ciphertext. The system
essentially uses the fact that it is exceedingly difficult to factor
the product (N) of
two very large primes. N is called the public key.22 To send a message to A, B
inserts her public key and the message into the one-way function and sends the
result to A. Merely knowing A's public key is not enough for anyone to decipher
the message. He also requires A's private key. The private key is related to the
Cryptology, Digital Assassination and the Terrorism Futures Markets 223

primes that A multiplies together to obtain the public key. However,
it is difficult to
factorise a very large number into the two large primes that are its
factors. If the
prime numbers used are of the order of 1065, the number N would be of the order
of 10130. Factorising such a number could take a 1 GHz Pentium with 128 MB of
RAM several months. Actually, the values of N used in important transactions
tend to be much higher.
Hash Functions and Digital Signatures
    Digital signatures were originally suggested by Diffie and
Hellman as a method
of verifying that a message had not been tampered with and that it had indeed
been sent by the purported author.23 These are generated using hash functions. A
hash function H takes the message m and transforms it into a sequence of fixed
length, whatever the size of the original message. This is called the
hash value h
(i.e., h = H(m)). Reversing the process should not yield the message m or its
length. Hash functions employed in cryptography are usually chosen to
be collision-
free, i.e., no two messages will result in the same hash value.
Further, neither the
message nor its length can be extracted from the hash value. A first encrypts a
message using B's public key and sends it to him. B uses his private key to read
the message. In order to generate a digital signature, A inputs her
message into a
hash function. She then encrypts the resulting hash value using her
private key and
sends the result to B separately. B extracts the hash value using A's
public key. He
then applies A's hash function to the original message. If the
resulting hash value is
the same, it proves that the message has not been tampered with and that it was
genuinely originated by A.
Privacy and e-Banking
Digital Cash
    Personal privacy is now a major public concern. Increased computerisation
has resulted in credit card companies and banks creating huge databases on
customer preferences and spending patterns. Despite assertions to the contrary,
this information is often sold to other commercial interests and can
also be linked
to virtually build up a dossier on any particular individual. This
information can be
misused by various agencies, including the government.
    Increased computerisation has resulted in the development of digital cash.
These are essentially numbers which represent a certain sum of money. A
bank would sign (superimpose) a particular series of notes with its
digital signature
 224 Strategic Analysis/Apr-Jun 2004

(private key).24 All notes signed with this particular key would have a certain
value. These bank notes could be authenticated using the bank's public
key. Thus,
if A wishes to withdraw a dollar from her bank, she first generates a random
number, signs it with her private key and sends it to the bank. The
bank verifies her
signature with the public key she has earlier agreed for transactions
with the bank.
It then removes her signature, signs the number with its own private
key, certifying
that it is worth one dollar and returns the now valid note after
debiting her account
by one dollar. This note can now be used by A to pay for goods in B's
shop. B can
verify the note by checking the bank's digital signature. He then
sends the note to
the bank. The bank verifies its own signature and the note number and notes that
it has been spent by A. It then credits B's account with one dollar,
debiting A's account by the same amount. The note cannot now be double-spent.
However, the system described does not have privacy since the electronic notes
can be tracked.
Blind Signatures and Digital Pseudonyms
    In a paper published in the Scientific American in August 1992, David
Chaum and his colleagues outlined a scheme to prevent such digital cash being
traced. They developed a system they called `blind signatures'.25 When sending a
note to the bank, its number is multiplied by a random factor. The
bank therefore
does not know its number. It only knows that A has sent it. Once the bank has
signed and returned it, A removes the blinding factor. Since the bank has no
knowledge of the actual note number, transactions cannot be linked. The notes
cannot be traced since the blinding factor is unknown.
    In the same article, David Chaum also described a concept called a `digital
pseudonym' which would ensure privacy while at the same time-enabling a person's
identity to be validated. A person could choose different digital pseudonyms for
every organisation that he/she does business with. This would be done by using
`electronic representatives' and `electronic observers'.26
    An electronic representative would reside on a smart card with a keypad and
display. It would control all electronic transactions that its owner
makes, all data
input and generate the private and public keys required for a transaction. This
would ensure total privacy and untraceability of transactions.
    `Electronic observers' would prevent double-spending of digital banknotes
and protect the interests of banks. The observer would reside on the smart card
along with the electronic representative and monitor its behaviour. Observer and
Cryptology, Digital Assassination and the Terrorism Futures Markets 225

representative would be programmed not to trust each other. In order to protect
its owner's interests, the representative would be in overall control
and ensure that
unauthorised transactions are not carried out. Observers would be validated by
validating authorities. These would also authenticate the various
digital pseudonyms
that a person requires for transactions with different agencies. The
validating process
would assure any agency transacting business that a genuine person exists behind
the digital pseudonym.
Assassination Politics or DigitaLiberty
    An American anarchist named Jim Bell has integrated all these
aspects, into a
system for the elimination of corrupt Government officials.27 Jim Bell is an MIT
graduate, presently serving a term in prison for threatening a US
federal agent. His
original grouse seems to have been that he was unfairly taxed. His scheme, which
he calls DigitaLiberty, has been published on the Internet under the title
"Assassination Politics".28 The effectiveness of Jim Bell's scheme hinges on the
concept of digital cash and digital pseudonyms, as envisaged by David Chaum
and on securing personal anonymity through the use of Public Key Cryptography
(PKC). It envisages an organisation which would act as a combination of bulletin
board, mail forwarder and lottery manager. It would maintain a list of
disliked public officials and separate accounts for each person. The
would also display details of the money that it has received as
contributions from
the public in each account. This amount would be paid to the person
who successfully
predicts the date of that individual's death.
    An individual would send to this agency, an encrypted envelope containing
some digital cash encrypted with the organisation's public key. Inside
this envelope
would be another, containing his prediction for the date on which a particular
official would die. The second envelope is encrypted using the person's private
key and hence cannot be opened. The organisation would open the first envelope
with its private key and discover the digital cash. It would not,
however, be able to
open the second envelope without the public key which the predictor retains. It
thus does not know whose death has been predicted and when. People aggrieved
by an individual could also send the organisation some digital cash to
be paid to
the person who correctly predicts that individual's death. When the
prediction is
proved right, the predictor wins the reward which has been posted, for anyone
who correctly predicts the death of that individual. Bell suggested
that the use of
(PKC) and digital pseudonyms would ensure absolute anonymity. This would
prevent people being targeted for criminal activity by government
agencies like the
 226 Strategic Analysis/Apr-Jun 2004

FBI. In any case, no one would be carrying out any illegal activity
because people
would merely be predicting the dates on which some particular individuals would
die. No one would be incited to carry out a killing. The reward would be due
whether the person died a natural or unnatural death.
Preventing Frivolous Predictions
    In Bell's system, the name of the official and the date of his
predicted death
are both encrypted using PKC and cannot be read. The prediction would be
posted on the bulletin board. In order to ensure that frivolous
predictions are not
sent in, individuals would also have to enclose some digital money. This money
would be added to the amount sent in by all those who have also predicted or
wish the death of that particular individual. There would be nothing
to indicate the
identity of the person sending the prediction. The amounts contributed for the
death of a particular person would be publicly posted on the bulletin board.
Protecting Identity
    If the prediction comes true, the person who has correctly anticipated the
death of the particular individual would send the organisation the key to decode
his prediction. The organisation would open his envelope and discover the name
and date of death correctly predicted. The individual would also send another
public key which the organisation would use to encrypt the reward. The public
key would be posted to enable anyone else, who wishes to do so, to send money
to the successful predictor. The use of PKC, digital pseudonyms and
blind signatures
would ensure the anonymity of the successful predictor. Further, no one would
know what role, if any, he had played in the demise of the individual.
Even if it
wished to, the organisation could not assist any authority which wished to trace
the successful predictor. Even the digital cash would not be traceable
to its source.
    This is the essence of Jim Bell's system. He summarises its advantages as
follows: The prediction can be made in total anonymity. Since the
prediction itself
is encrypted and revealed only on the death of the `target', the
target cannot be
warned. The predictor need not reveal his prediction, unless he chooses to. He
need not claim the reward either. He can transfer it to anyone else
since it can be
blinded. The organisation, too, does not know the contents of any prediction and
therefore cannot be held liable for any criminal activity. However,
for the system to
work, a potential predictor would also have to be convinced that the
money posted
would actually be paid for a successful prediction.
Cryptology, Digital Assassination and the Terrorism Futures Markets 227

How It Works
    Assume that a citizen is upset with a government official or
politician who is
corrupt or violates his rights. He mails the individual's name and his
predicted date
of death to the organisation along with any amount of money that he considers
appropriate. If even 1 per cent of the population of India were
willing to contribute
Rs 1/- towards the reward, the amount collected would total Rs one crore. The
successful predictor could collect his money knowing that his identity
is safe and
not dependent on the benevolence of the organisation. The money he receives
would also be untraceable to its source.29
    Governments could target the organisation for promoting criminal activity.
However, Bell argues that the organisation could not be charged with criminal
activity because it is merely forwarding mail. It also could not be charged with
being an accessory after the fact since it would not know what information is
contained in the encrypted digital envelopes. It would not itself be
engaged in any
criminal activity. There would be no conspiracy because there are no co-
conspirators. All participants would be anonymous. The predictions are
encrypted and the name of the target unknown. However, one interpretation of
the law suggests that the organisation could be considered to be
acting criminally
in `endeavouring to persuade' people to murder. However, Bell suggests that the
organisation would, in fact, become global and therefore, difficult to
target under
national laws. It would then bear comparison with international
terrorist networks.
Further, the mere fact that no laws now exist to combat such organisations does
not mean that this will always be the case. It is more than likely
that specific laws
would be drafted to target any group planning to enter this `niche' business.
Revolutionising Society
    Bell suggests that the implementation of his scheme would revolutionise
society.30 He goes so far as to suggest that even the police and
military could be
abolished. Leaders of bellicose states could be removed without the dangers of
war. No leader would be immune.
    In most cases, it is the general population which has the most to
lose from war.
The availability of such a system would ensure that countries are not
pushed into
unpopular wars. Bell feels that this would result in a
de-bellicisation of international
politics and even remove the need for large armies. He suggests that
why this has
not happened so far is because it has been left to the leaders
themselves. Earlier, a
deed could be done but the doer could not be rewarded without fear of discovery.
 228 Strategic Analysis/Apr-Jun 2004

The perpetrator could be traced and punished by the police. The beauty of his
system is that successful predictors could be rewarded without any
risk of discovery.
The random nature of the whole process ensures a disconnect between predictor
and target.
    Such a system would also ensure that no judges or prosecutors would be
willing to take up any case on behalf of an unpopular government since
they could
also be targeted. Any dishonest organisation (one which failed to pay
the promised
reward for a successful prediction) which goes into this business
could itself be
targeted or forced out of the market by a similar, but more honest organisation.
The ethics of the marketplace!
Self-Regulated Policing
    Bell also suggests that crime itself would reduce. According to
him, the police
are generally unable to prevent serious crime and prefer to target `victimless'
crimes like pornography, prostitution or gambling. However, the cost
of maintaining
a police force is enormous. He suggests that a self-regulating system could be
created for a fraction of this cost. He feels that people would be
willing to contribute
a small sum in order to predict the death of a malefactor, say a car thief. Even
insurance companies would be willing to reward successful predictors,
in order to
reduce losses caused by payouts for car theft claims. This would
result in car theft
becoming a risky proposition.
Competition from Criminal Organisations
    The other fear is of criminals using similar methods to set up an
targeting law-abiding people -- a modern-day variation of extortion. However,
with an unethical organisation, there is no guarantee that payment
would let you off
the list. Such an organisation would be willing to target anyone, not
just wrong-
doers.31 The advantage of the legitimate organisation is that it would
target only
evil-doers. The monetary incentive for terminating evil-doers would therefore be
higher than for targeting an ordinary individual in whose death hardly
anyone would
have any interest, The criminal organisation therefore may not continue long in
business. The ethical organisation would survive.
The Viability of Digital Assassination
    From cryptography to the elimination of intrusive government the
police, the
military and war itself, is truly a giant leap. But does this system
stand up under
Cryptology, Digital Assassination and the Terrorism Futures Markets 229

examination? It is true that PKC, digital pseudonyms and blind signatures would
enable identities to be kept secret. However, it presupposes that,
given the public
key, determining the private key would be difficult. PKC depends to a
large extent
on the huge amount of time that it takes to factorise very large
numbers. However,
computers continue to become smaller and faster. It is also not impossible that
mathematical algorithms enabling faster factorisation of huge numbers could be
developed. These could significantly reduce the time factor. However,
it is equally
likely that PKC would then use much larger numbers and also that different
encryption methods using asymmetric keys could be developed.
    The kind of scheme Bell proposes is likely to threaten established forms of
government. It is unlikely that an establishment, aware of the threat
such a system
would pose to itself, would allow its creation. Such an organisation
would need to
be visible, accessible and with public support.
    The technology proposed to be used is only likely to be found in advanced
countries which presumably have an active citizenry concerned about governance
and civil liberty. The system also assumes widespread awareness among the public
of advances in cryptography and electronic banking. But people in most countries
are wary of the claims advanced for new technology. Further, new technology is
generally controlled by capital which already owns the technology
currently in use.
New technology will therefore, generally be suppressed until society has been
sufficiently prepared for its introduction -- the aim being to maximise profits.
Thus, for example, we may be reasonably certain that the replacements for fossil
fuels, as and when they arrive, will be controlled by the likes of
Royal Dutch Shell
and Exxon, which controlled fossil fuels in the first place.
    The fact that this system requires the availability of advanced
technology rules
out its adoption in the developing world which would possibly benefit the most
from the implementation of such a system. It is unlikely that it could
work with the
kind of primitive infrastructure that is available in most of the
developing world. In
fact, it is highly likely that it would be an attractive proposition
for adoption by
criminal organisations in the developing world, given the lack of
activist interest in
issues of governance and the difficulty of mobilising public opinion.
It therefore
seems that Bell's scheme will remain an interesting study in the use
of technology
for the abolition of intrusive government and be added to the many schemes for
world government that have cropped up in the past.
    Bell does not specify who will run this organisation. It will need capital,
equipment and, most important of all, personnel. How will it be funded? It will
 230 Strategic Analysis/Apr-Jun 2004

obviously need to keep a percentage of the donations people send it for its own
operating expenses. The key to the organisation is its personnel and
their integrity,
since it is they who would maintain the website and post the rewards.
The Terrorism Futures Market
    In late July 2003, news broke that the Pentagon was researching a scheme
called the Futures Market Applied to Prediction (FutureMAP). 32 The idea had
been broached by Admiral John Poindexter, National Security Adviser to President
Ronald Reagan and a prominent casualty in the Iran-Contra affair. The budget for
the program was apparently US$ 8 million. The program was part of the Total
Information Awareness Program and was coordinated by the Defense Advanced
Research Projects Agency (DARPA).
    Admiral Poindexter, who has a PhD in nuclear physics, has had a
career.33 He has apparently specialised in offering unorthodox
solutions to difficult
problems. In the Iran-Contra affair, he and Col. Oliver North sold weapons to
Iran, then under US sanctions for holding American hostages. With the proceeds,
he financed the Contra insurgents to overthrow the Sandinista regime
in Nicaragua.
    Poindexter's latest idea is to allow investors to bet on their
predictions of
likely terrorist actions to help law and intelligence agencies
anticipate better where
the next outrage could take place. This system is supposedly modelled on the
Delphi method of forecasting, pioneered by the RAND Corporation. The
assumption is that, investors acting en masse, could pool their bits
of information
together to create a far better picture of reality than they could
individually. A
better picture of the future of the stock market or the national economy should
thus emerge.
The Iowa Electronics Markets
    This principle is already being used in the Iowa Electronics
Markets to predict
the outcome of presidential elections. The Iowa Electronics Markets are small-
scale real money markets run by the University of Iowa Business School. The
most well-known of these is the Presidential Futures Markets, which
aims to predict
winning candidates in the Presidential elections. Essentially, traders
are asked to
answer which candidate they think people would vote for on election day. A
cocktail of options is offered. The system uses classical statistics,
a representative
sample of voters and assumes truthful responses to arrive at a prediction of the
result.34 This is done on a daily basis. Trading is frozen on the
night before the
Cryptology, Digital Assassination and the Terrorism Futures Markets 231

election and the results compared with the actual results.
    Each market is linked to a specific future event. Traders are
offered a bundle
of contracts, each contract relating to a particular subset of the
main event, for
example, the likelihood of a particular Democratic candidate winning against any
Republican candidate, or a particular candidate being nominated by a particular
party. Each bundle consists of one of each contract available in the market. The
bundles are bought and sold by the system at a price which is the aggregate pay-
off for that outcome as determined by the market. The system merely introduces
contracts into the market. Traders can exchange these at prices that
they decide.
Traders only know the best bid and ask for prices and the last trade price. They
do not know the quantities available at these prices.
    Joyce Berg and her fellow researchers at the University of Iowa
have discovered
that the system is fairly accurate as regards US Presidential
elections. Accuracy is
enhanced when the event is high profile and arouses general interest by market
volume. They have also discovered that markets with fewer contracts, i.e., fewer
variables (candidates) are more accurate.
    With FutureMAP, Poindexter attempted to extrapolate the Iowa Presidential
markets system to the prediction of terroristic events. Each of these outcomes
would become a contract. It was assumed that the information available
to various
players in the market could be used to determine the likelihood of an event and
might even yield information on terrorist attacks. The probability would be
proportional to the price. Since people would be betting with cash, it
was assumed
that they would be more truthful.
    The assumptions underlying FutureMAP were that human beings are rational
economic players and that markets accurately predict the future. The model also
assumed that information distribution processes are highly efficient, readily
leveraged by players and that markets are free from manipulation.35 All these
assumptions may be questioned.
    Moreover, unlike Presidential polls, which are scheduled to occur
on a known
date, the schedule for terror attacks is known only to the terrorists.
Even if we
assume that the target is known and that the terror event is certain
to occur, the
day would still be uncertain. The peak price would be no indication, since we
would not know that it is the peak. Further, to assume that the
information is so
 232 Strategic Analysis/Apr-Jun 2004

widespread that it has filtered into the market, is contrary to what
we know of the
way terrorists operate. If they allowed this to happen, they would be
giving away
information which could jeopardise their plans.
    A more probable scenario would be one where terrorists pretend to be
interested in a particular target. This would enable them to divert
attention from
the actual target and also enable them to manipulate the odds and the market.
Research however indicates that attempts to skew the market only have a
momentary impact.
    The scheme could also be used by government to enable players to predict
the death of enemy leaders like Saddam Husein. In such a case, the resemblance
to Jim Bell's scheme would become very marked. In this case, players would
attempt to bet on whether Saddam, Fidel Castro or Osama bin Laden would be
alive on a certain date. In this case, the government's role would not
be passive.
It must be presumed that this would be linked to active attempts by intelligence
agencies to hasten the demise of these individuals. The facts in this
case would be
known to the government and individuals would be betting on death dates. This
would raise the same ethical arguments as Bell's scheme.
    The exposure of Poindexter's scheme resulted in a huge outcry in Congress.
The scheme was dropped like a hot potato, essentially on moral grounds.36
However, some analysts feel that it could have been useful as a trend
indicator and
should have been continued, though perhaps not in the context of terrorism. In a
study published by the AEI-Brookings Joint Center for Regulatory Studies,
Professor Abramowicz concludes that information markets could help refine
administrative agency predictions about government policy if the possibility of
manipulation can be overcome. It, therefore, seems likely that FutureMAP may
eventually resurface in an entirely different context as a policy analysis tool.
    Jim Bell has suggested a scheme to punish corrupt officials which he calls
DigitaLiberty. This presumes the existence of an organisation, which would allow
those who correctly predict the death of such officials to be rewarded with
untraceable cash, while keeping their identities secret. Discussion of
his scheme
and the eventual abolition of government, which he hopes it will bring
about, require
some rudimentary understanding of cryptography. Salient encryption systems have
therefore been examined to understand better the issues at the heart
of cryptology.
Cryptology, Digital Assassination and the Terrorism Futures Markets 233

    Bell's idea hinges on the use of PKC to preserve the anonymity of
who participate in the scheme. It also requires the availability of
digital cash and
digital pseudonyms on the lines suggested by David Chaum.
    Asymmetric cipher systems together with the Internet form the
cornerstone of
Jim Bell's scheme of DigitaLiberty. It is truly revolutionary. It is a
moot point
whether it will be implemented. The dangers it poses to existing
systems of command
and control will probably ensure that it will never be. Bell argues
that the system is
not criminal. However, since implementation is likely to threaten
elites, it seems
very likely that laws will be updated to make such activity illegal.
    The heavy dependence on advanced technology ensures that the system is not
likely to be used in the developing world. While we cannot deny the devilish
ingenuity of Bell's scheme, it seems most likely that it will merely
be an interesting
appendix in a book on the elimination of governments.
    The Futures Market Applied to Prediction (FutureMAP) propounded by
Admiral John Poindexter seems to have been inspired by Jim Bell's `Assassination
Politics'. The distinction is that it would be operated in the
interest of national
security. It would allow punters to bet on the occurrence of certain
terrorist events
like the likelihood of a terrorist attack, the assassination of a
leader or the death of
a wanted terrorist to obtain actionable intelligence on likely events.
    Unlike Presidential elections, the time-table for terror events cannot be
predicted. Terrorists are unlikely to be influenced by market decisions. That
FutureMAP was under serious consideration only highlights the fact
that no idea is
too outrageous to be considered.
                              References/End Notes
    1  "Amid Furor, Pentagon kills terrorism futures market" , 30
July, 2003, at http://www. /2003/ALLPOLITICS/07/29/
    2  Ibid.
    3  Schlegel, Alex, "Jim Bell and Assassination Politics", at
        articles/art-200109-assassination_politics.html updated July 30, 2003
    4  Ibid.
    5  Kahn, David, The Codebreakers: The Story of Secret Writing.
1966. Weidenfeld and
        Nicolson; London. p. xvi.
    6  Ibid. pp. xiii-xv
    7  Singh, Simon, The Code Book. 1999. Fourth Estate; London. p. 30
 234 Strategic Analysis/Apr-Jun 2004

  8  Kahn, David, no. 5, p. xiii.
  9  Ibid., p. xv
  10 Singh, Simon, no. 7, p. 31
  11 Ibid.
  12 Ibid., p. 17
  13 Kahn, David, no. 5, p 84
  14 Ibid., p. 46
  15 Ibid., p. 49
  16 Ibid., p. 51
  17 Ibid., pp. 208-213
  18 A working model of the Enigma is available at the site indicated
below and will serve
      to give a good idea of how it functioned. See "Working Model of
Enigma ciphering
      machine", Java Applet by Russell Schwager at
  19 Singh, Simon, no.7, p. 136
  20 Ibid., p. 251
  21 Ibid., pp. 264-265
  22 Ibid., pp. 274-275
  23 Ibid., p. 300
  24 Chaum, David, Achieving Electronic Privacy. Scientific American.
August 1992,
      pp. 96-101
  25 Ibid., pp. 97-98
  26 Ibid., pp. 98-99
  27 McCullagh, Declan, "Crypto-Convict Won't Recant", April 14, 2000
at http://
  28 Bell, Jim, Assassination Politics", April 03, 1997 at
  29 Ibid.
  30 Ibid.
  31 Ibid.
  32 "Amid Furor, Pentagon Kills Terrorism Futures Market", July 30, 2003 at
  33 "John M Poindexter" at
  34 Berg, Joyce, et al, "Results from a Dozen Years of Election
Futures Markets
      Research", University of Iowa, November 2000, at
Cryptology, Digital Assassination and the Terrorism Futures Markets 235

    35 Ritholtz, Barry L., "Terrorism Futures Market: Much Ado about
the Wrong Thing";
          The Big Picture: Macro Perspectives on the Capital markets,
Economy Geopolitics,
          August 02, 2003 at
    36 "Terrorism Futures Market Plan Cancelled", Fox News Channel,
July 29, 2003 at

                            Wg Cdr R. Sukumaran is a Research Fellow at IDSA.
                            He is an Air Force fighter pilot and has
operated on both
                            INS Vikrant and INS Viraat. His research
interests include
                            military history, technology and the use
of air power.
Errata: The name `Lt Cdr Frank Taylor of the Royal Navy' on page 50 of
the Jan-Mar 2004
issue of Strategic Analysis should read `Lt Cdr David R. Taylor of the
Royal Navy'.
-- Editor
236 Strategic Analysis/Apr-Jun 2004
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