From: tcmay@netcom.com (Timothy C. May)
Date: Wed, 17 Nov 93 00:04:16 PST
To: cypherpunks@toad.com
Subject: ANARCHY: The Coming Crypto Phase Change (fwd)
Message-ID: <199311170803.AAA10424@mail.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain


Cypherpunk friends,

Here's a piece I just did for the Extropians mailing list, arguing for
a kind of "crypto phase change."

Yes, it's political, but in a way that I sense some list members are
eager to hear about. We rarely discuss the long term implications of
strong crypto, digital money, remailers, etc., these days. These
topics got pretty thoroughly aired a year or so ago when the list was
young, and the message is of course made clearly in some of the
"rants" (Eric's term, but in light of the "True Rants" we've been
seeing lately, I think the term is misleading).

Anyway, I won't apologize further. You can always delete this.

Forwarded message:
To: Extropians@extropy.org
From: tcmay@netcom.com (Timothy C. May)
Subject: ANARCHY: The Coming Crypto Phase Change
Date: Tue, 16 Nov 93 23:54:51 PST


I want to elaborate on some comments I made earlier about anarchy and
crypto-anarchy and tie them to the "Oceania" ocean colonization thread.

I wrote:

> Some of us believe various forms of strong cryptography will cause the
> power of the state to decline, perhaps even collapse fairly abruptly.
> We believe the expansion into cyberspace, with secure communications,
> digital money, anonymity and pseudonymity, and other crypto-mediated
> interactions, will profoundly change the nature of economies and
> social interactions.
> 
> Governments will have a hard time collecting taxes, regulating the
> behavior of individuals and corporations (small ones at least), and
> generally coercing folks when it can't even tell what _continent_
> folks are on!

The "crypto phase change" is the transition to wide use of private
communications to conduct business, to arrange deals, to meet other
people, and so on. I contrast it with the idea of a "singularity," so
often associated with nanotechnology (cf. Vinge, Stiegler, et. al.),
because nothing is ever truly a "singularity." Discontinuities, yes.
Phase changes, yes. Singularities, in the sense of infinite spikes,
no.

Crypto and related cyberspace methods have the potential for causing a
fairly rapid transition to a new sort of society. Just as printing
presses did. Just as radio, television, and new media did.

And this phase change could involve--likely _will_ involve--many
people, perhaps the majority of the population in America and Europe,
at the least.

Some scenarios:

- people hear about widespread tax evasion by crypto-anarchists, and
they get interested (for various reasons, including jealousy, anger,
greed, desire for freedom). "Crypto lasing."

- consultants discover they can consult on projects from other
countries, from jurisdictions that might ban their invovlement if they
knew about it, and so on.

- the "permanent tourists" in the world-spanning economy.

- black markets in credit information, dossiers, insurance fraud
cases, medical malpractice, etc. 

A simple example that will reach many people: You're thinking of
hiring a lawyer. Under U.S. law, records of "bad lawyers" are hard for
outsiders to keep, to gain access to, etc.  The Bar Associations,
like the American Medical Association, like other officially
sanctioned "guilds," prefers to keep outsiders in the dark. So what
happens when "Reputations R Us" sets up shop in cypherspace--or, more
mundanely, on an island in the Caribbean that has no such laws? What
happens when for the price of an offshore phone call or Net query the
parochial and paternalistic U.S. laws can be trivially bypassed? It'll
be a whole new world.

Ditto for gambling, escrow services to hold money (think of the
reduction in violence when "reputable" digital banks will hold the
drugs _and_ the money), information markets, private investigation
services, rent deadbeat records, and credit records that include _all_
creditor information (not just the last 7 years, and not just the
"allowable" items...how dare anyone infringe my right to take into
account records more than 7 years old?!).

(For those worried about tracing the calls, about sting operations,
etc., that's where digital mixes (remailers) come in and where prepaid
"coupons" ("The holder of this number is entitled to one database
query") come in. Even short of full-blown Chaumian digital money, a
lot can be done. Prepaid digital coupons, or digital postage of a
sort, can be used to make these off-shore--or in cypherspace, a la the
"BlackNet" demonstration I did a few months back, and written about in
"Wired"--markets liquid and profitable.)

Like a seed crystal dropped in a supersaturated solution, crypto could
trigger a phase change of immmense proportions. (The metaphor is
slightly awkward, as I see the crypto phase change _increasing_ the
number of degrees of freedom, as in the transition from a solid to a
liquid to a gas.)

The "Oceania" project, in contrast, tends _not_ to produce this kind
of phase change. Joe Nextdoor may eventually start using data havens
and crypto tax evasion schemes, but he's not at all likely to
volunteer to man the oars on a floating barge.

(I don't mean to defame the Oceania project. Just my sense of humor.)

Ocean-going colonies have not appeared, even by corporations and
states, for whatever reasons, so the onus is on the oceanauts to
explain just what is out there that is so valuable (that can't be done
by ordinary boats and ships that fish, mine for manganese nodules, do
oceanographic research, etc.).

Merely seeking freedom is probably not enough. Gambling, prostitution,
and easy access to drugs and other hedonistic delights may be enough,
but I've seen nothing to indicate this type of "Love Boat" is being
planned. Just the dreamy ideas about self-sufficiency. A commune by
another name. A floating "Hog Farm," with anarchocapitalist ideology
replacing Thoreau and Marx.

In any case, Oceania-type projects, even if moderately successful (and
not just the rusting pontoons I predicted in an earlier posting), are
very unlikely to trigger a phase change such as the one I see for crypto.

This is why I am currently placing my faith in strong crypto and am so
active in the Cypherpunks group. That's one place where the Revolution
_will_ be televised.

--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.