From: tcmay@netcom.com (Timothy C. May)
Date: Mon, 29 Nov 93 10:57:14 PST
To: cypherpunks@toad.com
Subject: Crypto Anarchy, the Government, and the National Information Infrastructure
In-Reply-To: <9311291413.AA20144@vail.tivoli.com>
Message-ID: <199311291854.KAA13023@mail.netcom.com>
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In this essay, quickly written, I'll address some points raised about
the government and its "willingness" to let strong crypto and crypto
anarchy develop, and how the Data Superhighway will require all data
packets to have "license plates" on them (my biggest speculative
leap).

We're in an arms race, us versus them, and I think the government as
we know it will ultimately lose.


Mike McNally writes:

> Given the material in the WiReD 1.6 article, how likely is it that a
> true anonymous digital cash system would be allowed?  I know, I know;
> there's "no way to prevent it"; however, I think that concept is based
> on the premise that the Government proceeds rationally.

You mean, how likely is that the government will allow a system that
makes taxation almost impossible, that enables black markets, that
facillitates the transfer of illegal information, and that basically
nukes the present arrangement?

I don't think they'll "allow" it. But this doesn't mean it won't happen.

> If somebody with an axe to grind gets hold of the "kidnapped baby"
> scenario described in _Applied_Cryptography_, plenty of public outrage
> and indignation could be generated.  Imagine a made-for-TV docu-drama
> that shows teams of strange greasy little hackers hunched over their
> glowing workstations, wailing kidnapped babies piled in a corner.
> 
> Go on, reassure me that "all is well".

I can write more after I shut these babies up...maybe it's time to
just sell a few or recycle my stock. My new babytender, a nice young
girl named Polly Klaas I picked up a while back, is working out well, though.

(This was politically incorrect humor, outlawed on the Data Highway in
1997. As President Hilary put it: "That's not funny!")

The "crypto crackdown" Mike is alluding to is one that has be
predicted for a long time. We are indeed in an "arms race": both sides
are racing to cut the other off. 

Strong crytography means government can no longer do its thing, at
least not has it's accustomed to. Strong crypto means untraceable
payments, secure phone lines, information markets in what are now
military and corporate secrets, liquid markets in illegal services,
and of course a nearly total collapse in taxation abilities.

On taxation, it is certainly clear that many folks will still be
"visible" and will be taxed as heavily as other--I don't want to imply
that the guy who works for Lockheed or behind the counter at Safeway
is somehow going to be liberated from paying taxes by the onset of
crypto anarchy.

No, the effect will be more of an erosion of _support_ for taxation,
as word spreads that many consultants, writers, information sellers,
and the like are sheltering much of their income via use of networks
and strong crypto.  The tax system is already shaky--$5 trillion
national debt, growing every year--and it may not take much of a push
to trigger a "phase change," a tax revolt.

This "crypto phase change" (a term I prefer to the term "Singularity,"
so beloved by the nanotechnology folks) is what I see coming. Whether
the government can crack down first is the fly in the ointment.

Note that the way strong crypto works means a successful crackdown
could only come as the result of strong police state policies. That
is, outlawing of unapproved encryption, on demand inspection of all
data packets, strict regulation of across-the-border
telecommunications, an end to the Internet as we know it today, and
strict penalties merely for "conspiring" to use strong crypto. Eric
Hughes' "Use a random number, go to jail" line is not so far from the
truth.

I oppose the government's plan for a "data superhighway" for two main
reasons. First, there's no need and the free market is already giving
us a multiplicity of lines, channels, satellites, etc. Anarchic
development can produce a more robust system, actually. Second, I fear
the involvement of government. Already the NII proposal is talking
about the nice things it needs to ensure fair access, a
nondiscriminatory system, and so on. These "nice" things also imply
government restrictions on content. But I'll save this for another
thread.

Imagine this: to get on the Data Superhighway, which will likely be
the only major lines if the government succeeds in making it the
mandatory standard, every data packet must have a "license plate."
Don't laugh! The idea of a license plate on data packets is coming. It
would provide the kind of traceability that control freaks like
Detweiler claim to want (I say "claim" because our pal LD is the
largest user of pseudonyms we have.) It would provide for taxation of
packets, much like road fees and truck charges, and it would generally
make the Net an environment hostile to crypto anarchy.

The forces of NIST/NSA and the National Information Infrastructure are
moving in this direction.

I'm moving in another direction, toward the overthrow of the present system.

Over the past several years I've thought about these issues at length.
I don't think they can crack down. Can they stop "dial-a-prayer"
computer confessionals? (priest-confessor privilege, recognized at a
deep level) Can they stop attorney-client computer communications? (To
wiretap these would break open the entire legal system.)

Can they place police monitors in every role-playing game or
deep-immersion VR system? (Make no mistake about it, systems like
"Habitat" and LambdaMOO, and many more are coming or already exist,
will be full-fledged agoric marketplaces, with goods and services
being traded. Read "Snow Crash" or "True Names" to remind yourself of
this (I'm not endorsing the specific views of Stephenson or Vinge, who
got some things "wrong"--no big deal, as their general vision was what
was so important.)

Can they tell people they can't compress their files? (compressed
files look outwardly like encrypted files) Can they ban the use of
steganography--if they can find it being used at all?

No, too many bits are flowing already. Too many degrees of freedom. A
Soviet-style crackdown is not in the cards.

But we stil have to fight.

Things like the Clipper still need to be fought, by ridicule ("Big
Brother Inside" stickers), by lawsuits (not my specialty), by
denouncement (as when industry groups denounce it), and especially by
developing and promoting alternatives. The market is truly ripe for a
Soundblaster-type voice encryption system---when will one of you
budding entrepreneurs get one out?

Having read the three main "position papers" on NII (the White House
paper, the CPSR analysis, and the EFF "Open Platform" piece), I'm as
convinced as ever that the Data Highway is largely about regaining
control of the currently anarchic network system. It just isn't about
giving ghetto residents access to Crays, nor is it about the
government being benificent in expanding our cable choices from 50
channels of shit to 5000 channels.

No, it is about taxing the commerce that is moving increasingly into
cyberspace. It is about continuing to regulate and control. It is
about the survival of Big Brother.

The arms race is on.


--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.