From: s1113645@tesla.cc.uottawa.ca
Date: Mon, 29 Apr 1996 10:58:02 +0800
To: mkj@october.segno.com
Subject: Re: CryptoAnarchy: What's wrong with this picture?
In-Reply-To: <199604281221.AA01603@october.segno.com>
Message-ID: <Pine.3.89.9604281554.A30287-0100000@tesla.cc.uottawa.ca>
MIME-Version: 1.0
Content-Type: text/plain


One of these days I'm going to learn the art of succint writing.

On Sun, 28 Apr 1996 mkj@october.segno.com wrote:

> Which brings us to the "flight of capital" issue.  Will nations be
> able to compete freely for the loyalty of the rich?  Or will the most
> powerful nations form effective coalitions, and perhaps simply bomb
> "rogue" nations into the stone age?

I don't think the rich are really the issue. From what Sandy, Black 
Unicorn and others write, it looks like those of the rich who are 
self-employed already play these shell games to a certain extent and a 
certain amount competition and thumb-screwing already happens.

What is interesting is how it applies to the middle-class, where most of 
the tax-base is. 

Imagine a world where for cost reasons most offices are VR constructs (a 
la Snow Crash and all the others) run over the net. Assume that for 
privacy reasons, nobody in their right minds goes without crypto
since any cracker could literally be recording their whole lives.
(And assume that this gets built into all the software or the users scream
murder as hard as we did when Netscape's CEO looked like he was waffling 
on GAK.)

Assume that some enterprising jurisdictions find some *reliable* means of 
automating entity creation and use of all the offshore services (creation of 
companies, trusts, doing financial transactions...) and offer a standard API
to these services, making the whole game a commodity and as easy to 
access as downloading Netscape. 

Assume that somehow secure pseudonymous financial markets can be created. 
(Big if, but also big profits) Also assume very low transaction fees as 
a result.

The result of this might be that the netshore economy might actually 
have lower overhead and an easier interface to its users than the 
physical world version. If people's easiest intro to economics and the 
job market is such a simple anarchy and the place where they get most 
of their entertainment, education and generally spend most of their lives 
is such an impossible to regulate environment, what do you think this 
bodes for state control? Or people's desire for it? There is no teacher 
like experience. 

Many of us have found it safer to use a pseudonym, sometimes even to save 
ourselves from occasional embarassment when saying stupid things 
(nevermind privacy from altavista and whowhere). I think it is natural 
for people to want such things, especially in a VR environment when 
anyone can watch you. I assume that in this the cypherpunks, roleplayers, 
MUD players, political writers and BBSers are not radical but merely 
slightly ahead of the curve. It is also not a coincidence that 
pseudonymity keeps getting reinvented in new environments. Basic human need.

These games have all been possible for quite some time in the offshore 
market and seem far more developped. I've read that there are as many 
registered corporations in the Cayman Islands as there are inhabitants. 
It might actually be less of a hassle to conduct your business as a 
corporation than as a individual. Even here in high-tax Canada there are 
nifty tax benefits (I'm told). Foreign jurisdictions might also be easier 
to deal with as a corporation (do you *really* want the Chinese government
to know that you're doing business with their people? Do you want to get 
on Saudi Arabia's blacklist?)

How do you think most people will act when they learn that just by 
putting on their glasses they could enter a tax-free jurisdiction with 
perfect privacy? THIS meme does travel.

Now many here think that unless we get chaumian ecash Real Soon Now, none 
of this will happen. I submit that there will be far more demand for it 
in the years to come than right now. Anonymous ecash is still several years
ahead of its mass-market time. I don't see how in the absence of GAK or 
any other mandated ID scheme that it will be any easier to stop it (maybe 
you do). And market share? How can VISA and Microsoft compete against 
something that lets you save on taxes (why compete *against* it when you 
can be part of it?). Marketing this is a no-brainer.

The only extra expense I can see is that if you're large enough, you might
need more accountants to help with your double-booking. (Though maybe you
could fire them all if the system is done right)

Finally, how will you regulate disputes? Last week we had just this problem.
Now imagine how these things will be resolved when real money is involved 
and force cannot be applied. Arbitration is already "in" in the real world...
It's much faster than the average court. What do you think will happen 
when enough people get exposed to that? Arbitration negotiators 
(lawyers) might be quite cheaper than real lawyers, after all there's 
less rules to learn (probably standardized and commoditized) and a global 
market of them (competition!). Markets can also be set up for 
transferable lawsuits with greater ease...

In sum we're talking about the age of the global small business. As 
long as you're in the service industry, and you don't deal with physical 
goods, even if a only few of these things happen, life will be interesting.


Ps. Micheal Froomkin disagrees with this. How for example will you escape
having your house seized, how will you convince a large institution like
his university to pay you as a longterm contractor...?

I may be unrealistic, but judging from what is happening to university 
funding in this country, the increased number of for-credit university 
courses done by video or TV (Carleton U does 'em), the increased demand 
for knowledge workers and the increase in small specialty colleges, I'd
say he might dean of the www.law.anguila.edu online law school sooner 
than he thinks. And as for his house, getting "payment" from your "employer"
(trust fund/company) only for your expenses is already quite possible and 
(so it's been said around here) seemingly legal (IANAL!) He might even 
rent it from some odd offshore real estate company (himself).
The only difference compared to now is that it might eventually become alot 
easier.

Thinking of setting up your own universities, folks?