From: Kent Crispin <kent@songbird.com>
Date: Sun, 29 Jun 1997 01:21:04 +0800
To: cypherpunks@Algebra.COM
Subject: Re: Hettinga's e$yllogism
In-Reply-To: <v03020929afd325266f9d@[139.167.130.247]>
Message-ID: <19970628101134.52512@bywater.songbird.com>
MIME-Version: 1.0
Content-Type: text/plain



On Tue, Jun 24, 1997 at 01:45:35PM -0400, tzeruch@ceddec.com wrote:
[...]
> > ... why wouldn't escrow work ...
> 
> Because the government could retroactively reverse transactions.  Currency
> is only as good as far as it is trusted.  Would you accept a transaction
> that if the government opened the crypto, and found that the person that
> sent you the cash was a drug dealer, which meant that all your finances
> are thus contaminated with "drug money", and that they would not only
> seize the transaction, but all other money?  I think not. 

So how is that different than the current situation without 
cryptography?  If people couldn't live with key escrow, how can they 
live with the current situation?  Answer:  they live with the current 
situation because the government abuses you describe are kept below 
the revolution threshold.  The same would be the case with key escrow.

> The goverment could also open the note and spend it before you did (for
> things like back taxes).  Assuming it is not a janitor working in the
> building housing the escrow computer who is doing it.
> 
> In effect, key escrow applied to electronic cash is a lein against every
> note that can be executed without your knowledge or consent.

But so what? Right now the government has intimate knowledge of your
finances through tax records and other sources, and has the power to
put liens on your property and your cash for all kinds of reasons.  
And indeed, all too frequently it gets out of control.  But the 
bottom line is that business in the US continues to function.  It 
would continue to function with key escrow, as well.

> There are technical solutions and problems which I can go into further. 
> But, briefly, the goverment will want to track all sides, and anything
> will require huge computer resources to store the escrowed keys.  

Assuming certain models of key escrow, yes.  Under other models, no.  
But imagine the worst case -- GAK creates a huge unwieldy expensive 
computerized infrastructure and associated bureacracy.  What 
happens?  Businesses find other ways to protect their data and 
transactions, huge economic inefficiencies develop, and the whole 
thing collapses and goes away.

It's amazing how little faith libertarians have in the market system,
isn't it?  :-)

Or another scenario:  A janitors at a Government Key Escrow Center is 
caught making billions illegally.  An outcry in Congress, laws are 
repealed, new laws are passed, etc etc etc.  If the system works 
badly it will fail.

[...]

> If the government can declare "authentic" currency to have no value
> (especially retroactively), the same rule applies, which is why key escrow
> is equally damaging. 

Governments have devalued currencies many many times in the past
without the need of key escrow...key escrow is an independent issue. 

-- 
Kent Crispin				"No reason to get excited",
kent@songbird.com			the thief he kindly spoke...
PGP fingerprint:   B1 8B 72 ED 55 21 5E 44  61 F4 58 0F 72 10 65 55
http://songbird.com/kent/pgp_key.html