anonymous digital cash and other (now) iffy stuff

[Ryan Lackey]

[Moderator's note: This is quite long, and much of it is interesting
primarily to those following the Sealand saga. Since many of us
_have_, in fact, been following the Sealand saga, I'm forwarding it
for that reason. --Perry]

Quoting Phillip Hallam-Baker <hallam at ai.mit.edu>:

> I never thought much of the idea at the time. In todays climate I
> suspect that E-Gold, ZeroKnowledge and Sealand might as well
> start packing up their servers before they get busted.

(it's "HavenCo" not "Sealand", just as ZKS is ZKS and not "Canada")

I agree the current climate is substantially worse, in terms of respect for
the rule of law, individual liberty, and the prospects for freedom of 
speech, than it was before the WTC bombing.   However, none of this was
unanticipated; this incident just accelerates our descent into a future
dystopia of universal monitoring, global statism, and individual 
subjugation, but does not at all affect where we're going.  We've been on 
this path for at least the past 50 years, and if this attack and the 
aftermath pushes us forward another 20 years in a single day, that's certainly 
important, but no one should be surprised when they look around themselves 
and don't like what they see.

(I assume you mean legislative/legal/political climate; while the 
nay-sayers said we'd be out of business before the end of 2000 due to lack
of demand, HavenCo at least is profitable, and I think E-Gold is as well.)

This trend is far more damaging to firms whose core business is not the 
provision of anonymity and privacy to clients, but which require
privacy and anonymity provided by others to make their services useful.
If it becomes more difficult to provide privacy/anonymity/security, the
demand for such services will increase even faster than the costs of 
providing them.  Some firms with relatively weak technical or other
basis may be unable to scale up to provide more secure solutions, but the
ensuing vacuum will encourage others to step up to the plate.

The greatest enemy of secure electronic mail, for instance, being widely
deployed is the LACK of widespread monitoring.  If every internet
connection in the US were monitored actively, and the contents were
routinely used in civil and criminal legal actions, technologies
like ZKS Freedom, PGP, SSL would be in far wider use than they are now.

Certainly an argument can be made that it is more complex to offer such
services with active government prosecution in one or more jurisdictions
around the world.  However, certain fundamental technical conditions
do not cease to be true simply due to terrorist action, political will,
or legislative fiat.  Blowing up the WTC is unlikely to have made factoring
RSA any easier than it was on 10 September, it is unlikely to have found
a backdoor in widely deployed symmetric ciphers, and it has not affected
the laws of thermodynamics to lessen the difficulty of defeating 
steganography.  Sure, identifiable persons, physical assets, etc. can now
be more easily attacked through legal means, at least in most of the world,
and there is public support in many countries for international military
action against others, provided at least a tenuous link to the "global
terrorist conspiracy".  However, the fundamental game is not changed.

All that is required for "cypherpunk" reality is:

[*] at least one computer with secure local execution environment 
    (processor, some internal secure memory for interim results)
   
[*] some means of permanently storing data (which can be 
    unreliable, monitored, etc.)

[*] some means of communication (even highly monitored, maliciously 
    modified, or other) to the humans involved

[*] plus, for anything reasonable, multiple such setups and some means 
    of communication among them in a large network, even monitored or 
    modified, with traffic analysis possibly limited to "a member of the 
    overall network" where "network" can be massively more broad than 
    "conspirators").  

[*] Code[1].

I think it highly unlikely even a new "War on Terrorism", even if 100 times
more forceful than the "War on Drugs", will be able to eliminate every
last pre-2001 laptop computer, PDA, etc. from the earth, or the ability
for people to send email (even if monitored, and outright encrypted email
is a capital crime) and connect to a global network.  

On top of that infrastructure, viable electronic cash systems protected
from traffic analysis and resistant to censorship, anonymous publication
systems, etc. can be built.  Indeed, most of the technical challenges have
been solved since the 1980s; the only difficulty has been general lack of
demand from the public, standard software engineering complexity issues,
excessive concern for legality and intellectual property concerns,
and the distraction of the dotcom boom.  If, as you seem to imply,
open warfare on personal liberty shall be declared, most of those concerns
go away; if it's a felony to deploy ecash, you'll want to be anonymous
anyway, and then violating someone's patent just doesn't seem like a big
deal in comparison.

> [...]

> Sealand will probably still keep maintaining its idiotic claim to be an
> independent state, but if the UK government wants to search they can
> easily get a warrant. If sealand were outside UK territorial waters (it
> ain't anymore) the navy can board at any time of their choice any structure
> or vessel that is not registered with the shipping registry of a recognised
> state that is in international waters.

Sealand's claim to statehood rests on the following argument:

1) An artificial island, Roughs Tower, was constructed in 1942 by the 
   British Government in then international waters, for the purpose of
   defense.  This island was not constructed for the purposes of extending
   the UK's territory, but only to defend the UK's mainland from air or
   sea attack.

2) Subsequent to cessation of hostilities, WWII, 1945, the UK removed 
   personnel and some equipment from the island, abandoning it.  The UK did 
   not return to the island at any subsequent point.

3) In 1966, Roy Bates, a UK citizen, along with others, landed on Sealand
   and occupied it.  It was at this point abandoned for over 20 years by
   the UK government.  Roy, his wife Joan, and son Michael established
   permanent primary residence on the island, renaming it Sealand.

4) Through repeated legal challenges, including firing on ships of the royal
   navy, mounting armed counter-invasion, resolving the issue of taxation of
   UK citizens resident on Sealand as if they were resident in any other
   foreign country, etc., Sealand's sovereignty has been repeatedly reaffirmed.
   We have a large body of supporting documentation from the past 59 years;
   I'll try to put more of it up on our website in the future.

5) Despite the UK extending territorial waters in 1987 to 12nm, Sealand
   was by that point established for more than 20 years, and extended its
   own territorial waters to 18nm the day before.  Similarly, treaties and
   amendments to the laws of the sea in the 1980s prohibiting the construction
   of platforms in international waters by sovereign governments in order to
   extend territorial waters did not apply to the UK in 1942, nor did they
   apply to Sealand when founded in 1966.  Such treaties also support the
   long legal tradition of artificial and reclaimed land being treated as 
   land for the purposes of international and national law.

None of this has been in the least affected by an apparent new willingness
on the part of the US and other nations to invade arbitrary other nations.
Sealand has nothing to do with any of the recent terrorist events; if Osama
bin Ladin were, for instance, living on Sealand, I would fully expect
Sealand would be asked to turn him over[1] or face invasion.  Sealand's
legal status is NOT the issue; international realpolitik of larger states
vs. smaller ones is much more the issue.  In fact, given such a situation,
it seems more likely they would treat Sealand as a state, and ask us to
comply with a demand placed in such language.

Independently of that, HavenCo operates.  If HavenCo/Sealand is shut down by 
invasion by the nation of -------, HavenCo can continue to operate
from other locations; indeed, eliminating Sealand would simply establish more
need for our services and ensure our next facility has more customers and
capital equipment than Sealand.

[1] There *was* a time where cypherpunks wrote code, rather than worrying 
    about influencing legislation; they assumed the government was 
    malicious and all powerful anddesigned technical systems to defeat them 
    still; I don't think that time is over.  Indeed, an upcoming conference, 
    CodeCon, exists to advance the state of the art in and promote discussion 
    of such systems; CFP to be sent shortly.)

[2] Which would be done, but in multiple boxes/bags/jars, just as our
    ultimate response to someone presenting a clear military threat unless we
    hand over a given customer machine is to destroy it completely and then
    refund the customer's unused balance.

-- 
Ryan Lackey [RL7618 RL5931-RIPE]	ryan at havenco.com
CTO and Co-founder, HavenCo Ltd.	+44 7970 633 277 
the free world just milliseconds away	http://www.havenco.com/
OpenPGP 4096: B8B8 3D95 F940 9760 C64B  DE90 07AD BE07 D2E0 301F




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