e$: Tet in Cypherspace

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Apr 17, 1998, 3:00:00 AM4/17/98

Robert Hettinga wrote:

>We won't even talk about what it will do to the ultimate "natural" monopoly,
>the monopoly modern nation states have on force. Besides, if everything's
>paid for in cash on the net in perfect anonymity, how are they going to beat
>taxes out of us? So much for Blue Wednesday.

Excuse me, Bob , but aren't you treading on dangerous ground a bit, here,
being so explicit about the meaning of things? Is this the same Hettinga
of the Ubiquituous Smiley Face, who discourages discussion on the
consequences for government of The Thing$ We Do, who prefers to quietly
slip it "under the table" before anyone realizes (becomes conscious) of
what's transpired, of what has been accomplished?

First you take "a cheap shot at the gentleman from the FBI" in public at
MIT, then you post a url for the Patriots on cpunks, and now this. What
is this world coming to.

Robert Hettinga

Apr 17, 1998, 3:00:00 AM4/17/98

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Subject: e$: Tet in Cypherspace
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e$: Tet in Cypherspace

Thursday, April 16, 1998
Boston, Massachusetts

So, it looks like the Clinton Administration, through its Commerce
Department, woke up this Blue Wednesday and smelled the coffee on the issue
of cryptographic prohibition.

The fact that it happened on the day of the year when Uncle Fedster and his
minions formally celebrate their confiscation of almost 50% of our
collective income in federal, state and local taxes only made the victory
sweeter for those of us who think freedom still matters.

It's too soon to count coup, here, because the crypto war's not over, but I
believe that the tide of this particular conflict has now officially turned.

Tet came on April 15th this year.

Think about it. We threw the "French" out of the cryptography market when
the NSA figured out that they could never control asymetric cryptographic
protocols in a world of freefalling semiconductor prices and ubiquitous
internetworking. Like the French did with USA 40 years ago in Indochina, the
NSA invited the FBI into a cryptographic "police action", to preserve
totalitarian statist colonialism in the guise of propping up the wiretap

However, no matter how many editions of the 5 o'clock follies Mr. Freeh
held, no matter how many imaginary bodies he counted, he couldn't quite win
the hearts and minds of the internet, much less the American people.

No amount of baleful hairy eyeballs cast in the general direction of the
crypto "advocacy" community could shut them up, certainly, but even more
important, it's the impending economic cost of Mr. Freeh's war that's
causing the implosion of his plans to see everything we do, or buy, in
"cypherspace", as Eric Hughes calls encrypted cyberspace.

It's remarkable, really. It may even be better than the Tet offensive of
1968. It might actually be as if everyone understood, at the time of the
Gulf of Tonkin resolution, that LBJ couldn't have the great society and the
Viet Nam war at the same time, that they had all read Milton Freedman's
monitarist papers somehow, and they could see in advance the devastating
inflation of the 1970's that LBJ would cause with our Viet Nam adventure.
The Gulf of Tonkin resolution fails. No war. More money for VISTA volunteers
or at least moonshots.

Actually, LBJ would have caused stagflation doing that "we owe it to
ourselves" stuff anyway, but it's a nice pipedream. Nonetheless, money is
always much more important than "policy". In spite of the most bloodthirsty
actions of the most totalitarian statist -- say, the late Pol Pot -- it's
money that creates law, and not the other way around.

This presidency, more than any other in the history of this nation -- a
nation where political corruption has been celebrated as fine art --
understands this simple fact as a natural course of doing its lucretive
business. And the irony that the most socialist president in American
history is also the most attuned to income has never been lost on the people
he's trying to tax and regulate out of business.

However, Freidrich Hayek has been proven right once again where the Clintons
have been concerned, though it's hard to figure out sometimes if Billary are
outright totalitarians themselves or just Hayak's "useful idiots" in the
now-dead cause of socialism. Fortunately, like any good parasites, Billary
can't kill their host, as this latest "spinglage" on cryptography seems to
show. That need for a market "host" for socialism to suck blood from, in the
end, is what has saved our freedom again, if it can ever be said to be under
any threat at all, cryptographic "advocacy" notwithstanding.

And so, the Clinton administration now apparently understands that to kill
strong cryptography is to kill financial cryptography, and thus digital
commerce. It's pretty simple, really. One need only count the nine zeroes in
the internet sales figures from individual companies like Cisco or Dell, and
the unbelievably scary growth of commerce on the internet in the past three
years, to understand its inexorable economic necessity.

Someday, practically *all* economic activity will happen on the internet, or
its decendants, and, if you think that strong financial cryptography is
necessary now to keep your credit card number safe, wait until you see what
is required for cash itself to be exchanged, using very strong cryptographic
"bearer settlement" protocols.

And cash *will* be used on the internet. Cash just like you think it is,
anonymous and untraceable.

Why will we use cash and other instantly settled digital bearer instruments?
Because it will be cheaper. Cheaper than checks, which are already being
digitized. Exponentially cheaper than encrypted credit card transactions,
which force you to borrow money just to pay for things, not to mention tell
everyone where you spend your money just to keep everyone honest about the
fact that you paid them.

More to the point, digital cash, using digital bearer settlement protocols,
will be cheaper to use than paper cash or even coins. After all, you can't
shove a nickle over a wire, and electrons are probably the only things which
are cheaper than paper or base metal.

These new forms of digital bills and coins will be safely "spendable" in
larger -- and even more especially, smaller -- amounts, than we can spend
with physical cash today.

Large enough to clear and settle multi-billion dollar currency trades in the
blink of an eye.

And small enough for your computer to purchase what it needs from the net in
terms of information, even bandwidth, as it is used, on a pay-as-you-go
basis. After all, we pay for what we use on the internet now, but we buy it
in advance, in fixed monthly fees, and usually with a check after someone
sends us a bill. At the very least, we pay indirectly, when we purchase an
advertised product.

Believe it or not, most of that money you spend on internet service goes
down an administrative rathole.

If we had the ablity to purchase internet resources in cash, the cost of
accounting for those resources, that is, the billing and payment for those
resources using offsetting debits and credits in your checking and credit
card accounts -- and, by extension, the accounts of every entity on the
network -- would effectively dissapear. Money would change hands where it's
cheapest to move it, in secure transactions on the cheap and insecure public
network, instead of the way it now does, using insecure transactions on
expensive private secure financial networks.

The savings, particularly in the human resources needed to manage all those
accounts, all those triplicate septennially-archived double-entry debits and
credits, would be enourmous compared to the other so-called "book-entry"
forms of transaction settlement we all use today.

And simple internet service isn't the only place where these strong
cryptographic financial "protocols" would change how business is done. For
instance, the actual cost of delivering a phone call, excluding marketing,
and especially accounting costs, is less than 5% of the cost of that call,
and probably smaller. Especially if you took away the resource allocation
decisions of where to put switches, lines, etc., which all now have to be
arrived at manually, and replaced them with automatic market-based ones. We
won't even think about the cost of regulation and taxes. At least for the
time being.

If, however, switches were able to accept digital cash bits at the time of a
telephone call's execution, the billing cost for that call would just
dissapear. So too would the marketing of the call, because, with cash
settlement, telephone switching becomes what's called a fungible commodity,
like grain, and would be priced and graded by quality of bandwidth, just
like so much rice. Remember, at the grain elevator, there is no "branding"
by whose farm the grain came from, it's all just grain. Finally, the human
decisions about where to build switches themselves would go away, because
the switches which made the most money would save enough cash out of
operations to quite literally buy better -- or probably just more -- copies
of themselves.

You can do this with just about anything. Take electricity. The British have
done experiments about sending internet service down power lines, so paying
digital cash for electricity on the same line you use it from is completely
possible, especially in a world of hypercompetitive, deregulated

You can do this with roads. Just use cheap little chips in the road, each
one collecting micro-tolls as a car rolls past, and, of course, raising the
price as traffic builds up. A brave new world indeed. Except, of course,
with privacy.

Fungible-service pricing in instantaneous cash-settled auction markets will
probably destroy our entire concept of "natural" monopoly. And, as Moore's
law continues to heat up financial transaction settlement, creating a new,
geodesic economy, great hunks of that industrial economic glacier we're all
familiar with will start calving off to float off and melt into an ocean of
real-time information, financial and otherwise.

And, yes, Virginia, you can do every financial transaction we now have with
these digital bearer settlement protocols as well; stocks, bonds, and every
exotic derivitive thereof you can imagine.

We won't even talk about what it will do to the ultimate "natural" monopoly,
the monopoly modern nation states have on force. Besides, if everything's
paid for in cash on the net in perfect anonymity, how are they going to beat
taxes out of us? So much for Blue Wednesday.

Which, of course, brings us back to the modern era's General William
Westmoreland, FBI Director Louis Freeh, a man who made his "bones"
wiretapping mafiosi in the "pizza connection" heroin case.

Frankly, if Mr. Freeh knew how bad it really was going to be for his "army"
someday, maybe even just a few decades away, I bet he'd even be more
energetic in his fight to listen in to everyone's phone calls, or read our
email, or even, with such ludicrous totalitarian schemes like key "escrow",
pretend to be us to our own banks and take our money should we try to hide
from him with better cryptography than he can crack. All of this with the
click of a mouse.

Fortunately for us, Mr. Freeh, like General Westmoreland, has been too busy
making up bodycount numbers, or at least sightings of "the four horsemen of
the infocalypse" (pedophiles, terrorists, drug dealers and money launderers,
all using cryptography the FBI can't break) for what he hopes will be the
next 5 o'clock follies, thinking Tet was just another holiday for the

Well, until yesterday, anyway.

Bob Hettinga

Version: PGP for Personal Privacy 5.0
Charset: noconv


Robert Hettinga (r...@shipwright.com), Philodox
e$, 44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
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Robert Hettinga (r...@shipwright.com), Philodox
e$, 44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
The e$ Home Page: http://www.shipwright.com/

Robert Hettinga

Apr 17, 1998, 3:00:00 AM4/17/98

At 1:51 AM -0400 on 4/17/98, Blanc wrote:

> Excuse me, Bob , but aren't you treading on dangerous ground a bit, here,
> being so explicit about the meaning of things? Is this the same Hettinga
> of the Ubiquituous Smiley Face, who discourages discussion on the
> consequences for government of The Thing$ We Do, who prefers to quietly
> slip it "under the table" before anyone realizes (becomes conscious) of
> what's transpired, of what has been accomplished?
> First you take "a cheap shot at the gentleman from the FBI" in public at
> MIT, then you post a url for the Patriots on cpunks, and now this. What
> is this world coming to.


Guilty as charged, your honor. :-)

Self reference has its internally inconsistant consequences, I suppose. :-).

What I said to the FBI guy at the MIT talk was he didn't matter any more.
It seems the Commerce department agrees with me. :-).

I forward lots of interesting militia-crazed stuff which crosses my desktop
to cypherpunks, as it seems some people here like that kind of thing. :-).


Seriously, Blanc, I suppose I feel the same way lots of people do about
government, and certainly Tim May's crypto-anarchy rants have inspired me
to "sing along with Tim" more than once here, like it does lots of
long-time cypherpunks, you included.

And, no, I don't think that guys in black helicopters and nomex balaclavas
are going to bash down my -- or any other cypherpunk's -- door anytime soon
for what is said there. Tax-protesting mercaptin chemists, and
grandstanding "veiled" threats of violence against sitting judges ;-),

However, I still believe, as I said in this most recent rant of mine, that
no amount of "advocacy" is going to make privacy and ubiquitous
cryptography happen. Hell, no amount of just writing code will make
ubiquitous cryptography happen, even if it's trivial to encrypt something
that would take a computer for every atom in existance longer than the
entire age of the universe to decrypt.

What will make ubiquitous cryptography happen is money. Just like every
other technology. As I've said before here, the availablilty of coach seats
to places like Cleveland has created more manhours spent in the air than
any drivel about "slipping the surly bonds of earth" ever did.

Civil aviation can easily be said to be the ultimate use of avaition
technology, more so than even military aviation. I wouldn't be surprised if
the economic impact of civil aviation, in airfares, equipment, support,
increased international trade, etc., is *waay* bigger than even all
military expenditures on aviation, and that in a world where every
industrialized nation has built whole branches of their military to focus
on the technology. Certainly you can't have one without the other, but you
get my point.

So, even with its military roots, I think that the ultimate use of strong
cryptography is in financial cryptography; moreover, I claim the ultimate
use of financial cryptography is for digital bearer settlement.

And, finally, I believe that digital bearer settlement, because it doesn't
require the actions of a force monopoly in its ultimate error step, will
eventually be the undoing of those force monopolies themselves.

However, it's certainly a waste of time rattle the lion's cage like I do on
occasion. No matter how fun it is.

Frankly, I wouldn't have sent that rant out if it was just a fulmination
about government control of cryptography. That's kind of tired, anymore,
even when governments amuse us with their cluelessness. The bits at the end
about electricity, and cars, and telephony, all novel applications of
digital bearer settlement, are what I really care about anymore.

Bearding the lion is just gravy, though certainly a waste of time.


Bob Hettinga

Tim May

Apr 18, 1998, 3:00:00 AM4/18/98

I see from the comments from Toto/H G-P/whatever that my name is being
invoked in a discussion about various things. So I'll say a few words to
remind folks that I haven't moderated my views. If anything, I am
accelerating my own preparations for the End Times. (Possibly triggered by
what I think will be extremely serious disruptions caused by the Year 2000
Problem, a problem which ain't some minor little thing solved by resetting
some system clocks.)

At 11:31 AM -0800 4/17/98, Bubba ROM DOS wrote:

>In the present instance, due to Terrible Tim May's sudden attack of
>Social Manners due to the Prozac being secretly added to his water
>supply by THEY (TM), Robert Hettinga is forced to compensate for the
>absence of daily 'Nuke DC' diatribes by badmouthing the FBI, and Blanc
>Weber (aka - Toto, TruthMonger, Information Security) finds it necessary
>to play the role of the Grouchy Old CypherPunk, castigating Bubbly Bobby
>for not maintaining a consistent 'milktoast' list persona.

Oh, I'm as realistic (= cynical, ornery) as ever. I've been doing rants on
misc.survivalism and talk.politics.guns, where the ground seems more
fertile these days (the tree of liberty getting watered and all). The
Cypherpunks list is dominated by newbies, requests for information, and
other minor ephemera. And the absence of any of the major crypto apologists
like Sternlight, Crispin, etc. has meant relatively little to debate; most
of us are in apparent agreement on crypto and related issues.

As for my political views, I have given up on democracy. I am currently
fighting the gun grabbers in California. I will cheer when a patriot says
"Enough!" and gives them what they so richly deserve. Radical? Maybe. It's
what I think. Expressing an opinion is not yet a crime in Amerika, though
we're almost to that point.

Speaking of triggers, I spent time today at the local range practicing with
a new SIG P239 pistol. I highly recommend it. Mine is a .40 S & W,
typically call a "forty," and dimensionally similar to the 10mm chambering
introduced about 10 years ago.

The 10mm was mostly a failure, but the .40, with a slighly shorter case, is
quite a success. it's a nice compromise between a 9mm (diameter) or
.37-.39 inch bullet and an 11 mm or .45 inch bullet. (One might not think
the progression from 9mm to 10 mm to 11 mm would have much effect, but
remember that bullet volume and hence weight will tend to go as between the
square and the cube of the diameter, depending on the bullet's length. And
case capacity and hence powder used will also go as the square or cube of
the diameter. A 9mm bullet and case is pretty much constrained to light
bullets and not much powder flexibility. Also, a larger case means less
pressure on the case walls. All of these factors contribute to constraints
on the 9mm and fewer constraints on the 10- and 11mm rounds. But the 11mm
(.45) is harder to fit in a small pistol. And so it goes.

I've been shooting .45s for 25 years now, including Colt 1911s (what most
think of as .45s) and an H&K USP. Also 9mm Glocks (I got my first Glock in
1986, when they were new to America and thought of as "plastic guns.")

Anyway, the SIG is wonderful. Very concealable, very reliable, very
durable. Double action first shot, single action thereafter, with no
external safeties to worry about. (Long ago, with the Walther P-38, this
DA/SA got a bad reputation, due to the heavy pull of the DA. But modern
DA/SA and Double Action Only (DAO) pistols like the SIG are quite nice.)

The SIG-Sauer operation is a joint venture between the venerable Swiss gun
maker, SIG, and Sauer of Germany. Parts of the 239 are made in Exeter, New
Hampshire, where final assembly occurs. This reduces the price relative to
Swiss or German currency prices. In any case, new SIG 239s are going for
$450 in local gun stores, and for $350 used.

I have a Blade-Tech Kydex holster, inside the waistband (IWB). Very flat,
and it holds the SIG snugly, and adjustably. It sticks inside my waistband,
behind the hip bone, and then loops snap over my belt. A light shirt worn
loosely obscures it well, and of course a vest or sweater or jersey or
jacket will completely obscure it. (Which is one reason cops are asking for
millimeter radar to do remote "pat downs" of suspected gun carriers.)

I bought a half case (500 rounds) of Sellior and Bellot ammo, from the
Czech Republic, to test functioning and for general practice. And then some
really hot hollowpoint loads, including Hydra-Shock, Gold Dot, and Cor-Bon
(propelling a jacketed hollowpoint 135-grain bullet at a very zippy 1300
feet per second!). All functioned flawlessly. The Cor-Bon load is reported
by law enforcement studies and reports on shootings to have an almost
unheard of 96% one stop shots: in 96% of the reported shootings, the first
shot put the target down (usually killing by massive trauma, as should be
obvious from the ballistics and the extreme mushrooming and fragmentation
of such loads). And the SIG carries 8 of these little gems.

(Some of you may have heard about pistols with 17 or 18 or more rounds.
Indeed, my old Glock 9mm carries 17 or so rounds in each magazine. And I
had the foresight to buy several extra mags before Swinestein and her ilk
were able to get Komrade Klinton to support the ban on mags with more than
10 rounds. But my theory is that a small, flat, concealable .40 carrying 8
rounds like the Cor-Bon or the Hydra-Shok should be more than enough. As
one wag put it, "If a perp doesn't go down after being hit with multiple
Cor-Bons, he wasn't meant to die." For more serious social encounters, like
a raid on my house, I have a .223 "assault pistol" with delivers 30 rounds
of vest-piercing .223 rifle rounds from a hand-held pistol with laser sight
and holographic reticle sight. The laser, which works best indoors, or at
night, is one of those "WYSIWYH" ("What you see is what you hit") sorts of
systems. Not so practical for small pistols, in my view, but real nice for
"assault pistols." Needless to say, Swinestein throws a fit when she hears
about ordinary proles with this kind of firepower.)

And the folks I run into at the various ranges are mostly similarly
well-armed. Each time the gun grabbers make moves to outlaw more stuff,
these guys (and a few women, proportionately) stock up on more stuff. And
they "bury" their "cold" guns, the guns they got without benefit of

I haven't even mentioned rifles....

> This is where Socialists and 'God Is Love, Why Can't We All Just Get
>Along' proponents stare at their shoes and try to pretend they didn't
>really hear what was said, because they know it is 2True.

Yeah, Rodney King's simpering "Why can't we all just get along?" whimper
was coming just as Korean merchants were blowing the heads off Mexicans and
Blacks who were rampaging and looting and burning in parts of LA. (There
were, understandably, no prosecutions, no charges filed, in this "wartime"
defense situation. The Korean merchants sat on their rooftops and picked
off the looters with Colt AR-15s. Ironically, these are the same "assault
weapons" which gun grabbers claim have no "legitimate hunting purposes."
I'd say hunting Mexicans and blacks who are set on burning out one's
business is surely a legitimate use. Not to mention black-clad raiders who
burst into a home at night without so much as a knock on the door, let
alone presentation of a properly-prepared search warrant.

And as Bob Dornan likes to say, "The Second Amendment is not about hunting
ducks, it's about hunting politicians."

Any reading of the comments of the Founders at the time the Second was
being considered will show that the Second was about defeating tyrants and
preventing the government from disarming the citizen-units. That modern
Americans have mostly lost sight of this, and that politicians can lie
about the "sporting use" intentions of the Founders, shows how hopeless the
democratic approach is these days.

> Yes, but it allows Tim's body time to excrete the Prozac being
>secretly slipped into his water system, so that he can get back to
>being his normal, onery self.

I assume you mean "ornery." I call a spade a spade. I call my shots as I
see them.

And I practice down at the range. And I expect to replace my PPK/S with my
new SIG as the gun I have on me most of the time. 96% one shot stops...yow.

--Tim May

"The tree of liberty must be watered periodically with the blood of
Timothy C. May | Crypto Anarchy: encryption, digital money,
ComSec 3DES: 408-728-0152 | anonymous networks, digital pseudonyms, zero
W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets,
Licensed Ontologist | black markets, collapse of governments.

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