Crypto Anarchy and Virtual Communities

Timothy C. May

Table of Contents

  1. Extended Abstract
    1. Basic elements defining change
      1. strong, unbreakable public key cryptography
      2. virtual network communities in cyberspace
    2. Preliminary capabilities
      1. Encryption that essentially cannot be broken with all the computing power in the universe
      2. Digital mixes, or anonymous remailers, use crypto to create untraceable communications.
      3. Digital Money
        1. The concept of E-money
        2. Digital cash
        3. R Davies's Electronic money page (the more general money page)
    3. Agents implementing/advocating change
      1. Pay Pal.
      2. the Cypherpunks
      3. Cypherpunk remailers
      4. BT Click and Buy.
      5. Digital Cash Inc
      6. African Cell phone banking
    4. Short term Consequences
      1. Low-risk low-cost tax avoidance
      2. Online gambling ✔
      3. Data havens, information markets: Retrieve/exchange information anonymously and untraceably
        1. Price-fixing
        2. Insider-trading
        3. Intellectual property undermined ✔
        4. Online murder-for-hire
    5. Long term Consequences: New kinds of community with new kinds of relationships to authority and government

1 Introduction: Two major Technologies

  1. Virtual Communities
    1. MUDs
    2. MOOs
    3. Habitatlike systems
  2. Science fiction and virtual comunities:
    1. Vernor Vinge (SDSU CS Department) True Names
    2. William Gibson Necromancer
    3. Bruce Sterling Islands in the Net
    4. Orson Scott Card Ender's Game
  3. Cipherpunks
    A virtual community of its own
    "a loose, anarchic mailing list and group of hackers, was formed by several of us in 1992 as a group to make concrete some of the abstract ideas often presented at conferences"
    Sucesses and failures
    Growth of PGP users
    Cover of 2nd issue of Wired Magazine
    Explosive growth of internet

2 Modern Cryptography

  1. Diffie Hillman
    A protocol for secure key exchange over an insecure channel.
  2. RSA
    algorithm developed by Rivest, Shamir, and Adleman, known of course as RSA. The RSA algorithm was given a patent in the U.S., though not in any European countries, and is licensed commercially.
  3. Authentication tools
  4. Digital timestamping
  5. Digital Cash
    David Chaum: Key concepts
    Anonymous untraceable money
  6. Anonymous email
    David Chaum: Key concepts
    Anonymous untraceable email
    Riot Anonymous emailer
    Global Liberty Campaign Anonymous emailer

3 Virtual Communities

  1. Virtual Communities: No necessary geographical connection, yet a community
    1. Online
      1. Text-based adventure games (The mists of time) evlving into multi-user adventure games, into large shared environments
      2. MUDs (MultiUser Domains): Virtual worlds with a variety of space and envirnoments in which users take permanent identities and may remain anonymous
        Role-playing games
        Characters, environments, and character-inspired action and plot. Role-playing games. Players assume names they must consistently use. Thus, characters are persistent entities with reputations. Our first example of a cyber-space identity.
        Distance education
        Ideal for combining distance learning with learning-situations in which interaction is of premium value (the more the better). Writing courses, language-learning courses. But any interactive learning situation can benefit.
      3. MOOs (MUD Object-oriented or Multi-User Object Oriented Systems): Stephen White (1990). Preliminary Object-oriented implementation, named TinyMOO. Developed into a full-fledged programming language by Pavel Curtis at Xerox PARC.
        MUD vs. MOO
        The difference between MUDs and MOOs is often said to be a matter of underlying software architecture. Both feature a large shared domain with some common themes; both usually allow users to change or expand the domain, within limits. See Rachel Rein's helpful introductory essay..
        First MOO
        LambdaMOO: Xerox PARC (Palo Alto Research Center). Original devleoper Pavel Curtis (aka Haakon, aka Lambda)
        The software idea:
        MOO is written in an object-oriented language that makes it easy to extend the world with new objects and new commands tailored to those objects.
        Pavel Curtis's MOO Language:
        Wikipedia article: Object-oriented, dynamic typing, prototype-based inheritance (0verridable defaults); syntax is Algol-like
        LambdaMOO Site
        LambdaMOO source code and info about MOOs.
        Virtual communities: Communities with real community problems or escapist games or anarchist utopias?
        Dibbell, Julian. My Tiny Life. Book detailing Village Voice writer's Julian Dibbell's experiences in LambdaMOO, a book that angered a lot of LambdaMOO participants.
        Rape in cyberspace
        A rape in cyber space (1994): A crisis arose in the LambdaMOO community when what was termed a "virtual rape" occurred: an obscenity-laced attack by one participant on another, with explicit sexual acts described, broadcast to the entire community.
        Aftermath
        Perhaps the most interesting aspect of this event, the aftermath: the residents of LambdaMOO had to decide what to do. The decision was made as group to permanently cast out the offender, a character named "Bungle". Julian Dibbell's "A Rape in Cyberspace, or How an Evil Clown, a Haitian Trickster Spirit, Two Wizards, and a Cast of Dozens Turned a Database into a Society". In order to take this action, Dibbell claims, LambdaMOO had to first define itself as a society and a community.

        Examples of MOOs:
        Lingua Moo: an academic virtual community devoted to online rhetoric teaching
        MOO Canada. An online community of over a thousand young Canadians. In operation for eleven years, five months.
      4. Habitatlike systems
      5. Cipherpunks
    2. Everyday examples: Their own reasons for being a community independent of geography, their own rules
      1. churches (Catholic Church)
      2. service organizations (Boy Scouts, Red Cross)
      3. clubs (Masons)
      4. criminal gangs, cartels (Mafia)
      5. fan groups
      6. Aryan Nation
      7. Animal Liberation Front
      8. Greenpeace
      9. Any large corporation
      10. Communities of academic researchers
      11. Bad guys
        1. child pornographers
        2. Terrorists
        3. Abortionists
        4. Abortion protesters
  2. Encryption creates the borders of virtual communities
    1. Governments take an interest in infiltrating virtual communities, creating an interest in encryption
    2. Rules for community boundaries become rules for intellectual "property"
      1. Access control
      2. Access rights
      3. modification privileges ("ownership")
    3. Same sets of issues for free software licenses, rights transfer contracts

4 Observability and Surveillance

5 Crypto Anarchy

6 True Names and Anonymous Systems

  1. True names
    Vernor Vinge's story
    Online version.
    The idea:

    "The title is significant: in today's world when many wander the net known only by a self-chosen moniker, and jealously guard access to any information about their real selves, but have, never-the-less, a large amount of information held in many databases about their real selves (driver's license, social security number, credit reports), obtaining their 'true names' would be equivalent to forcing them to stand naked on a stage." --Anonymous reviewer

    In a society of endless pseudonyms, the priceless secrt anyone has is their true name (like the most priceless secret of sorcerers in fairy tales). And the most powerful act of intimacy is to reveal one's true name.

  2. The issue: Can cryptographic technology really provide what we need for cyberspace identities and reputations?
    The case of Bungle the rapist in LambdaMOO
    How was Bungle exiled?
    Investment fraud
    Can the gullible be protected? Or does libertarianism come along with a Darwinian view of community participation?
  3. Can "trust" be acheived without "Information Highway Driver's Licenses"?
    The issue of crime
    Crime in cyberspace is not just a reality. Cyberspace law enforement is becoming a major activity for law enforcement organizations. And it always boils down to finding "true names"

7 Examples and Uses

  1. Remailers
    1. "Cypherpunk"-style remailers, which process text messages to redirect mail to another sites, using a command syntax that allows arbitrary nesting of remailing (as many sites as one wishes), with PGP encryption at each level of nesting.
    2. "Julf"-style remailer(s), based on the original work of Karl Kleinpaste and operated/maintained by Julf Helsingius, in Finland. No encryption, and only one such site at present. (This system has been used extensively for messages posted to the Usenet, and is basically successful. The model is based on operator trustworthiness, and his location in Finland, beyond the reach of court orders and subpoenas from most countries.)
  2. Data havens, for the storage and marketing of controversial information is another area of likely future growth. Nearly any kind of information, medical, religious, chemical, etc., is illegal or proscribed in one or more countries, so those seeking this illegal information will turn to anonymous messaging systems to access--and perhaps purchase, with anonymous digital cash--this information. This might include credit data bases, deadbeat renter files, organ bank markets, etc. (These are all things which have various restrictions on them in the U.S., for example....one cannot compile credit data bases, or lists of deadbeat renters, without meeting various restrictions. A good reason to move them into cyberspace, or at least outside the U.S., and then sell access through remailers.)

  3. Matching buyers and sellers of organs is another such market. A huge demand (life and death), but various laws tightly controlling such markets.

  4. Digital cash companies Digital cash efforts. A lot has been written about digital cash. [14] [15] David Chaum's company, DigiCash, has the most interesting technology, and has recently begun market testing. Stefan Brands may or may not have a competing system which gets around some of Chaum's patents. (The attitude crypto anarchists might take about patents is another topic for discussion. Suffice it to say that patents and other intellectual property issues continue to have relevance in the practical world, despite erosion by technological trends.)

  5. Credit card-based systems, such as the First Virtual system, are not exactly digital cash, in the Chaumian sense of blinded notes, but offer some advantages the market may find useful until more advanced systems are available.

8 Commerce and Colonization of Cyberspace

  1. "You can't eat cyberspace"

    a criticism often levelled at argument about the role of cyberspace in everyday life. The argument made is that money and resources "accumulated" in some future (or near-future) cyberspatial system will not be able to be "laundered" into the real world. Even such a prescient thinker as Neal Stephenson, in Snow Crash, had his protagonist a vastly wealthy man in "The Multiverse," but a near-pauper in the physical world.

  2. transfers of wealth from the abstract world of stock tips
  3. Second, a variety of means of laundering money, via phony invoices, uncollected loans, art objects, etc., are well-known to those who launder money...these methods, and more advanced ones to come, are likely to be used by those who wish their cyberspace profits moved into the real world.

  4. The World Wide Web is growing at an explosive pace. Combined with cryptographically-protected communication and digital cash of some form (and there are several being tried), this should produce the long-awaited colonization of cyberspace.

  5. Most Net and Web users already pay little attention to the putative laws of their local regions or nations, apparently seeing themselves more as members of various virtual communities than as members of locally-governed entities. This trend is accelerating.

  6. Most importantly, information can be bought and sold (anonymously, too) and then used in the real world. There is no reason to expect that this won't be a major reason to move into cyberspace.

9 Implications

  1. Key escrow cryptography: U.S. "Clipper" chip.
  2. Electronic Frontier Foundation
  3. Secrets harder to keep (flip side: security becomes a more lucrative business)
  4. New money-laundering approaches

  5. a New elite: Those who are comfortable with the tools described here can avoid the restrictions and taxes that others cannot. If local laws can be bypassed technologically, the implications are pretty clear.

  6. Personal liberty: No longer can nation-states tell their citizen-units what they can have access to, not if these citizens can access the cyberspace world through anonymous systems.

10 How Likely?

I am making no bold predictions that these changes will sweep the world anytime soon. Most people are ignorant of these methods, and the methods themselves are still under development. A wholesale conversion to "living in cyberspace" is just not in the cards, at least not in the next few decades.

But to an increasingly large group, the Net is reality. It is where friends are made, where business is negotiated, where intellectual stimulation is found. And many of these people are using crypto anarchy tools. Anonymous remailers, message pools, information markets. Consulting via pseudonyms has begun to appear, and should grow. (As usual, the lack of a robust digital cash system is slowing things down.

Can crypto anarchy be stopped? Although the future evolution in unclear, as the future almost always is, it seems unlikely that present trends can be reversed:

Technological Inevitability: These tools are already in widespread use, and only draconian steps to limit access to computers and communications channels could significantly impact further use. (Scenarios for restrictions on private use of crypto.)

As John Gilmore has noted, "the Net tends to interpret censorship as damage, and routes around it." This applies as well to attempts to legislate behavior on the Net. (The utter impossibility of regulating the worldwide Net, with entry points in more than a hundred nations, with millions of machines, is not yet fully recognized by most national governments. They still speak in terms of "controlling" the Net, when in fact the laws of one nation generally have little use in other countries.)

Digital money in its various forms is probably the weakest link at this point. Most of the other pieces are operational, at least in basic forms, but digital cash is (understandably) harder to deploy. Hobbyist or "toy" experiments have been cumbersome, and the "toy" nature is painfully obvious. It is not easy to use digital cash systems at this time ("To use Magic Money, first create a client..."), especially as compared to the easily understood alternatives. [12] People are understandably reluctant to entrust actual money to such systems. And it's not yet clear what can be bought with digital cash (a chicken or egg dilemma, likely to be resolved in the next several years).

And digital cash, digital banks, etc., are a likely target for legislative moves to limit the deployment of crypto anarchy and digital economies. Whether through banking regulation or tax laws, it is not likely that digital money will be deployed easily. "Kids, don't try this at home!" Some of the current schemes may also incorporate methods for reporting transactions to the tax authorities, and may include "software key escrow" features which make transactions fully or partly visible to authorities.

11 Conclusions

Strong crypto provides new levels of personal privacy, all the more important in an era of increased surveillance, monitoring, and the temptation to demand proofs of identity and permission slips. Some of the "credentials without identity" work of Chaum and others may lessen this move toward a surveillance society.

The implications are, as I see it, that the power of nation-states will be lessened, tax collection policies will have to be changed, and economic interactions will be based more on personal calculations of value than on societal mandates.

Is this a Good Thing? Mostly yes. Crypto anarchy has some messy aspects, of this there can be little doubt. From relatively unimportant things like price-fixing and insider trading to more serious things like economic espionage, the undermining of corporate knowledge ownership, to extremely dark things like anonymous markets for killings.

But let's not forget that nation-states have, under the guise of protecting us from others, killed more than 100 million people in this century alone. Mao, Stalin, Hitler, and Pol Pot, just to name the most extreme examples. It is hard to imagine any level of digital contract killings ever coming close to nationstate barbarism. (But I agree that this is something we cannot accurately speak about; I don't think we have much of a choice in embracing crypto anarchy or not, so I choose to focus on the bright side.)

It is hard to argue that the risks of anonymous markets and tax evasion are justification for worldwide suppression of communications and encryption tools. People have always killed each other, and governments have not stopped this (arguably, they make the problem much worse, as the wars of this century have shown).

Also, there are various steps that can be taken to lessen the risks of crypto anarchy impinging on personal safety. [10]

Strong crypto provides a technological means of ensuring the practical freedom to read and write what one wishes to. (Albeit perhaps not in one's true name, as the nation-state-democracy will likely still try to control behavior through majority votes on what can be said, not said, read, not read, etc.) And of course if speech is free, so are many classes of economic interaction that are essentially tied to free speech.

A phase change is coming. Virtual communities are in their ascendancy, displacing conventional notions of nationhood. Geographic proximity is no longer as important as it once was.

A lot of work remains. Technical cryptography still hasn't solved all problems, the role of reputations (both positive and negative) needs further study, and the practical issues surrounding many of these areas have barely been explored.

We will be the colonizers of cyberspace.