Cyphernomicon Index
Cyphernomicon 16.17

Crypto Anarchy:
Persistent Institutions


  16.17.1. Strong crypto makes possible the creation of institutions
            which can persist for very long periods of time, perhaps for
            centuries.
           - such institutions already exist: churches (Catholics of
              several orders), universities, etc.
  16.17.2. all of these "persistent" services (digital banks, escrow
            services, reputation servers, etc.) require much better
            protections against service outages, seizures by governments,
            natural disasters, and even financial collapse than do most
            existing computer services-an opportunity for offshore escrow-
            like services
           - to maintain a distributed database, with unconditional
              privacy, etc.
           + again, it is imperative that escrow companies require all
              material placed in it to be encrypted
             - to protect them against lawsuits and claims by
                authorities (that they stole information, that they
                censored material, that they are an espionage conduit,
                etc.)
  16.17.3. Escrow Services
           + "Digital Escrow" accounts for mutually suspicious parties,
              especially in illegal transactions
             - drug deals, information brokering, inside information,
                etc.
             + But why will the escrow entity be trusted?
               + reputations
                 - their business is being a reliable escrow holder, not
                    it destroying their reputation for a bribe or a
                    threat
               + anonymity means the escrow company won't know who it's
                  "burning," should it try to do so
                 - they never know when they themselves are being tested
                    by some service
               - and potential bribers will not know who to contact,
                  although mail could be addressed to the escrow company
                  easily enough
           - like bonding agencies
           - key is that these entities stand to gain very little by
              stealing from their customers, and much to lose (hinges on
              ratio of any single transaction to size of total market)
           - useful for black markets and illegal transactions (a
              reliable third party that both sides can trust, albeit not
              completely)
  16.17.4. Reputation-Based Systems
           + Credit Rating Services that are Immune from Meddling and
              Lawsuits
             + with digital pseudonyms, true credit rating data bases
                can be developed
               - with none of the "5 year expirations" (I mean, who are
                  you to tell me I must not hold it against a person that
                  records show he's declares Chapter 7 every 5 years or
                  so?...such information is information, and cannot be
                  declared illegal, despite the policy issues that are
                  involved)
               + this could probably be done today, using offshore data
                  banks, but then there might develop injunctions against
                  use by Stateside companies
                 - how could this be enforced? stings? entrapment?
                 + it may be that credit-granting entities will be
                    forced to use rigid formulas for their decisions,
                    with a complete audit trail available to the
                    applicant
                   - if any "discretion" or judgment is allowed, then
                      these extralegal or offshore inputs can be used
                   - related to "redlining" and other informal
                      signalling mechanisms
                   - remember that Prop. 103 attempted to bypass normal
                      laws of economics
             + AMIX-like services will offer multiple approaches here
               + ranging from conventional credit data bases, albeit
                  with lower costs of entry (e.g., a private citizen
                  could launch a "bankruptcy filings" data base, using
                  public records, with no expiration-they're just
                  reporting the truth, e.g., that Joe Blow filed for
                  personal bankruptcy in 1987
                 - this gets into some of the strange ideas involving
                    mandatory rewriting of the truth, as when "credit
                    records are expunged" (expunged from what? from my
                    personal data bases? from records that were public
                    and that I am now selling access to?)
                 + there may be arguments that the "public records" are
                    copyrighted or otherwise owned by someone and hence
                    cannot be sold
                   - telephone book case (however, the Supremes held
                      that the "creative act" was the specific
                      arrangement)
                 - one ploy may be a Habitat-like system, where some of
                    the records are "historical"
               - to offshore data bases
           + Book Reviews, Music Reviews
             - sometimes with pseudonyms to protect the authors from
                retaliation or even lawsuits
           + "What should I buy?" services, a la Consumer Reports
             - again, protection from lawsuits
  16.17.5. Crypto Banks and the "Shell Game" as a Central Metaphor
           + Central metaphor: the Shell Game
             - description of conventional shell game (and some
                allusions to con artists on a street corner-the hand is
                quicker than the eye)
             + like entering a room filled with safe deposit boxes, with
                no surveillance and no way to monitor activity in the
                boxes....and user can buy new boxes anonymously,
                transferring contents amongst the boxes
               - only shutting down the entire system and forcing all
                  the boxes open would do anything-and this would "pool"
                  all of the contents (unless a law was passed saying
                  people could "declare" the contents before some
                  day....)
             + the shell game system can be "tested"-by testing
                services, by suspicious individuals, whatever-at very low
                cost by dividing some sum amongst many accounts and
                verifying that the money is still there (by retrieving or
                cashing them in)
               - and remember that the accounts are anonymous and are
                  indistinguishable, so that the money cannot be seized
                  without repercussions
             + this is of course the way banks and similar reputation-
                based institutions have always (or mostly) worked
               - people trusted the banks not to steal their money by
                  verifying over some period of time that their money was
                  not vanishing
               - and by relying upon some common sense ideas of what the
                  bank's basic business was (the notion that a bank
                  exists to continue in business and will make more money
                  over some long run period by being trustworthy than it
                  would make in a one-shot ripoff)
           + Numbered accounts
             - recall that Switzerland has bowed to international
                pressure and is now limiting (or eliminating) numbered
                accounts (though other countries are still allowing some
                form of such accounts, especially Lichtenstein and
                Luxembourg)
             + with crypto numbers, even more security
               - "you lose your number, tough"
             - but the money must exist in some form at some time?
             + options for the physical form of the money
               + accounts are shares in a fund that is publicly invested
                 - shares act as "votes" for the distribution of
                    proceeds
                 - dividends are paid to the account (and sent wherever)
                 - an abstract, unformed idea: multiple tiers of money,
                    like unequal voting rights of stock...
               + could even be physical deposits
                 - perhaps even manipulated by automatic handling
                    systems (though this is very insecure)
           - the Bennett-Ross proposal for Global Data Services is
              essentially the early form of this
  16.17.6. cryonicists will seek "crypto-trusts" to protect their assets
           + again, the "crypto" part is not really necessary, given
              trustworthy lawyers and similar systems
             - but the crypto part-digital money-further automates the
                system, allowing smaller and more secure transactions
                (overhead is lower, allowing more dispersions and
                diffusion)
             - and eliminates the human link
             - thus protecting better against subpoenas, threats, etc.
           + and to help fund "persistent institutions" that will fund
              research and protect them in suspension
             - they may also place their funds in "politically correct"
                longterm funds-which may or may not exert a postive
                ifluence in the direction they wish, what with the law of
                unintended consequences and all
                opl
           + many avenues for laundering money for persistent
              institutions
             + dummy corporations (or even real corporations)
               - with longterm consulting arrangements
               - "shell game" voting
           + as people begin to believe that they may just possibly be
              revived at some future time, they will begin to worry about
              protecting their current assets
             + recollections of "Why Call Them Back from Heaven?"
               - worries about financial stability, about confiscation
                  of wealth, etc.
             - no longer will ersatz forms of immortality-endowments fo
                museums, universities, etc.-be as acceptable...people
                will want the real thing
           + Investments that may outlive current institutions
             - purchases of art works (a la Bill Gates, who is in fact a
                possibel model for this kind of behavior)
             - rights to famous works, with provision for the copyright
                expirations, etc. (which is why physical possession is
                preferable)
             - shell games, of course (networks of reputation-based
                accounts)
           - Jim Bennett reports that Saul Kent is setting up such
              things in Lichtenstein for Alcor (which is what I suggested
              to Keith Henson several years ago)


Next Page: 16.18 Organized Crime: Triads, Yakuza, Mafia, etc.
Previous Page: 16.16 Markets for Contract Killings, Extortion, etc.

By Tim May, see README

HTML by Jonathan Rochkind