Anonymity with Reputation

Among the other things I learned from Natalie Solent's confession about the fraudulent episodes of her life as a university student (who didn't have them?) is that she writes under a pseudonym. Having been on the internet for nearly 11 years, this sort of thing should not suprise me, but it did. I have been reading her blog, which I believe was in place even before Samizdata launched, regularly since late 2001, and always assumed that she wrote under her True Name. I think this illustrates a fundamental, if obvious, rule of the internet - that it is easy to build reputations anonymously.

One of the problems with interactions in realspace is that even completely voluntary relations are interfered with by third parties, whether as a result of self-interest, moral outrage, power-seeking, or sheer ignorance. Cyberspace can be a way to bypass these third parties.

In cyberspace, reputation is essential. Through their writing, bloggers build reputations. With experience, readers know what to expect from bloggers, what their views on various issues are, and their general worldview. In the blogosphere, reputation is the currency that attracts readers. Nothing else needs to be known about the blogger - not where he lives, not his age, not how many children he has, not anything else about him - to maintain readership. And the blogger often has an interest in keeping his true identity a secret, especially if he holds unpopular political views.

Yet, even with anonymity, reputation exists through pseudonyms, as is the case with Natalie Solent. The revelation of pseudonymity does not affect my reading of her blog in the future. It is the content that counts.

Cyber-interaction follows this general principle. Reputations are established through experience and through intermediary rating systems. Some examples include the Truth Laid Bear Ecosystem, Amazon customer reviews and seller feedback ratings, Ebay feedback scores, and Epinions ratings. From personal experience, the reputations do play a large part in whether or not I choose to buy a particular book or use a particular vendor. And much like credit rating systems, these systems can get much more complicated.

Could governments track down bloggers who use pseudonyms and write unpopular opinions if they put their full efforts behind it? Yes, but it is expensive and time-consuming. And with a few tools that are already available, bloggers can make it essentially impossible. Public-key cryptography and anonymous remailers use mathematical algorithms to both keep anonymity and create unforgeable signatures. Third-parties like Invisiblog and Domains by Proxy can be used to do the necessary manipulations in realspace.

Similarly, outside the blogosphere, cryptography can create anonymous reputational enforcement of e-commerce. The primary qualities that buyers absolutely need to look for in a merchant are the caliber, reliability, and efficiency of his goods and services. Facts about his personal life do not matter. Strong cryptography allows for commerce to flourish away from the prying eyes of third parties. With anonymous digital cash, the anonymity can be bilateral. When these systems are fully implemented in a user-friendly way, the implications will be remarkable.

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Additionally, just like in

Additionally, just like in the world of business, often your reputation is bolstered when you are open about more things. If you use your real names and don't attempt to hide personal information, some people take that as a sign of integrity and your reputation grows. When businesses choose to let the public know about itself, whether good news or bad, their reputation as a straight-dealer is bolstered.

the implimentation of

the implimentation of everyday ultra strong crypto, mixed with digital cash or digital gold held in other jurisdictions is going to be the final nail in the coffin of the ninny state. the gov't is going to desperately try to close loopholes but will fail.

Charles, I take your point,

Charles,

I take your point, but I strongly believe that on the internet, revealing your True Name is neither necessary nor vital to building a reputation. I think many people would be surprised at just how many well-known bloggers use pseudonyms, and I only know of their pseudonymity because I have met them in realspace.

The ability to create reputation with anonymity/pseudonymity is, of course, a good thing.

Does this mean I'm not cool

Does this mean I'm not cool cause I use my real name online? Or just that the jackbooted thugs will be able to track me down oh so easily?

Who needs jackboots when you

Who needs jackboots when you can use things like COPA on you freedom-liking evildoers?

Absolutely, Jonathon. I spent my formative years on the Net using "drizzten" as my handle and continue to do so to this day. In the process and on one web forum in particular, having a pseudonym didn't hurt or hamper the respect I earned one bit.

the implimentation of

the implimentation of everyday ultra strong crypto, mixed with digital cash or digital gold held in other jurisdictions is going to be the final nail in the coffin of the ninny state. the gov’t is going to desperately try to close loopholes but will fail.

Nonsense. Digital cash is held on physical servers. Hold the owners of the servers legally liable for untaxed transactions. Bingo, state wins.

- Josh

Josh, Nonsense. Digital cash

Josh,

Nonsense. Digital cash is held on physical servers. Hold the owners of the servers legally liable for untaxed transactions. Bingo, state wins.

The patterns of thought in your head are also held on a physical server.

When anyone and everyone can be a mint, i.e., create patterns of data on a computer and send them over networks, the costs of enforcement skyrocket. The state can still try to shut down anonymous digital cash like it tries to shut down the flow of drugs today, but it will be largely unsuccessful, much more so than it has been in the drug war.

It would be like the state trying to shut down the blogosphere. I will welcome the day when it tries and will laugh at its impotence.

They wouldn't be able to

They wouldn't be able to stop it entirely, but they can stop enouhg of it to keep it from being a nail in the coffin of the state. The state could make encryption illegal tomorrow and put the onus for stopping it on ISPs. Encryption would vanish.

Let me quote at length from Paul Birch, who destroyed this idea when Kennedy proposed it a while ago on ASC:

Economic privacy on a large enough scale to matter is to all intents and purposes impossible. Hiding money (even if that were generally practicable) does not and will not provide it because money is not wealth. The real economy is always highly visible, thus taxable.

Furthermore, there is reason to believe that in order to be secure enough to use, electronic money must also be traceable (ecash is basically just a number, and numbers can be copied with ease). Commodity money is also traceable, in that it needs to be physically exchanged.

It is very easy for governments to control the Internet, whenever they choose, because the infrastructure is both obvious and accessible. They can block or censor any material coming from outside their jurisdiction themselves, or can simply place the obligation to obey the laws of the country upon the "importers" (the ISPs). And don't think they won't. The other approach, which is increasingly being used (cf Nazi memorabilia and holocaust denial laws), is to force all jurisdictions to impose the same laws; this means that sovereignty is shifting away from nation states towards supranational and global bodies; it is not a move towards anarchy or greater freedom, but towards a repressive world state.

- Josh

Josh, Nothing that you

Josh,

Nothing that you quoted above makes me think that he "destroyed" JTK's ideas. There are a couple of issues here:

1) The government can pass any and all laws it wants to and politically able to. It cannot enforce any and all laws it passes.

Laws against alcohol, drugs, guns, speeding and more do not work. They are too expensive to enforce. There is a massive illegal nationwide gambling tradition occurring right now, and it happens every year at this time - the NCAA tourney.

If the argument against encryption is that a govt can make it illegal, that is not much of an argument. Encryption would not "vanish" just like drugs, guns, and gambling have not vanished. Sure, they lock people up periodically, but 99% of people who want pot can and do get it.

States are successful on the large scale against major "hubs" like corporations where the costs of enforcement are well worth the price paid. If you don't pay your taxes in a given year and keep your mouth shut, there is little chance that the state will lock you up. But corporations can not get away with the same. That is also why corporations have to pay for software even though individual users can get just about anything over P2P file sharing for free.

2) Computing power and the internet, driven by Moore's Law and its counterpart, create highly distributed networks in which the "hubs" can shrink smaller and smaller with time. Remember, processing power/physical space doubles every 18 months, and if Ray Kurzweil is correct, this rate will become even faster in the future. What happens when an "server" is the size of a PDA and communication is wireless? Will there be a War on PDA's? How successful will it be?

If I wanted to start a new currency today, that would be a large operation. I would need a warehouse full of gold or other commodities stored somewhere, and have to circulate warehouse receipts. This would be a massive scale operation. And it would be illegal. So the Feds could easily shut me down by attacking the warehouse in a pre-dawn raid.

But what if you, JTK, and I and a hundred of our closest friends dispersed throughout the country started the First Anarchist E-Bank that used fully anonymous digital cash backed by gold similarly disbursed at over a hundred locations? And suppose we had competition from a thousand other such banks? Literally anyone you see walking on the street can be a bank. Could the Feds stop this? No. They could try, and might even lock a few of us up, but they could not stop it even if they declard a War on Banks.

3) As Kevin Carson often likes to point out in the comments, most corporations are in bed with the US Govt. Yet, this is a positive for the deployment of crypto, because crypto makes corporations money. As a result, they have an interest to buy politicians and influence to keep crypto legal.

4) There are many different types of digital cash in development with different properties. Fully anonymous digital cash does not require either the payer or the payee to reveal his identity.

5) What happens when lawyers give each other advice and charge each other? Do they report this as income? I doubt it. Crypto enables this kind of private exchange between two willing parties on a massive scale. Large parts of the economy are entirely information based: lecturers, lawyers, radiologists, artists, novelists, doctors when they diagnose and advise treatment, financial analysts, stockbrokers, radio hosts, musicians, spokespersons, secretaries, and much more. Just about any job has at least some part that is primarily based on information exchange. Crypto makes this part of the economy hidden. So what if the state raises tax rates to 90% if 90% of the economy is encrypted?

6) I agree that the one thing that can hinder this is a worldwide government. But that will still be very difficult to pull off and will require a massive, massive police state. Most people don't mind large government, but I believe they do mind outright police states.

7) The other way to try to stop encryption might be the Transparent Society, but

- there is a constant and secularly increasing gap between encryption and cryptanalysis as time passes. Unless new factoring techniques are developed, which mathematicians have unsuccessfully tried to do for over a thousand years, this is not going to change. This is an freedom-enabling technology.

- However, there is no evidence that surveillance measures are any stronger than anti-surveillance measures. In other words, there is no evidence of a similar secular relationship that grows state power.

- As David Friedman has pointed out, a large part of this battle depends on the realspace/cyberspace interface. If individuals are able to control it, and if large parts of the economy are based on cyberspatial interactions, the state will be impoverished.

Josh, if you are as young as I think you are (20's, like myself), the nation-state will become pauperized within our lifetimes. Chin up. We're going to kill Leviathan.

we're not going to kill

we're not going to kill anything. its stabbing itself in the face as we type. the babyboom is going to absolutely crush the states ability to fund any kind of response other than hollow threats, and then the 'servers' will move offshore. how this will play out is going to be one big ugly semi police state until it crashes. when they outlaw gold ownership you'll know they are getting desperate.

1. The transactions of guns,

1. The transactions of guns, drugs, etc. are more difficult to control because the transactions can basically happen anywhere (presuming the state wants to stop all transactions, which it doesn't). Not so with the Internet, since all transactions are running through the ISPs. The ISPs get their licences revoked, or in the extreme case, they're arrested and the assets are seized and either destroyed or auctioned off. Worse comes to worst, if the Internet poses a threat to the state, the state will take measures to shut it down for good, or run it as a government enterprise where they can monitor mostly everything. You can sneak a couple of goodies past, but you won't take down the state this way.

2. But what if you, JTK, and I and a hundred of our closest friends dispersed throughout the country started the First Anarchist E-Bank that used fully anonymous digital cash backed by gold similarly disbursed at over a hundred locations?

E-cash has to be traceable to be useable, and if we can trace it, you can bet the state would.

Besides, on the PDA point, they'll simply make the wireless companies responsible for checking and destroying unauthorised transactions. The wireless companies comply or get their licences revoked. If they continue to fight, they'll be arrested and haled to prison and their assets will be seized.

3. Corporations will obey government orders because they don't want their boards arrested and their assets seized. If crypto endangers the state and the state makes it illegal, the corporations will follow suit.

4. Anonymous cash is impossible. It must be traceable. And if it's traceable, it's traceable to an account. Subpeona the accountholder for their records and lock up any who don't comply. They'll comply. As an example, if you use anonymous credit card numbers, you can trace the number to a credit card account. Some company holds that credit card account. Subpeona the credit card company and lock up any board members who resist. Pretty simple stuff.

5. Even on the outside remote chance the state loses track of digital cash (and it won't), it's not a big deal. You simply switch your tax base over to property tax. Send a "To Whom It May Concern" letter to the address. Seize and auction off any assets on which the tax hasn't been paid. Simple stuff.

6. These measures wouldn't even require a police state, just more state regulation of the Internet than we have now, another 0.1% of GDP of government spending to monitor it and net.cop the lawbreakers.

I have no idea what 7) is saying.

While I appreciate your optimism, I don't share it, and I seriously doubt you're going to use the government-created Internet to squeeze the state dry. If we're going to beat the state back, we're going to have to win the hearts and minds of people, just like our Leveller and Liberal forefathers did. There's no cheap route to liberty.

- Josh

1. The transactions of guns,

1. The transactions of guns, drugs, etc. are more difficult to control because the transactions can basically happen anywhere (presuming the state wants to stop all transactions, which it doesn?t). Not so with the Internet, since all transactions are running through the ISPs. The ISPs get their licences revoked, or in the extreme case, they?re arrested and the assets are seized and either destroyed or auctioned off. Worse comes to worst, if the Internet poses a threat to the state, the state will take measures to shut it down for good, or run it as a government enterprise where they can monitor mostly everything. You can sneak a couple of goodies past, but you won?t take down the state this way.

The amount of computing power that filled a room 20 years ago can fit in your wallet today. 20 years from now, how much room will you need to have that same computing power? A speck? A button on your shirt? How big will an ISP need to be? How big will these 'nodes' need to be if we limit their function to specific tasks such as routing information needed to transfer the 1's and 0's needed to run, say an E-bank? The state can revoke any and all licenses they want to. It can't afford the enforcement costs of outlawing computing power. If it can't enforce drug laws, it will not be able to enforce shutting down worldwide communications.

E-cash has to be traceable to be useable, and if we can trace it, you can bet the state would.

Why do you say that? Remember, there are many different forms of e-cash, including digital coins, electronic checks, etc. Many different sytems have been suggested and tried over the years - Mondex, NetCash, Cybercash - most of which are useless and not what I am talking about. Fully anonymous digital cash is leave the payer and payee anonymous to third parties and the bank itself. David Chaum is the main driving force behind the protocols that exist and owns many of the patents. Fully anonymous digital cash is definitely possible.

Besides, on the PDA point, they?ll simply make the wireless companies responsible for checking and destroying unauthorised transactions. The wireless companies comply or get their licences revoked. If they continue to fight, they?ll be arrested and haled to prison and their assets will be seized.

What happens when wireless "companies" fit on your deck? Are they going to go after every single one?

3. Corporations will obey government orders because they don?t want their boards arrested and their assets seized. If crypto endangers the state and the state makes it illegal, the corporations will follow suit.

Depends on whether or not they can bribe politicians or not. Usually corporations get their way. Most economists today agree free trade is good, protectionism is bad. Yet corporations bribe the politicians enough to allow protectionism.

The state is so intermingled with corporations that we will never have a "state vs. corps" scenario. Corporations have more political power than individuals.

4. Anonymous cash is impossible. It must be traceable. And if it?s traceable, it?s traceable to an account. Subpeona the accountholder for their records and lock up any who don?t comply. They?ll comply. As an example, if you use anonymous credit card numbers, you can trace the number to a credit card account. Some company holds that credit card account. Subpeona the credit card company and lock up any board members who resist. Pretty simple stuff.

That is emphatically not what anonymous digital cash is. It is not about credit cards, electronic transfers, ATMs, smart cards, PayPal, or wiring money to the Caymans, etc. It is payer-payee untraceable encrypted information transfer.

5. Even on the outside remote chance the state loses track of digital cash (and it won?t), it?s not a big deal. You simply switch your tax base over to property tax. Send a ?To Whom It May Concern? letter to the address. Seize and auction off any assets on which the tax hasn?t been paid. Simple stuff.

You're right, and I don't deny this. As I said above, it depends on how much of the economy can be managed over the internet (and with how we control the realspace/cyberspace interface). The larger the fraction of the economy that goes online, the less the state will be able to tax. There will still be taxes on food, clothing, property, etc, but the power to tax will be greatly diminished for many reasons.

  • Internet transactions that involve information transfer (legal advice, consulting, art, lecturing, journalism, medical advice, video gaming, e-movies, medical image interpretation, and much more - these are just the tip of the iceberg) cannot be taxed.
  • The state cannot steal through inflation when currency is private.
  • With dimishing returns, it becomes more profitable for many state employees to simply become part of the 'honest' economy.

All these factors will work together to make real taxation much less than it is now.

6. These measures wouldn?t even require a police state, just more state regulation of the Internet than we have now, another 0.1% of GDP of government spending to monitor it and net.cop the lawbreakers.

I think you are severly underestimating the costs of breaking encryption. It literally requires the more energy than is in the universe to break a 1000-digit asymmetric cipher. And with advances in computing power, this amount grows.

The state can try all it wants to control the internet, but it won't be sucessful. And in a way I hope it does try so that there will be a greater driving force for use of encryption in everyday internet use. More laws will bring closer the day when encryption makes us freer than we've been in nearly a hundred years.

While I appreciate your optimism, I don?t share it, and I seriously doubt you?re going to use the government-created Internet to squeeze the state dry. If we?re going to beat the state back, we?re going to have to win the hearts and minds of people, just like our Leveller and Liberal forefathers did. There?s no cheap route to liberty.

I don't think that whether digital cash will be "allowed" or "banned" will have anything to do with its success. These laws will if anything, merely delay, but not hinder its use. There are many roadblocks to its deployment into everyday use - and it might not happen for decades. But the trend is in that direction and the state can't do much about it.

The government may have created the internet, but that does not mean it can control it. No doubt it will try, but in the end, its efforts will fail. The future is unknown to me, and it's usually hopeless to try to do a static analysis like I am. But this is just the way I see things as of today. Trust me, I am not usually optimistic. In fact, I come from the Beck school of pessimism. Nothing good is going to come out of politics in my lifetime. As a result, I throw politics aside. It's useless. But technology and markets are a means around politics. Technology empowers freedom-seeking individuals, especially technologies like encryption.

I think you also severely underestimate what role escape played in the success of America. Yes, the Liberals did a great job spreading ideas, and absolutely, I think spreading ideas is essential (I wouldn't blog otherwise). Yet, it was the vast frontier of North America that made the practical application of Liberal ideas possible. The costs of enforcement for the England became enormous, until it finally decided to fight a war which it lost. Would you have been making the same argument back in 1750 - "If we declare independence, the British will simply declare the declaration illegal?" Without escaping the European continent and making it expensive for England to send armies and navies across a wide ocean to rule over a large landscape whose population is determined to resist foreign rule, the work of the Liberals would have been for naught.

You can say, "The state shall make it illegal" to anything anyone proposes. Yet, you have back it up with how the costs and benefits of enforcement will determine whether or not the edict will make any impact.

Encryption and Moore's Law makes governing very, very expensive and often times, unprofitable.

1. The size of the server

1. The size of the server doesn't matter. It's immaterial how big the servers are. What matters is that the state can simply hold ISP owner/operators liable for letting encrypted stuff go through. Sure, you'll get a few that fall through the cracks, but the idea that you're going to overthrow the state with it is nonsense.

In essence, you're positing a world where everyone is walking around purchasing things over the Internet through tiny servers, and the state's minions just stand around stupified how to stop it. That's nuts.

2. E-cash has to be traceable for two reasons:

a. if some jerk stiffs you, you'll want to sue.
b. if you're the jerk, you can spend the same dollar over and over again.

If you can trace it, so can they, and probably better since they have the tolls of law to turn the screws on ISPs.

3. If corps are as in bed with the state as you suggest, they will be all too eager to dump encryption if it threatens the state.

4. Untraceable cash sinply isn't feasible, for the two reasons I've outlined above.

5. Internet transactions that involve information transfer (legal advice, consulting, art, lecturing, journalism, medical advice, video gaming, e-movies, medical image interpretation, and much more - these are just the tip of the iceberg) cannot be taxed.

In large part they still can. Simply require government licences to enter any of those professions and state fees to disburse information. Arrest those who practice without a licence as they do with unlicenced doctors and lawyers now. Put the onus on the ISPs to charge it and shut down the ones that don't comply.

6. They don't have to break encryption, just make it illegal.

?44-131 Information Crimes: Unlicenced Encryption
Sending encrypted information as defined in ?44-100 is a Class II felony.

?44-132 Information Crimes: Transferring Encrypted Messages
If an internet node is found sending encrypted messages, the individual or corporation owning the node is subject to a $100,000 fine, possible loss of licence as per ?44-040, or forfeiture of assets.

You only need to throw a few people in prison and shut down a few ISPs before encryption becomes a rarity. You won't take the state down like that.

7. The state doesn't want to do anything about digital cash because it isn't going to threaten it. It will be nicely regulated and full open to the taxman from the start.

While I don't discount the value of escape, I do discount the idea that you can escape the state by walking around buying crap online through tiny servers that the state simply can't find or regulate. That's not science fiction, it's a pipe dream.

Repeatedly, I have said how the state will make it work: it will shift legal liability to ISPs. It will shut a few down and clamp down on the Internet a little more. Worse to worst, it appropriates the whole thing and runs it as a wildly inefficient but heavily monitored government behemoth. I think you greatly underestimate the power the state wields and the awesome power it would wield should something like digital cash threaten its existence.

Banning encryption is very, very easy. Is that message coded? It's deleted. If it slips through, you, the ISP, are in deep shit. If you'd like to keep your investment, you clamp down on encryption. A few messages get through. The state goes nowhere.

- Josh

The size of the server

The size of the server doesn?t matter. It?s immaterial how big the servers are.

Above you stated, "The transactions of guns, drugs, etc. are more difficult to control because the transactions can basically happen anywhere". When servers are as big as guns and drugs, the state cannot simply go out and shut down servers without a huge cost of enforcement.

Sure, you?ll get a few that fall through the cracks, but the idea that you?re going to overthrow the state with it is nonsense.

I do not think the state will be overthrown. Rather, it will become much, much weaker than it is today. More and more areas of my life will become free from third-party interference.

In essence, you?re positing a world where everyone is walking around purchasing things over the Internet through tiny servers, and the state?s minions just stand around stupified how to stop it. That?s nuts.

People do that today, with things called cell phones. I just ordered a pizza through one. Are you saying that the machinery needed to run an ISP will not become smaller and smaller with time?

The internet makes things that were once available to huge organizations available to anyone. 10 years ago, making a daily publication espousing radical libertarianism that is accessible anywhere in the world would have taken a lot of effort and funds. It is unlikely that all the contributors would have all lived in the same geographic area. How would the contributors gotten their articles to me every night? How much money would I have spent to "print" them on paper? What kind of equipment to print would I have needed? How would I have distributed them to Japan or Sweden on the same day? How much would all of this have cost?

10 years ago, Catallarchy and No-Treason would have simply been impossible. Yet, today, I spend about $200/year on it - about $0.75/day. Total. And that price is also dropping. And we have visitors from Japan and Sweden and all over the world daily. And I have only met one other contributor in realspace and have never phoned any of them. Moore's Law (even without encryption) has made it possible for nearly anyone and everyone to create and publish their own daily newspaper.

Similarly, the costs of digital photography, instantaneous communication, artistry, securities investment, web hosting have dropped like a rock. That is the general trend of the internet - anyone can be a journalist, anyone can be a photographer, anyone can make badass movie preview posters, anyone can be an informed stock investor, anyone can be a webhost... The time is soon coming when anyone can route packets of data, anyone can be a mint, anyone can learn all the skills needed to be a computer programmer over the internet...

2. E-cash has to be traceable for two reasons:

a. if some jerk stiffs you, you?ll want to sue.

Yet, black markets thrive without this kind of legal enforcement. When was the last time a drug user sued his dealer? Internet interaction does not follow the legal tort model, nor does it have to. That was what my original post was about. On the internet, anyone wishing to make money has to build a reputation. If some jerk stiffs people repeatedly, he builds a bad reputation. Markets can thrive without lawsuits.

b. if you?re the jerk, you can spend the same dollar over and over again.

That is not how fully anonymous digital cash works. In ordinary e-cash, the bank designates a unique ID number to each bill it loans out. Thus, if you try to spend the same dollar again, you will be identified when the merchant tries to clear it from the bank. I agree, this is not fully private - both the payer and the payee can be revealed.

In a better system, the payer first generates a random number which the bank signs with a blind signature. When the payee clears it with the bank, the bank does not know it was the same dollar it signed earlier (hence blinded). The payer is anonymous, the payee is not.

However, in fully anonymous digital cash, an additional step is used to blind the payee making him anonymous too. Various proposal have been made for this including 3rd party moneychangers who hand out fresh coins for used coins.

3. If corps are as in bed with the state as you suggest, they will be all too eager to dump encryption if it threatens the state.

4. Untraceable cash sinply isn?t feasible, for the two reasons I?ve outlined above.

See above.

In large part they still can. Simply require government licences to enter any of those professions and state fees to disburse information. Arrest those who practice without a licence as they do with unlicenced doctors and lawyers now. Put the onus on the ISPs to charge it and shut down the ones that don?t comply.

Why would anyone need a license? Reputation is the ultimate currency on the internet. The lawyer you ask for advice could just as like be "Joshua Homes" as "Wild Pegasus". The avatar who interprets your MRI would just as easily be "Dr. Wilde" as "Magneto".

Enforcement and incentive by driven by reputations online. It is important to develop these systems, but whenever there has been a need, they have arisen (see Ebay etc).

6. They don?t have to break encryption, just make it illegal.

?44-131 Information Crimes: Unlicenced Encryption
Sending encrypted information as defined in ?44-100 is a Class II felony.

?44-132 Information Crimes: Transferring Encrypted Messages
If an internet node is found sending encrypted messages, the individual or corporation owning the node is subject to a $100,000 fine, possible loss of licence as per ?44-040, or forfeiture of assets.

You only need to throw a few people in prison and shut down a few ISPs before encryption becomes a rarity. You won?t take the state down like that.

See the following:

CHAPTER 94C. CONTROLLED SUBSTANCES ACT

Chapter 94C: Section 32 Class A controlled substances; unlawful manufacture, distribution, dispensing or possession with intent to manufacture, etc.

Section 32. (a) Any person who knowingly or intentionally manufactures, distributes, dispenses, or possesses with intent to manufacture, distribute or dispense a controlled substance in Class A of section thirty-one shall be punished by imprisonment in the state prison for not more than ten years or in a jail or house of correction for not more than two and one-half years or by a fine of not less than one thousand nor more than ten thousand dollars, or by both such fine and imprisonment.

(b) Any person convicted of violating this section after one or more prior convictions of manufacturing, distributing, dispensing or possessing with the intent to manufacture, distribute, or dispense a controlled substance as defined by section thirty-one of this chapter under this or any prior law of this jurisdiction or of any offense of any other jurisdiction, federal, state, or territorial, which is the same as or necessarily includes the elements of said offense shall be punished by a term of imprisonment in the state prison for not less than five nor more than fifteen years. No sentence imposed under the provisions of this section shall be for less than a mandatory minimum term of imprisonment of five years and a fine of not less than two thousand and five hundred nor more than twenty-five thousand dollars may be imposed but not in lieu of the mandatory minimum five year term of imprisonment, as established herein.

Is drug use, distribution, and exchange a rarity?

7. The state doesn?t want to do anything about digital cash because it isn?t going to threaten it. It will be nicely regulated and full open to the taxman from the start.

The state fears encryption. Or at least certain parts of the state (the NSA) does. Why else would they have brought "munitions" charges on Phil Zimmerman for attempting to distribute Pretty Good Privacy? Why else did they spend millions of dollars trying to pass the Clipper Chip initiative?

While I don?t discount the value of escape, I do discount the idea that you can escape the state by walking around buying crap online through tiny servers that the state simply can?t find or regulate. That?s not science fiction, it?s a pipe dream.

Wasn't the belief that we would even be having this conversation 10 years ago a pipe dream? Wasn't it science fiction 20 years ago?

Repeatedly, I have said how the state will make it work: it will shift legal liability to ISPs. It will shut a few down and clamp down on the Internet a little more. Worse to worst, it appropriates the whole thing and runs it as a wildly inefficient but heavily monitored government behemoth. I think you greatly underestimate the power the state wields and the awesome power it would wield should something like digital cash threaten its existence.

I think you underestimate the power of technology in the hands of individuals. The state gets power from centralized coercion - that's where the most "bang for the buck" is. When the targets of coercion become distributed, it cannot enforce its edicts and loses power. The state cannot stop everyone from driving 65 mph in a 55 mph zone. It cannot force everyone to wear seatbelts. It does not have the power to suppress all speech. The state has a huge incentive to control home schooling - it threatens the indoctrination of obedient citizens - yet the homeschooling movement is growing and thriving. It may try to set an 'example' periodically, but it is powerless to control power at the periphery. The ISPs might be centralized hubs today, though I think they are much more distributed than you say. The latest figures I saw (I can't find any links) say that there are 10,000 ISPs in existence today in the US alone. How many will be around in 10 years? in 20 years?

Banning encryption is very, very easy. Is that message coded? It?s deleted. If it slips through, you, the ISP, are in deep shit.

Right now it is possible for every single person with a computer and dial-up connection to send an encrypted message. For comparison, it is much, much easier to use Pretty Good Privacy to send an encrypted email than it is to buy pot on the weekend. Are you saying that if any person that could send an encrypted message did, the state would arrest all of them? Would it put every single one of use in jail? Does it have the power to?

The state is not all-powerful Josh. It makes economic decisions much like the rest of us - by weighing the costs and benefits of actions. Many drug dealers would stop being drug dealers if there was no money in it. Many thieves would stop being thieves if they could get a better return with honest work. The state may be evil by human standards, but it is not some omnipotent Dark Lord.

There are tools out there for people to escape much of human interaction into a new frontier, much like the American frontierists did. These tools are getting stronger by the day.

The state cannot outlaw

The state cannot outlaw encryption. It is just too commonly used. VPN's, secure Web sites, and network management are all being done via encrypted streams. Exporting encryption products was illegal only a few years ago, yet pressure from software developers and business users forced the issue with the gov.

If there is anything I am pessimistic about it is getting enough people to participate in the encrypted economy. I am not too pessimistic though, because back in the 80's I was convinced that this internetworking thing was only going to be big amongst us nerds.

if you look at a country

if you look at a country like the former soviet union they had a pretty good handle on controlling people. but like the ice on Lake Superior, it eventually melts, albiet slowly. Physical location will be important as some goverment somewhere WILL stand up to the OECD, and allow serious encrypted commerce. that place will become the richest country on earth and will be emulated by many. The $US dollar is going to collapse in an inflationary spiral LONG before that happens, defeating the pigs ability to discover and prosecute anything, let alone a encrypted transaction. if the server is in Panama and you have an encrypted connection there is no way to make you fold, other than physical 'rubber hose' decryption which i am assuming will be used.but why would you stay in a country that was that insane? theres a big world out there.

To have more ideas on how we

To have more ideas on how we could have reputations with anonimity, you can look on my project of a webmail system that combines anonymity (well, not an absolute anonymity but one that can hardly be cracked when it is not legitimate to do so) with a trust system of a new type, by which one can keep one's reputation and remain responsible while changing pseudonym.

Also I prepare an article on an economic model of a money system that would fit with this project (a system of financial credits shaped like a trust system).