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E-Currency ExchangeProfitable New Horizons - Addendum

2006-09-18T20:00:00.000+01:00

Your feedback—what we forgot to say—combining the functionality of e-currency issuer, exchanger and third party processor. ... Masochistium Clickium Hic!

All under one roof

We’re already starting to get a lot of feedback on our last blog entry. It’s certainly got some people thinking! One of the emails pointed out that you don’t have to be a Pecunix or an e-gold to get started. It’s a good point, one that we failed to mention.

Setting up as a primary e-currency issuer like Pecunix or e-gold takes quite some time and some capital. Setting up as a secondary e-currency issuer like 1mdc takes almost no time and very little capital. So there’s nothing to prevent some entrepreneur from setting up as a secondary e-currency issuer and then offering additional e-currency features, like reserved fund accounts.

Even better, any business could combine the functionality of secondary e-currency issuer, e-currency exchanger, and third party credit card processor. Even if these functions were presented under different brands there is nothing to prevent centralized control and management, eliminating the need to coordinate between different businesses. While separating the functionality of issuer and exchanger provides confidence for the investor wishing to store substantial quantities of gold, it’s not an issue that concerns the average merchant or his customers. A consolidated business operating from an offshore base could offer a one-stop shop for customer and merchant alike, bringing everything under one roof. Now that would be interesting!

E-Currency ExchangeProfitable New Horizons

2006-09-16T16:45:00.000+01:00

Barriers to entry—the labours of Luigi—e-currency third party processors—the ETTP reseller—the e-currency issuer as facilitator—reserved fund e-currency accounts—expiry dates, chargeback accounts, and tags—interface standardization—seamless shopping cart integration—automatic virtual e-currency account creation, or how to ensure that every credit card user has an e-currency account! ... Masochistium Clickium Hic!

E-currency: Barriers to Entry

Many wonderful inventions fall by the wayside because their inventors have overlooked one essential factor in the success of any new enterprise: ease of migration. It doesn’t matter if the “new” is far better than the “old”. It doesn’t matter if the “new” is far cheaper than the “old”. If it isn’t easy for the consumer to make the transition from the old to the new way of doing things, then—irrespective of how wonderful the “new” may be—it will fall flat on its face. And “getting started” is the Achilles heel of e-currencies. The e-currency issuers and e-currency exchangers are turning away vast amounts of mainstream web business because between them they have constructed one of the most impenetrable and user-unfriendly methods of “getting started” that’s imaginable. But with a little effort both the issuers and exchangers could direct this missing business through their virtual front doors, adding handsomely to their profits in the process.

Let’s look at what awaits the web user who’s tempted to make a first time purchase using e-currency:

The Labours of Luigi

Now Luigi wants to buy a widget—the kind of widget doesn’t matter—but like most of the other billion-plus users of the Internet he wants to buy a widget, and he wants to buy it online. So Luigi makes his way to Google and performs a search, a search that returns two hits.

As far as the first hit is concerned: “It’s-a not-a quite what I’m-a looking for. Eh! And it’s-a expensive, but maybe it-a do if I-a find nothing better.” As far as making payments is concerned Luigi—like most web users—uses a credit or debit card, so he scans the page for payment methods, “Eh! There’s-a no credit card logos at bottom of page. Ah! But here’s-a Paypal.” Luigi doesn’t know much about Paypal beyond that it’s a way of paying for goods and services, and he certainly doesn’t want to open a Paypal account. However, he does know that if he clicks on the Paypal logo then he will be able to pay by credit card without the hassle of having to open some new fangled account. So to Luigi’s mind the Paypal logo is no different from the Visa logo. It means his credit card will be accepted.

As far as the second hit is concerned: “Ah! It’s-a exactly what I’m-a looking for. And it’s-a cheap, very cheap. And it’s-a in stock.” Luigi scans the page for payment methods. No credit card logos, no Paypal logo, only strange unfamiliar logos, “What’s-a these logos, Pecunix, e-gold, 1mdc? Never-a seen these before. Maybe one of them like-a Paypal. Maybe I can-a pay with credit card?” But Luigi is soon disappointed. These methods of payment don’t allow him to use his credit card. But he’s very keen to get “just the right kind of widget”, so on this occasion he decides to investigate a little further. “Eh! Such a nuisance. Looks-a like I’d-a have to set up account. Can’t-a set up account here on merchant site, have to go to e-currency site. I have-a quick look. Ah! To set up account maybe not too difficult. But how I-a get-a money into account if I-a create one? Eh! So stupid! I cannot-a believe it! This site where I-a create account not allow me to put money into account, but just give me list of other sites where I-a have to go to put in-a money. Hey! I-a don’t-a have-a time for treasure hunt! These people not-a make it easy. Let’s-a look at this list of exchangers. Dozens and dozens of them. Which one to pick? Let’s-a try this one. I don’t-a understand! What’s-a this ‘bank wire’ thing? I never-a use this-a bank wire thing. Why can I not-a use credit card. I try another.” After visiting fifteen e-currency exchangers Luigi finally hits gold—well fool’s gold to be precise. “Ah, at last! This e-currency exchanger allow me to-a pay by credit card. But-a what’s-a this. I-a have to wait for days, maybe weeks. Have to be-a verified. Exchanger say he have to-a ring me at-a home to confirm identity. Eh! Well, all I can-a say is-a bugger off!”

So Luigi is now the not so proud possessor of an expensive widget that was not quite what he wanted, and some merchant still has in stock one cheap widget that was just what Luigi wanted, but which was simply too difficult to purchase!

This story illustrates the big problem faced by any merchant offering e-currency as a payment option. It’s just too much hassle for the first-time user to get started. Not only has the user got to open an account with the e-currency issuer, but he has to trawl through dozens of e-currency exchangers, some of whose web sites are broken, many of whose web sites are badly designed, and almost all of which insist on “weird” methods of payment that the user has never used, or never even heard of. And the few e-currency exchangers that do accept credit card payments have intrusive verification procedures that take days or weeks to complete. In short, while e-currency is just as easy to use as a credit card once the customer has a “funded” account, getting to this stage is far too complicated and far too time consuming to attract mainstream web business.

The challenge for the e-currency issuers and e-currency exchangers is how to provide a gentle and painless transition for the average web user away from the use of credit cards and towards the use of e-currency as a method of payment for web goods and services. The mistake that has been made to date is to expect that the web user will make this transition in a single step. It won’t happen. There needs to be several steps to ease the web user into this new way of doing things. And as a first step the e-currency issuers and exchangers must find a mechanism by which a web user can click on an e-currency logo and pay for goods and services using a credit card in the standard manner, without having to follow intrusive verification procedures.

Is this essential? Yes. Online merchants are no fools. Accepting credit cards will immediately increase an online business’ sales volumes by about 500%—and by far more in the long term—compared to all other methods of payment put together—and amongst all these other methods of payment the sales volumes attributable to e-currency are tiny for the vast majority of merchants. And while e-currencies have the great advantage of no chargebacks, this advantage is entirely worthless to a merchant if web users are not buying his goods and services in the first place. So until web users can click on an e-currency logo and make an instant payment by credit card, e-currency will remain a very niche market.

Paypal, despite its many sins, has been shrewd enough to serve as a third party credit card processor—allowing web users to pay by credit card has been a major factor in its success. From the perspective of the web user Paypal appears in the same light as Visa and Mastercard. Even if the web user doesn’t open a Paypal account he is still very aware of the name Paypal, so by acting as a third party processor Paypal is buying web user awareness and raising its profile. From the perspective of the merchant, particularly the small merchant, Paypal is a credit card processor with extra facilities; the merchant can accept payments from those web users who have Paypal accounts and from those web users who only have credit cards. It appears to be a win-win situation. Of course, the merchant will soon encounter the disadvantages of using Paypal, but these “nasties” are postponed until after the merchant has signed up and has been using Paypal for some time—possession is not only nine tenths of the law it accounts for nine tenths of the profit! So the message to the e-currency issuers is a simple one: you can’t compete effectively with Paypal until you offer the same benefits as Paypal.

In addition to raising their profiles and increasing transaction volumes, there is another reason why the e-currency issuers and exchangers would be wise to broaden their user base as quickly as possible. Big Brother is very keen to shut down the e-currency business—witness the recent attacks on e-gold by the US government, and its harassment of some US based e-currency exchangers. Until e-currency becomes much more widely used than it is at present it will remain vulnerable to such attacks. And accepting credit cards, just like any other credit card processor, is the fastest way to broaden that user base.

But accepting credit cards is only the first step. The e-currency issuers and exchangers need to ensure that every web user who has a credit card also has an e-currency account. Then they need to persuade web users to treat these e-currency accounts like bank accounts, and to use e-currency to pay directly for goods and services. How can this miracle be achieved? By:

Establishing e-currency third party processors
Offering reserved fund e-currency accounts
Standardizing e-currency payment interfaces
Implementing seamless shopping cart integration
Automating virtual e-currency account creation

The E-Currency Third Party Processor

Credit Card Processing

To begin with let’s have a look at online credit card processing. There are two main types of credit card processors that allow an online business to accept credit cards: the primary processors and the third party processors.

The primary processors offer lower charges (2-4)% and faster payments (about 5 days); but they have higher set-up costs, longer set-up delays, substantially more paperwork, and a lower acceptance rate.

The third party processors have higher charges (5-10)% and slower payments (2-4 weeks); but they offer lower set-up costs, very small setup delays (minutes to a few days), negligible paperwork, and very high acceptance rates (90-95)%.

Chargebacks are the main headache than comes with accepting credit cards since these are passed back to the merchant, sometimes accompanied by additional chargeback fees. And the acceptable chargeback rates have been pushed down in recent years to around 1%, whereas previously 2% was the norm. This can make it difficult for online merchants, where the chargeback rate can average (2-3)%, though the rate varies very widely depending on the type of online business.

Recent years have seen some third party processors operating what amount to scams. The chargeback rates for high risk online businesses, such as gambling and adult sites, can be of the order of (20-30)%. Even though acceptable chargeback rates are of the order of 1%, these businesses can still operate by setting up as third party payment processors. By attracting large numbers of low risk online businesses they are able to dilute the chargeback rates for their high risk sites, so that on average their chargeback rates approach 1%. By changing the IP addresses of their high risk businesses on a periodic basis they are able to persuade the card companies that they are not only keeping chargeback rates within the guidelines but are also policing those guidelines in an effective manner.

But these third party processors have an additional money making trick up their sleeves. They can effectively extort money from online businesses by including terms in their contracts that allow them to withhold funds and close accounts if the chargeback rate exceeds some very modest amount. They delay initial payments to merchants until chargebacks come in, and then use a chargeback rate that exceeds the contractual terms as a justification for making no payments at all. The cost to a merchant of mounting a legal challenge in an offshore jurisdiction is prohibitive, so effectively the merchant receives no payments in return for any of his customer’s credit card purchases, while the third party processor receives an additional revenue stream until the merchant finally realizes that he’s been scammed.

Because so many third party processors are subsidizing their own high risk web sites, there is a business opportunity for those third party processors who do not: either they can offer more favourable terms in order to grow their own businesses, or else they can take a larger profit margin by offering the same terms as their chargeback encumbered competitors.

E-Currency and the Third Party Processor

To meet the requirements of the e-currency niche we need a new type of third party credit card processor. Let’s define an e-currency third party processor (ETTP) as a business that provides all the functionality of a standard third party processor (STTP), but, in addition, pays each merchant using e-currency, and does not verify a merchant’s details beyond the standard inspection of the contents of the merchant’s site (this is an inspection that all credit card processors perform in order to ensure that the nature of the business is sufficiently low risk, and unlikely to give rise to frequent chargebacks).

The features of “payment in e-currency” and “merchant anonymity” make the ETTP a new niche that is not currently occupied at present, and it’s one that some of the existing e-currency exchangers could readily fill. Let’s look at what an ETTP has to offer for the four parties involved in a web purchase; the:

Customer
E-currency issuer
Merchant
E-currency exchanger

What are the advantages of an ETTP to the customer? Well, none, apart from the fact that a merchant who previously did not offer credit card payments now does, which may widen the customer’s choice a little.

What are the advantages of an ETTP to the e-currency issuer? Substantial. Many more merchants would find e-currency attractive simply because it would allow them to get a cheap credit card facility that greatly expands their sales potential, and all these merchants would be paid in e-currency, increasing the e-currency issuer’s transaction volumes. In addition, because many more merchants would now display the e-currency logo, the profile of the e-currency issuer would grow considerably. This high profile could, in time, be used as a stepping stone to migrate customers away from paying by credit cards and into paying directly by e-currency. The e-currency issuer is now playing the Paypal game, but without incurring the Paypal overheads: unlike Paypal the e-currency issuer has no chargebacks to deal with! Given the great advantages that accrue to the e-currency issuer from the existence of ETTPs, the issuer would be wise to assist both merchants and ETTPs in getting the process up and running, and in ensuring its smooth operation.

What are the advantages of an ETTP to the merchant? Some merchants would value the anonymity provided by not having to disclose their true identities. Others, particularly the smaller ones, would value not having the hassle and expense of setting up a business bank account—many small merchants are reluctant to use their personal bank accounts for online business transactions. Setting up a bank account takes days to weeks, whereas setting up an e-currency account takes minutes. The other advantage is that an ETTP would be more competitive than the standard third party payment processors. Transferring money to an e-currency account is far cheaper than transferring it to a bank account, so the ETTPs have a lower cost base than the STTPs. An ETTP wouldn’t have to set a minimum level of purchases before it’s prepared to make a payment to a merchant—a policy that would be particularly attractive to the small business (one of the objectives of the e-currency issuers is to replace the current banking system, and offering better terms than the banks is the best way to achieve this worthy objective).

In addition, those STTPs that are using low-risk businesses to dilute high chargebacks from their own high-risk web sites have inherently higher costs that are reflected in poorer terms and conditions for their low-risk merchants. An unencumbered ETTP can therefore offer even better terms when competing against these STTPs.

What are the advantages to an e-currency exchanger in becoming an ETTP? For a start, much larger business volumes, as the credit card market dwarfs the e-currency market. It’s a new niche, attracting merchants that want anonymity or a lower cost base. It’s more competitive than the traditional STTP, providing greater profits or enabling better terms to quickly build-up a large customer base. It preferentially attracts the small merchant who is likely to stay, at least for some time, as its business grows, leading to high percentage profits on large transaction volumes for the ETTP, before the merchant finally decides to move its business to one of the primary processors.

The risks for the ETTP are no greater than those for the STTP. A payment using e-currency is no more or no less repudiable than a cheque or a bank wire, and therefore e-currency as a method of payment does not add to the ETTP’s risk. Theoretically, verifying the identity of the merchant might help to reduce the risk, but in practice it does not. In practice, all the STTPs have time to do is to have a cursory look at a merchant’s website to determine the nature of its business. Merchants selling goods or services with a high risk of chargebacks—such as merchants offering gambling or adult sites—hide their identities behind personal proxies and their sites behind other low risk businesses, so that the STTP doesn’t realize the true nature of the business until the chargebacks start rolling in. So the degree of identity checking that is possible in practice does not help to lower the STTP’s risk.

The only potential problem for an ETTP is getting a credit card account from a primary or third party processor. Credit card processors are very wary of offering accounts to others in the same line of business to begin with. And Big Brother is not going to encourage any business that makes payouts in e-currency to anonymous individuals. However, as we’ll see in the next section, there is a simple way of packaging an ETTP business that will allow anyone who can get a standard credit card account for routine business purposes to effectively operate as an ETTP, and this repackaged business has a much lower profile than that of being an e-currency exchanger.

The ETTP Reseller

There are already businesses that effectively act as ETTPs, but which have no difficulty whatsoever in getting a standard credit card account from a primary or third party processor.

There are four main aspects to an online business:

Production
Marketing
Order payment
Order fulfilment

While traditionally these functions were performed by a single business entity, these days they are often split apart and outsourced. First consider the case of the sales portal. Let’s take the specific example of a sales portal for computer software. Many software programs are written by individuals whose sole interest is in writing software, individuals who have no desire whatsoever to run a business. The sales portal provides a web site that contains details about hundreds of different software programs. Each software program’s author gives a copy of the software plus a description to the sales portal, which places the description on its site. The web user finds the sales portal, pays for the software using the services of the sales portal’s credit card processor, and then the sales portal emails the user a link to download the software from its web site. About once a month the sales portal pays each software author for the number of copies sold less a commission by means of a check or a bank wire. There are a vast number of web sites that sell products that other people produce and it’s very easy for almost all such sites to get a credit card account from a processor. What’s important here is that the processor doesn’t inquire into the arrangements that exist between the sales portal and its suppliers. The credit card processor doesn’t ask, “Do you verify the identities of your suppliers?” It doesn’t say, “You mustn’t pay your suppliers using e-currency”. In this example the software author is responsible for production, while the reseller is responsible for marketing, order payment, and order fulfilment. But the business arrangements are often more complicated than this.

Consider the case of the reseller. The software author may well have his own web site and may well handle the downloading of the software after purchase. He may have a purchase button on his web site that is no more than a link to the payment page associated with his product on the reseller’s site. The description of the product on the reseller’s site may be very brief, and contain a link to the author’s site, so that potential customers can find out more information about the software. In this case the software author is responsible for production and order fulfilment, the reseller for order payment. Both contribute towards the marketing.

Now what would happen if the reseller simply deleted all the marketing information about the software he resells from its web site? The software author could still sell his products because the link from his site to the associated payment page on the reseller’s site would be intact. In this case the software author would be responsible for production, marketing, and order fulfilment, and the reseller would be responsible for order payment. If the reseller didn’t verify the merchant’s details and paid him using e-currency then he would be acting as an ETTP.

We now have a simple method for the ETTP to disguise the real nature of its business and to overcome any difficulties it might have in getting an account from a credit card processor. All the ETTP has to do is to pose as a reseller. The reseller’s site could operate on the department store model and sell a wide variety of goods and services, or it could specialize by selling just a particular category of goods and services. Payment by e-currency might be mandatory or just an option that sits alongside the traditional cheque and bank wire. The reseller could provide generic slots into which each merchant could insert a brief description of the goods and services for sale, together with a link to the merchant’s site for more details. If properly setup, the reseller would have to expend no effort in terms of maintaining this marketing information—the merchant would simply log in and modify his section of the site as appropriate.

The only thing the reseller would have to do—as with all credit card processors—is to assess the likelihood that a particular merchant is engaged in a business that will incur significant chargebacks. This could be done by a quick visit to the merchant’s site. The reseller could pick and choose those merchants that sell goods and services with a low risk of chargeback, and could limit initial sales volumes, require deposits, or lengthen initial payment periods to limit his exposure until he can confirm that chargebacks are no greater than expected. The reseller would have little difficulty in getting an account from a credit card processor as when the processor visits the reseller’s web site it would see a portfolio consisting of a wide variety of low risk products for sale, which is exactly the mix needed to keep chargebacks low and to minimize chargeback fluctuations. And the processor will not inquire as to how the reseller pays his suppliers or what steps he may or may not take to verify their identities.

Setting up as an ETTP reseller is a low profile and low risk method of acting as an ETTP. We’d like to see large numbers of individuals take up the challenge, with many small ETTP reseller sites scattered across the web. The vast number of reseller sites that already exist would make it impractical for Big Brother to identify and close down those ETTPs that act as resellers.

The E-currency Issuer as Facilitator

Now as e-currency issuers would benefit greatly from the existence of ETTPs, the wise e-currency issuers should take steps to make it easy to setup and run such a business. One of the chief shortcomings of the e-currency issuers to date has been a failure to appreciate that the success of their businesses is directly dependent on the success of the e-currency exchangers. We’d expect the e-currency issuers to help the e-currency exchangers to become ETTPs. In particular, we’d expect the e-currency issuers to:

(1) Provide information to prospective ETTPs that shows them how to get accounts from the credit card processors.

(2) Provide, for free, template web sites that an ETTP can customize by simply slotting in the details of its chosen credit card processor. The template would contain appropriate scripts for managing and paying merchants—using the issuer’s own e-currency, of course!

(3) Provide a supply of candidate merchants who are interested in using an ETTP. Users of the e-currency who would like to find an ETTP reseller could indicate this in their e-currency configuration settings, and ETTP resellers could register their interest in finding more merchants with the e-currency issuer. Then the interested parties could be introduced to one another in some suitable manner.

For a little effort an e-currency issuer should be able to ensure that with a very modest number of clicks anyone can set themselves up as an ETTP reseller for zero, or minimal, outlay.

Reserved Fund E-currency Accounts

Now that our e-currency issuers have helped to launch a number of ETTPs, many more merchants are using their e-currencies, and their brands are becoming well known. They’ve done what’s needed as far as the merchant end of the business is concerned. But from the customers’ perspective their e-currency logos are still just a means of paying by credit card. It’s time to get web customers to start using these e-currencies directly.

It’s coming up to Christmas. Grandpa used to send his grandchildren some money each year in the form of a gift voucher, but then they started complaining that they couldn’t spend it on the things they wanted to buy. Simply enclosing some cash with a card doesn’t seem quite right. So what about giving his grandchildren some gold in the form of a funded e-currency account instead? Ideally grandpa would be able to go to an e-card site, select a card, select an e-currency, select a funding amount, type in the email address of the recipient, pay with his credit card, and that would be that. However, while his credit card can be used to pay for the e-card it can’t be used to pay for the funded e-currency account.

Why can’t the e-currency issuers avail of simple marketing opportunities like this? After all, grandpa could buy a funded Paypal account with his credit card. The problem is that an e-currency exchanger would have to be involved somewhere behind the scenes, and this e-currency exchanger wouldn’t know whether grandpa had stolen the card details that he had entered. If so, there would be nothing to prevent grandpa from accessing the newly funded account and transferring his ill-gotten gold elsewhere. But grandpa can’t reasonably be expected to set up his own e-currency account and then fund it, just for the purpose of sending a gift to his grandchildren—this is just not how real-world Christmas shopping works!

How can we get around this problem? Well just as the ETTP gets around the problem by deferring the payments it makes to its merchants so too can the e-currency exchangers get around the problem by deferring the date until which funds placed in an account can be used or by restricting the purposes for which the funds can be used, or both. Well, they could if the e-currency issuers were to get their collective fingers out and make opening a funded e-currency account as simple as making a credit card payment: we live in a world of chargebacks, and until the e-currency issuers start from “where the world is” then they have no hope of moving the world to “where they want it to be”!

Let’s expand the concept of an e-currency account and distinguish between the concepts of reserved funds and free funds. The total amount of free funds in an e-currency account could be used in any manner the account owner wishes. The total reserved funds would be broken down into a list of separate amounts each of which had against it one or more of the following:

An expiry date and chargeback e-currency account number
A transfer tag

Prior to the expiry date the owner of the chargeback account number could transfer all or part of the reserved fund to the designated chargeback account. After the expiry date the reserved amount would be added to the free funds. To implement this functionality would not require much extra effort on the part of the e-currency issuer. On the e-currency payment form all that would be required is a few additional fields. If these were left blank—the default—then the payment would go into the account’s free funds. Very little change would be required to the e-currency issuer’s database; all that’s needed is the addition of the expiry date to the transaction history record. The processing overhead would not be large. Reserved funds could be indexed by expiry date, and once a day a script could look up all accounts that have reserved funds expiring on that particular day, and update the accounts by marking expired reserved funds as free funds.

A transfer tag is a reference to a set of e-currency accounts. Reserved funds with a transfer tag attached could only be transferred to one or more of the accounts belonging to the referenced set. If the reserved fund also had an expiry date, then the funds could be transferred to another account before the expiry date, provided that the expiry date and chargeback account were also transferred, creating a reserved fund in the recipients account—the original payee could still get his funds back before the expiry date as access to the reserved funds is controlled by the e-currency issuer who can be relied upon to enforce the rules. Again, this functionality would require little overhead to implement, just an additional lookup whenever a transfer of reserved funds is made to ensure the destination account belongs to the appropriate set of accounts.

A secondary market could be established in reserved funds, providing e-currency account holders with a means to automatically convert them to free funds for a commission: just as the debts of companies are sold based on the likelihood that they will repay the loan on the due date, so too could the chargeback entitlements of ETTPs be sold based on the likelihood that no chargeback would come it by the expiry date. The more care the ETTP took in selecting his merchants, the fewer the chargebacks, and the smaller the commission required by operators in the secondary market. To make the secondary market work effectively, a risk category would need to be assigned to the reserved funds by the ETTP when the funds are first created. If an ETTP had not processed a particular credit card before then the risk would be high; if it had frequently processed the same card with no chargebacks, then the risk would be low—the reserved fund would be almost as good as gold! So the commission charged in the secondary market would depend not only on the ETTP but also on the risk category assigned to the reserved funds by the ETTP. While the volumes of e-currency exchanged at present are relatively small, once instant credit payments were accepted the ETTP market would soon become large enough to encourage the development of a secondary market.

Reserved funds decrease the risk of using e-currencies and therefore expand the number of uses to which e-currencies can be put. Quite apart from increasing transaction volumes there existence would be effective in counteracting some of the negative publicity that e-currencies generate.

The existence of reserved funds would allow e-currency exchangers to accept credit cards without verifying customer details in cases where the transferred funds were not needed immediately. For example, grandpa could purchase his funded e-currency account with a credit card, as the e-card merchant could simply transfer its customers to an e-currency exchanger’s payment page. Provided grandpa got his Christmas gift well in advance, the funds would be available to be spent on Christmas day, as the e-currency exchanger would have had sufficient time to process any chargeback that might have come in against the transaction. If not, then the recipient could always convert the reserved funds into free funds by selling them on the secondary market. This mechanism is open to some abuse, but might well work for small payments.

A safer method would be to include a tag along with the deferred payment. If the funds can only be spent with one or more of a designated set of merchants then the risk of fraud falls still further. Instead of grandpa buying a particular gift from one of the merchants served by a particular ETTP, he could buy a funded e-currency account with a deferred payment date and a tag that only allowed the funds to be spent with one of the ETTP’s merchants—the expiry date would get transferred to the merchant account when a purchase was made from the reserved funds, so from the ETTP’s point of view the situation is exactly the same as if the purchase had been made directly.

While reserved funds may add some complexity to the structure of the e-currency issuer’s database, they offer the prize of being able to create and fund an e-currency account using a credit card for immediate payment. Gold that can be spent in a flexible manner is always an attractive idea for the last minute present, and the fact that there may be a delay before it can be spent would only be a minor drawback for most givers—as long as the giver has to do no more than click on a button and fill in his credit card details that is! Most individuals who have been gifted funds in an e-currency account are likely to make the effort to spend them. And some of those who receive such a gift will conclude that it’s quite a good gift to give someone else, generating even more business for the e-currency issuers and exchangers.

Interface Standardization

To simplify the process of e-currency exchange for e-currency users the e-currency issuers need to take a more proactive part in the process. The issuers need to design a standard set of forms that allow users to fund an e-currency account using various methods. These forms would be made freely available to the e-currency exchangers who could include them on their web sites in addition, or as an alternative, to their current interfaces. Those exchangers who implemented the standard interface would provide the e-currency issuers with suitable links, and, provided that the e-currency issuers were satisfied with the exchanger’s reliability, the e-currency issuers would list them as preferred exchangers. Being listed as a preferred exchanger on both the e-currency issuers’ sites and in the gold directories would clearly be highly prized by exchangers and almost all of the more reliable exchangers would be likely to comply (while it would be best if the different e-currency issuers got together and thrashed out a common standard, even if each of the big three set their own standards that, in itself, would be a vast improvement).

The great advantage of standardization is a single well-documented user interface for making e-currency exchange: paying by a credit card or a bank wire would always have the same fields in the same place, and the exchanger’s terms of business would be presented in a consistent fashion. The exchangers could still compete amongst themselves by offering different terms, but the e-currency user would always see the same easy-to-use interface, and not the ragbag of disparate, poorly designed specimens that greet him at present.

Seamless Shopping Cart Integration

Now, shopping carts that allow users who have an e-currency account to pay by e-currency already exist, but this functionality is no more than preaching to the converted. What we need to provide is an easy way to migrate customers away from the use of credit cards as a method of payment for purchases and towards credit cards as a method of funding e-currency accounts from which payments for purchases are subsequently made. During this transition period there are four different activities that a merchant’s customer needs to perform:

Pay for goods and services using a credit card (MR)
Create a new e-currency account (EI)
Fund an e-currency account (EE)
Pay for goods and services using an e-currency account (EI)

The problem is that these activities involve visiting three different web sites: the merchant (MR), the e-currency issuer (EI), and the e-currency exchanger (EE), and this toing and froing is far too complex for most web users. We need to ensure that the web user need never be aware that he is visiting the web sites of the e-currency issuer and the e-currency exchanger. The key to success is a single, uniform interface that can be included as an add-on to any shopping cart that allows payments to be made by means of e-currency.

The web user is familiar with the structure of shopping carts. There is a page where he enters his credit card details. Where this page is part of the merchant’s credit card processor’s site—such as WorldPay—the user is automatically transferred to and from the site in a seamless manner. What we need from an e-currency shopping cart is a similar set of seamless transfers between the sites of the merchant, the e-currency issuer, and the e-currency exchanger.

Let’s take a simple example. Suppose at the end of the payment’s section of a shopping cart, after the customer has already entered his personal and credit card details, he sees something along the following lines:

In addition to paying for the selected products would you like to:

Use your credit card details to create and fund an e-currency account:

Amount: XXXXX
Exchanger: XXXXX (change if preferred)

Use your credit card details to fund an existing e-currency account:

Account: XXXXX
Amount: XXXXX
Exchanger: XXXXX (change if preferred)

CONTINUE

The objective here is one of marketing and ease of use. Paying by credit card is the most common financial activity that the average web user undertakes. If the user has the option of performing e-currency transactions at the same time, using the same form and the same details that have already been entered for a credit card transaction, then this helps to place e-currencies on a par with credit cards as a method of payment.

The default value for the exchanger might be selected at random by the shopping cart from amongst the e-currency issuer’s preferred exchangers, so that the first time user of e-currency wouldn’t have to make a choice. The experienced user could select a particular exchanger that he likes to do business with. The “continue” button would initiate the sequence of payment and account creation processes. The payment for the selected products would be authorized in the background using the merchant’s credit card payment processor (which may or may not be an ETTP). A confirmation page would appear briefly.

Then, if the user had selected the “create and fund” option, he would be automatically transferred to the e-currency issuer’s site, with all the personal information copied across from the merchant’s shopping cart. All that the user would have to do to create an e-currency account would be to enter a password and any other security information that may be needed and then press “continue” (the user could, of course, change the information copied across if required). Information, such as an account PIN, would then be sent to the email address copied across from the shopping cart.

The user would then be transferred to the standardized credit card payment interface page on the selected exchanger’s site with all the credit card information copied across from the shopping cart and the new e-currency account number copied across from the e-currency issuer’s site. The user would just have to press “continue” and the newly created account would be funded with the appropriate amount (a link on the exchanger’s payment page would allow the user to select some other funding method offered by the exchanger if preferred). If the user selected the “fund” option then the first step would be skipped. And that’s it.

The user would have to make very few decisions, would not have to select, to navigate to, and to repeatedly enter the same information on multiple sites, and as the entire account creation and funding process would be automated the user need never be aware that he has left the shopping cart and the merchant’s site. For a new user the e-currency exchanger would, of course, have to place restrictions on the funds using the reserved fund mechanism, restrictions that the user could lift immediately by going through the exchanger’s verification process. The key objective here is to make the user do as little work as possible to create and fund an e-currency account. If any work needs to be done, then it should be deferred until the user comes to make the first spend from that funded e-currency account.

Automatic Virtual E-Currency Account Creation

The simple example in the previous section illustrates how the account creation and funding process might be streamlined. But account creation is still conditional—even though account creation and funding is easy, the user still has to be interested in creating an e-currency account in the first place. What we need to do is to make the process automatic, so that every user who makes a credit card purchase automatically gets an e-currency account, and, unbeknownst to him, effectively uses this account to pay for his purchases.

Let’s say that an e-currency issuer comes to an agreement with an ETTP, so that whenever the ETTP is used by one of its merchants to process a credit card payment, a “virtual” e-currency account is automatically used as a step in the payment process. From the user’s perspective he pays by credit card in the normal manner, but in the background the ETTP and e-currency issuer work together to automatically pass the transaction through the user’s virtual e-currency account, creating that account automatically if it does not already exist. Instead of the e-currency issuer placing a deferred payment directly into the merchant’s e-currency account as a result of the credit card payment, the e-currency issuer first places it into the web user’s virtual e-currency account as a debit (charging up the account), then places a credit into the web user’s virtual e-currency account for the same amount (so that the account balance returns to zero), and finally places the amount into the merchant’s (non-virtual) e-currency account as a debit. Financially, the result is the same as a single debit to the merchant’s account.

How does the e-currency issuer know which virtual e-currency account to use since the user is never asked to enter an e-currency account name, even if he has one? The answer is to generate the virtual e-currency account name from the details of the user’s credit card. The card number is authorised based on features such as name, address, and expiry date. The e-currency exchanger can generate a unique virtual account name from a hash of the concatenation of card number, name, address, and expiry date. If the account doesn’t already exist it is created by the e-currency issuer. This provides a mechanism for automatically creating and passing transactions through a virtual e-currency account. The naming convention can ensure that virtual accounts never have the same number as a real one. Even if two credit cards hashed to the same value—the probability is infinitesimally small—it would have no real financial impact since virtual e-currency accounts would always have a zero balance. The privacy of the user is not compromised since the e-currency exchanger does not pass the user’s credit card details to the e-currency issuer, but only a hash from which the original details cannot be recovered.

Note that this e-currency account has no password, but then neither does a credit card, so the user is no worse off, particularly as at this stage he never uses his virtual e-currency account directly. The ETTP could suggest that for additional security the user might wish to add a password to his credit card to help prevent credit card fraud. The password would become the virtual e-currency account password, which is first created and subsequently entered during the shopping cart checkout procedure by an automatic transfer to the e-currency issuer’s site, just as a user might be transferred to Visa’s site if using the optional “Verified by Visa”. The e-currency issuer doesn’t know the user’s credit card details and the ETTP doesn’t know the user’s virtual e-currency account password, enhancing the user’s security. What we’re trying to do here is to mirror credit card functionality as much as possible while generating all the information needed to operate an e-currency account behind the scenes.

What’s the advantage of all this accounting? Well, the ETTP would need to send the user a confirmatory email that gives details of his spend every time he pays by credit card, and this would provide an excellent marketing opportunity to encourage the user to convert his virtual e-currency account—the one that he didn’t know he possessed—into a real e-currency account. We are not doing anything at this stage that requires the user’s permission. We are just offering the user the opportunity to activate and use some additional functionality.

The confirmatory email could explain that the virtual e-currency account is charged up by the user’s credit card and then used to pay the merchant. We want the user to get used to the idea that (1) he already has an e-currency account, and that (2) he is already using that e-currency account to pay for goods and services. The email can point out to the user that the charging of the e-currency account (like paying into a bank account) and making payments to a merchant (like making payments from a bank account) can be done independently, and that this functionality can be activated with a single mouse click, and would then be available during the shopping cart checkout procedure and from the e-currency issuer’s web site.

Now our objective is nearly achieved. The e-currency issuer has stacked all the “cards” in his favour, for all the hard work of setting up an account has already been done automatically. He can let the user log into his virtual e-currency account and view his transaction history, familiarizing the user with the e-currency site’s functionality (once the user sets up a password). All the e-currency issuer has to do is to provide some incentive or discount to get the user to start using the e-currency account like a bank account from which payments can be made directly to merchants, bypassing the use of credit cards altogether. Alternative and cheaper account funding methods, such as bank wires, could be promoted as a cost saving feature. It is only at this stage that the user needs to sign up to the e-currency issuer’s T&Cs, because it is only at this stage that his “virtual” e-currency account becomes a “real” e-currency account that can possess a non-zero balance.

Now for the end game. If the e-currency issuer makes an effort to promote the use of ETTPs, then sooner or later most web users will make a credit card purchase from a merchant who uses one of the e-currency issuer’s ETTPs. As a result most web users will automatically end up with virtual e-currency accounts, and those web users will only have to make a single click to convert their virtual e-currency accounts into real ones. Q.E.D.

Which E-Currency Issuer?

2006-07-31T09:45:00.000+01:00

“P” is for privacy, “P” is for...—he who shall not be named—why free swaps used to be better than warranted searches—why the last shall be first—going the way of all flesh—the results of the privacy stakes—what to do in practice, be you a buyer or a merchant. ... Masochistium Clickium Hic!

“P” is for Privacy, “P” is for ...

Now there are different reasons why you might choose an e-currency issuer and we’ll compare the candidates on a point by point basis when we get around to it. But we thought it would be nice to offer some thoughts on the matter dearest to our hearts: which e-currency issuer should you choose on the grounds of privacy. While all e-currencies offer the convenience and certainty of non-reputiable transactions, e-currencies provide varying degrees of anonymity. The ideal is an e-currency issuer who

Operates on a “don’t-know-your-client” basis
Keeps no records of client transactions

If these two conditions are met then even if Big Brother commandeers the issuer’s data processing centre he will be no wiser when he leaves than when he entered.

The anonymous e-currency niche is a small one, but a relatively easy one to enter. Because of the increased interest by governments in the mass surveillance of financial transactions the world’s main financial players, who operate both onshore and offshore, cannot easily play in the anonymous e-currency market. They are forbidden from doing so onshore—except perhaps for small value transactions—by laws that require them to operate on a “know-your-client” basis. Were they to do so offshore then governments would take action, whether within or outwith the law, to ensure that the issuers were disadvantaged commercially as far as their onshore operations were concerned. And while e-currencies have been growing very rapidly, they have started from a very low base, and are only beginning to command the interest of the major players by way of small but interesting acquisitions.

These restrictions leave the anonymous e-currency niche open to any small enterprise that can consistently demonstrate itself to be trustworthy and reliable. Demonstrating reliability of operation is relatively easy, but as with any quasi-offshore business the appellation “trustworthy” only comes after many years of clients finding that they can “take out” that which they have “put in”!

While primary e-currency issuers require a moderate amount of capital to set up the infrastructure needed to safely store and routinely audit the precious metals that provide 100% backing for the e-currencies that they issue, secondary e-currency issuers that resell primary e-currencies under their own name have negligible set-up costs.

The main problem for the e-currency issuers is that while they readily attract a small and loyal following, making their e-currencies attractive to merchants is an uphill struggle. Without major financial backing and a high rate of cash-burn that effectively buys market share by giving away free cash, growth is, as the euphemism has it, organic!

At present there are three candidates that offer varying degrees of privacy, and who have been around for long enough for us to be reasonably certain that they will not run away with our gold. So if you’re interested in privacy which one of the big three should you select: Pecunix, e-gold, or 1mdc? (And that, dear reader, is called a hint!)

He who shall not be named

It’s a digression, but you may wonder why we always refer to the big three and not, as other commentators on e-currencies do, to the big four. Well, if you’ve seen that Harry Potter film you may recall the discussion between Harry and Hagrid in Diagon Alley, when Harry is told that the evil Lord Voldemort is always referred to by way of the phrase “He who shall not be named”. Well, like Lord Voldemort the invisible fourth member of the big four is as far as freedom loving people are concerned a name that we do not mention in polite society (well, if you must know it’s called “GoldMoney”).

GoldMoney operates under the same “know-your-client” rules that we might expect from the average bank. It requires detailed information about its account holders—notarized no less—though you can open an account and perform some limited transactions without verification. The following extract from their T&Cs gives you a flavour:

Unctuousness Personified

GoldMoney has a Customer Acceptance Policy (CAP) so that it can comply with established know-your-customer regulations for financial institutions ... all financial institutions are required to verify the name and address of their customers and the source of the customer funds entrusted to them.

While in some respects GoldMoney may seem similar to e-gold, there is a distinct difference in ethos. GoldMoney is, we feel, an unctuous servant of Big Brother, through and through. E-gold’s at times servile behaviour is dictated more by the practicalities of its location and by its aspiration to be a major financial player onshore. The other reason to shun GoldMoney is that it has gained a reputation for operating its accounts on a hair-trigger, and—taking a leaf from the Paypal rule book—of freezing accounts at a whim. Security demands that you are able to get access to your gold immediately: the price of gold can rise and fall rapidly in response to world events; were you to buy near a peak you would not wish to wait for months watching the gold price rapidly fall before your account was unfrozen.

So now you know why we speak of the big three and not of the big four!

E-gold versus 1mdc

This used to be an easy one to call. 1mdc tells us it operates entirely off-shore. E-gold’s data processing centre is in the US. As far as we know 1mdc does not disclose account details to third parties. E-gold tells us on its web site that “Our staff has participated in hundreds of investigations supporting the FBI, FTC, IRS, DEA, SEC, USPS, and others.”

Now we’re all for putting an end to crime, but what is a whistleblower to do when the government that instigates investigations contains within it the very criminal elements that the whistleblower is intent on exposing? And while we have every sympathy with the Agent Starlings of this world this sympathy does not extend to their political masters who find it difficult to distinguish between public interest and private gain, who seek to use the information gleaned from mass surveillance campaigns to manipulate public opinion, and who further their own political ends by passing on personal information garnered under the pretext of fighting crime to their paymasters within Big Business. The founders of the good old “US-of-A” were wise enough to place some restraints on the executive, but sadly that executive has found ways to get around them.

At the end of the day it comes down to which you fear the most, the criminals within, or the criminals outwith, governments. It we look around the world today we can ask who causes the most misery, those individuals acting at the behest of governments or those individuals acting at the behest of organized crime? The question is rhetorical, for the depredations of governments vastly outnumber those of organized crime. The peoples of the world have unwittingly allowed governments to gather unto themselves ever greater powers, powers that they abuse with deliberate intent, or, in the most charitable of interpretations, lack the wisdom to use wisely. So, we, the people, must wrest back from governments these powers, and where we face the uncomfortable choice between two evils, we must tackle first that which is the greater of the two.

Now you’d think the US government would appreciate e-gold’s cooperation in these matters. But no. On e-gold’s web site we read:

Biting the hand that feeds you

Starting in mid-December 2005, Gold & Silver Reserve, Inc. (G&SR), contractual Operator and primary dealer for e-gold, has been the subject of a warranted search of its premises and records, had its domestic bank accounts frozen, and been the target of a precisely timed, extraordinarily misleading attack by a major business publication. ... The examination utilized the full resources of e-gold's system and prevented customer access. We were told by the government examiners that the outage would be for a few hours, however, due to the volume of data maintained by e-gold for its customers' protection, a surprise to the examiners, the examination occupied e-gold's computing capacity for 36 hours.

“Maintained by e-gold for its customers’ protection”—ironic isn’t it? And 36 hours—the mind boggles! Had the government examiners just wanted details of the transactions made by a few hundred suspects then there would have been no need to bring e-gold’s operations to a grinding halt. It seems like a blatant attempt by the US government to damage a business whose operations are perfectly lawful but which the US government doesn’t approve of—a standard Big Brother ploy.

While we salute e-gold’s founder for his vision of a gold-based economy, he clearly did not appreciate that the playing field would not be level, that he would have to fight with one hand tied behind his back, and that the “so called” referee would trip him up at every opportunity. Sadly, e-gold seems to be at a fork in the road: either it becomes a pseudo-bank or, if it wishes to keep the vision alive, it must move off-shore.

The US has long ceased to be a democracy in which the executive makes policy that is implemented in a transparent and even-handed fashion by impartial public servants. Instead it has become a tyranny where the executive directs the operations of those public servants to its own ends. Francis Scott Key must be looking down with sadness from his place amongst the heavenly hosts, for while the US may still be “the home of the brave”, it has long since ceased to be “the land of the free”.

What’s important here is what e-gold doesn’t say. E-gold doesn’t say that the US government now has a copy of every transaction made by every e-gold account holder, including the relevant IP addresses, going back to the year dot (1996 in the case of e-gold). E-gold doesn’t say that the US government has shared this information with other “friendly” countries (and the US government keeps some strange company—Saudi Arabia, for example; and even in the case of hostile states information is often bartered). E-gold doesn’t say that the details of all these transactions are now being correlated by disparate governments with information obtained from other sources. And we’re not saying that any of these statements is true either. We just don’t know. But we can speculate! What would a government keen to tap everybody’s phone do with a database full of everybody’s transactions? Well Sherlock, even Watson could make a valid deduction in this case! What’s important here is not what e-gold says, but what every man and his dog thinks!

So it would be prudent to assume that the US government and it’s hangers-on around the world have a direct line into e-gold’s transaction database. That doesn’t rule out e-gold entirely from a privacy point of view. E-gold still does not validate your personal details, for which it is to be commended (though a GoldMoney-like scenario looms ever larger on the horizon). If you access your account using a good proxy chain, such as Tor, then you still have a measure of protection. But beware: analysis of transaction details can make it easy to identify you. The transaction database will allow any interested party to determine what merchants you’ve done business with. So if you’ve given personal information to anyone on the other side of an e-gold transaction—if you’ve ever purchased any physical goods using e-gold for example—then provided the US government or its “friends” can get access to that party’s records—and they often have “ways and means”—then your anonymity is blown. So if you’re a whistleblower or a dissident—no matter where you live in the world—and you are using e-currency to pay for a web site, for example, then stay clear of e-gold—if it’s worth their while, then governments and their friends may not find it too difficult to track you down.

So clearly, you should choose 1mdc ahead of e-gold. Well, it used to be that way, but not any more as we’ll see below!

Pecunix: And the last shall be first!

Now Pecunix has a more stylish interface than its competitors; Pecunix has more features than its competitors; and Pecunix offers greater security than its competitors. Yes, all very well, but what about privacy, the focus of this blog entry?

Well when it comes to privacy Pecunix not only belongs in a different category to e-gold and 1mdc, it belongs on a different planet! Or, if you’ll forgive us changing and elevating the metaphor still further: it’s a star shining brightly in the firmament of the great god Zimmerman, because, Pecunix, unlike its competitors, is PGP savvy (indeed if you want to quickly assess the privacy credentials of any site just ask the question, “Does it use PGP, and, if so, for what purposes?”). Now while the use of PGP with Pecunix is entirely optional, if you add a public key to your account then you will get much in return for your efforts.

When you get an email containing a PIN from almost any financial site on the Internet the email is sent as plain text, which means that every man and his dog could know what your PIN is long before you do! Your email has passed through multiple Internet routers and finally to your ISP’s mail server. You can be pretty sure that at least one Big Brother has sniffed the contents somewhere along the line, to say nothing of organized crime. But with PGP enabled, the PIN you receive from Pecunix comes in an encrypted email. And not only is the PIN encrypted, so too are all emails that you receive from Pecunix. And this kindness can be reciprocated since Pecunix’s PGP key is readily downloaded from its site for the purposes of (1) verifying that the email you’ve received is actually from Pecunix, and is not the result of some phishing expedition; and (2) encrypting your reply to Pecunix should one be warranted.

The next felicity that comes with PGP is a rock-solid mechanism for account verification. With PGP enabled if you don’t enter any personal information when creating a Pecunix account, you can still regain access to your account using PGP should you lose your password. No need to use your mother’s maiden name or avail yourself of other equally risible, cretinous, and hacker-friendly methods of password retrieval, methods that seem to be employed by almost all web sites. Hence, it can be said unequivocally that Pecunix operates on a “don’t-know-your-client” basis.

There is a fundamental privacy principle that any exemplary web site will hold fast to: authorization without identification. When it comes to logging into such a site you are your PGP key. And if you need multiple personae for different purposes, then you use a different PGP key for each persona. With Pecunix you have the option of using PGP for authorization providing unexcelled logon security, which is one of the reasons why Pecunix is also the issuer of choice for large-scale asset holding (but we’ll discuss security another day).

Wonderful isn’t it? Pecunix has always been by far the most impressive of the big three when it comes to privacy—impressive that is until you tried to create a Pecunix account and discovered that you couldn’t! And the reason you couldn’t was because you had disabled Javascript in your browser, and Pecunix wouldn’t allow you to create an account with Javascript disabled. Given the dangers of digital fingerprinting with the subsequent loss of anonymity that the use of Javascript entails, no one with an interest in privacy is going to take the risk. Hence, it was with a heavy heart that we said some time ago, “They stand head and shoulders above the competition in every other respect, but this one defect brings all their other good works to naught!”

In due course we received an email from Pecunix enquiring as to the nature of their sin, and the Prof told them in no uncertain terms what was needed by way of redemption. Despite our vast readership which must now number in millions—well, give or take six zeros—we had no expectation that Pecunix would accede to our request. But we’ve observed that Pecunix, unlike most web sites, responds well to criticism, and where it’s justified acts swiftly to remedy the matter. So we were not too surprised when we received an email from the “main man” at Pecunix, an email that contained the joyous news that Pecunix had repented—and we’re always prepared to welcome a lost sheep back into the fold.

It seems that Javascript is no longer needed in order to create and access a Pecunix account. Well, since “doing is believing”, the Prof started his sentinel, booted his Tor proxy, woke up Firefox, and then wended his way to Pecunixie land, www.pecunix.com. He arrived in Pecunixie land to be greeted by a scene from the Lord of the Rings, for the inhabitants of that fair kingdom had come under attack from some dark force. But those brave elven folk quickly rebutted the attack, and after burying their dead, and repairing a few minor dents that the Prof had discovered in the walls of their citadel, the Prof was able to continue with his allotted task. And yes, with Javascript disabled he was able to create and access a Pecunix account. Well done Pecunix!

1mdc: the way of all flesh!

And while we’re speaking of Javascript, when we tried to logon to a 1mdc account recently the logon form seemed different and it was only when we had clicked in our PIN and got no response that we realized that the logon form was indeed different and, even worse, needed to have Javascript enabled. “Bugger,” we thought, “we’ve just persuaded Pecunix to abstain from using Javascript, only to find that 1mdc has gone the way of all flesh.” Then we espied a small link at the bottom of the page pointing to the old logon form that does not use Javascript, and we thought that all might be well. But when we progressed a little further through the logon process we discovered that on the new security form Javascript was required and there was no corresponding Javascript-free option available for those users with an interest in privacy. So as long as 1mdc does not provide a Javascript free interface we recommend that you bid farewell to the land of free e-currency swaps!

Even worse, 1mdc’s new logon procedure requires the user to collect a new security code from his email account every time he logs on. This is extremely cumbersome and does not offer an improvement in security. For example, suppose there is a key-logger on your machine. It will record your 1mdc password as you type it in. 1mdc then insists you log on to your email account to collect a one-time security code to complete the login. But the key-logger will also record the name of the email account and the password as you login to collect the security code. Once a hacker knows your email account and password he will be able to collect the new security code when he in turn tries to login. So in adding this extra step 1mdc have added not to the user’s security but to the user’s frustration.

Extra security requires that the user performs some qualitatively different task rather than just doing more of the same. So requiring the user to select some items using the mouse will defeat basic key-stroke loggers, though not mouse-click loggers. But clicking on items with the mouse can be achieved without the use of Javascript, so there is no need for an increase in security to compromise privacy. To defeat mouse-click loggers, though not video surveillance, the positions of the elements to be selected can be randomized, so that a hacker cannot work out what character a user selected from the position of a mouse click on the screen. To defeat one-off video surveillance then “windowed password entry”, in which a randomly selected set of characters from the password rather than the full password, is entered each time, can be used—as is the case with Pecunix and many online banks. For the highest level of security a PGP challenge can be employed. Even if Big Brother bugs the entire room and rebuilds the entire operating system to record everything happening in the machine, the user simply records the text that has to be signed, takes it away to some other computer that does not have, nor has ever had, an Internet connection, signs the text on that machine and then brings the signed text back to the original machine. All that Big Brother’s spyware will see is the signed text which can only be used for a one-off access to the account.

The net effect of 1mdc’s changes to the logon procedure is to push 1mdc into third place for both privacy and ease of use.

Results of the Privacy Stakes

So for all of you freedom loving folks the results of the “Privacy Stakes” are as follows: Pecunix romps home, an easy winner, well ahead of the rest. In second place, limping badly following a fall at the “US Treasury” spread jump, comes e-gold. There’s concern as to whether e-gold has a broken leg, and the vet is performing an examination at present. We’ll let you know in due course whether e-gold recovers, or has to be “put down on compassionate grounds”! Unfortunately, 1mdc doesn’t come anywhere at present. Unless and until it stops forcing its users to enable Javascript it’s a non-starter. But if it did, then it would jump into second place well ahead of e-gold!

Now, that’s not to say that Pecunix is perfect. Could we say Nearly Perfect Pecunix? No, not quite yet. They are some areas where we’d like to see improvements, and we’ll expound on those when we get down to discussing details. But in the broad sweep of things, in regards to its motivation, its responsiveness, and its technical expertise, Pecunix is by far the best bet at present for the privacy-minded.

Practicalities

Of course, there’s a problem in practice. E-gold has the largest share of the market, with 1mdc a good second, and Pecunix coming well behind (and most web sites will take no e-currency of any kind in exchange for their merchandise). It would be nice to see Pecunix catch up a little, but that all depends on whether they have the business acumen to match their technical expertise.

Of course, any new entrant to the e-currency marketplace will have the same difficulties as Pecunix in gaining market share. We had a chat with JG about it one day. The ideas we floated were a virtual debit card offered with the same degree of anonymity as the e-currency account—sign up once and you get both; a pass-through mechanism for e-currency payments so that a merchant could maintain a unified accounting system with a single e-currency issuer; bundling of the e-currency interface with some other more popular product; and a user-friendly implementation of e-currency micropayments. But discussing these ideas in detail is something we must leave for another day.

The Buyer

If you’re a Herr W.S. Blooer or a Miss D.S. Dent open an account with Pecunix. Then you can easily pay for your web site and other basic Internet services with very little risk of losing your anonymity.

If, like us, privacy is nice in principle but not essential in practice then open accounts with all three e-currency issuers. Keep most of your gold with Pecunix (it will not only offer you greater privacy, it will also offer you greater security) and keep some working capital with e-gold or 1mdc. 1mdc have a very nice free swap facility with e-gold and now also, in one direction, with Pecunix as well—we can say this of 1mdc, “When the good Lord was giving out business brains, 1mdc was at the head of the queue! It’s a pity they don’t have the technical expertise to match.” If the site where you want to make a purchase doesn’t support Pecunix then use e-gold or 1mdc instead. With e-gold there is a good chance that Big Brother will be monitoring your transactions, though your anonymity should still be reasonably safe with a good proxy chain. With 1mdc your transactions are probably safe, though there is a small chance that Big Brother with get a digital fingerprint of your computer, so your risk losing your anonymity.

The Merchant

If you’re a merchant then having so many different payment systems is a pain in the neck. Apart from credit/debit cards, you’ll be looking at Paypal (well until they freeze your account that is!) long before you’ll consider any e-currency as a payment method. However, if you’re in a niche business and privacy is particularly important to your customers then it’s worth your while offering Pecunix as a payment method. JG pointed out to us that its value is not only the extra business that it would generate. If you wax lyrical about Pecunix’s privacy features then you’ll provide a focal point to differentiate your business from that of your competitors—some of Pecunix’s “street-cred” in this area is likely to rub off on you!

Micropayments, Micropublishing, andE-Currency

2006-07-29T14:30:00.000+01:00

The consequences of itemization and personalization—micropublishing—micropayment essentials—the telcos—the e-currency issuers—why anyone can have a go! ... Masochistium Clickium Hic!

Introduction

A micropayment is just a small payment, which, like its larger cousin, is handed over to a merchant in return for the supply of goods or services, and which, like its larger cousin, incurs an administrative overhead that is small relative to the transaction value. The cut-off level, at which micropayments transition into payments, is around a few dollars. Micropayments are ideally suited to the purchase of intangible web-based goods and services.

When JG gets going, he points out that if we look back over the past few decades there is one ever-present trend in retailing, a trend that consists of ever greater “itemization”. There was a time when many services were charged for at a uniform annual rate, even though different people made use of these services to different degrees. Goods were priced on the basis of what was needed to make a profit, on average, rather than by adding up the costs of production and adding on a percentage profit. In the absence of microelectronics and computers, measuring and recording service usage or constituent components was impractical. But now everything is being itemized—people charge for a service by how long it takes and the level of expertise of each person involved, and that newly installed water meter monitors how much water you actually use!

Personalization is a great driver in itemization. There was a time when people watched one channel on TV. Now there are hundreds, but viewers still have the inconvenience of manually changing from channel to channel. Soon a software agent will scan the Internet and download what it “knows” you like, and when you sit down to watch “TV” the software will assess your emotional state and present a personalised channel ideally suited to your current mood. Needless to say, you will only expect to pay for what you actually watch, and each programme will carry a separate charge.

The problem with itemization is how to pay for it. When there are many items delivered by the same supplier then the solution is easy. A computer records the items, adds-up the prices and you pay monthly, quarterly, or annually. The payment method used can have a high overhead which is easily absorbed, since the amount of each payment is relatively large. But what if you purchase just a few items of little value from a supplier—what if you read a few paragraphs of text in an online newspaper or magazine? For itemised charging to work in these circumstances the transaction overhead must be tiny. Welcome to the world of micropayments!

Micropublishing

Micropayments facilitate and are ideally suited to micropublishing: you can pay 20 cents for a recipe for some home-baked apple pie, or 10 cents for some rousing polemic against the war in Iraq.

Micropublishing is a potential goldmine, a vast untapped reserve. The conventional newspaper or magazine exists for the sole purpose that until now it has been impractical to pay for the individual articles you read from amongst the hundreds of articles that it contains. Perhaps you pay a few dollars for your magazine but only read 20%. But that means that 80% is wasted. In other words, for the price you’re prepared to pay the publisher could actually provide you with only that 20% and you’d still be satisfied, and he would pocket an enormous increase in profit. But it gets even better for the publishers, for the sum of the parts is far greater than that of the whole: publishers can charge a far higher price for articles when sold individually than when sold in bulk, as people are very insensitive to price when purchasing items of very small value—for example, for an article that should cost 2 cents most people would not bat an eye at paying 5 cents, but if the price of their newspaper jumped from $2 to $5 then they would be up in arms!

Another implication of micropublishing is the vast number of new content creators it brings into the marketplace. Very few people have what it takes to write a book, but many can write a few informative paragraphs on some topic in which they have some special expertise. Even if the number of potential readers is too small or the quality of the writing is too poor to merit conventional publication, search engines will find those paragraphs and micropayments will allow readers to pay for the pleasure, or otherwise, of reading the contents. Even though the Internet is overflowing with the most turgid prose, people still read it, and since people place at least some value on their time, they are effectively acknowledging that they are prepared to pay in order to read poppycock and piffle—after, all you’re reading this, aren’t you? A certain marketing man tells us that if you earn $30,000 a year, then you’re burning cash at the rate of about 6 cents per minute, even while you’re asleep, and so should be prepared to burn your hard earned dollars at a much higher rate to read something entertaining or informative while awake.

Micropayment Essentials

A practical micropayments system must embody two things:

Low transaction overheads
Ease of use

Low Transaction Overheads

Since the value of a micropayment is small, the overhead that the payment system incurs must be even smaller. This implies that transaction handling must be entirely automated—there must be no people in the loop. As long as people are only required in a support and maintenance role, then a very small profit made on each one of a very large number of transactions will pay for those people, and will lead to a profitable business.

Automatic transaction handling means that transactions must be irrevocable. Any system that allowed chargebacks would require manual intervention for a certain fraction of the transactions and this cost overhead would be prohibitive.

Ease of Use

The key issue as far as users are concerned is not security but ease of use. If a user is paying for each link that he clicks on then it is essential that he does nothing more than “click on that link”. If he has to do anything else, such as enter a password or even press a confirmation button, then the micropayments system is not viable. For a system to work there must be no alteration in the user’s browsing habits!

In practice, a site offering a usable micropayments system might simply add the price of the link to the anchor text. For example, if you were paying for this article you might see “Micropayments, Micropublishing, and E-currency ($1)”—okay, let’s be realistic (1c)! You’d click on the link, this page would appear, and one cent would be automatically deducted from your micropayments account, without any intervention on your part whatsoever!

Price Range Colour Coding

The first problem with the above solution is which currency to use. While gold is an obvious choice, it’s no use using milligrams of gold to display the price as the average punter has absolutely no feeling for what it’s worth!

As web users have many different national currencies a more generic approach would be to divide payments into a fixed set of ranges, and then code the payment into the anchor text using a small icon of a particular colour. A standard payments table would then show the approximate payment range based on the current gold price that each code represented in each national currency. For example,

Red > 2$
Orange 1-2$
Yellow 50 cents – 1$
Green 10 cents – 50 cents
Blue < 10 cents

would give a user immediate feedback on whether the price range was acceptable. A percentage figure contained within the icon could be used to indicate the exact price based on the range, so “blue 10%” equals 1 cent, “yellow 50%” equals 75 cents, and “red 500%” equals 10$.

When prices are small, the exact price becomes unimportant; a user just wants to ensure that he is not paying an unexpectedly large amount for an item. It is very easy to check colour coding that is embedded in a link. A user might decide, “I’m prepared to press on anything that isn’t red; if it’s red then I need to pause to see if it’s really worthwhile.”

So we feel that, with a bit of work, a simple and internationally useful system could be devised that would allow users to check the price in a nearly effortless fashion.

Security

Security is of very little importance when it comes to micropayments. Let’s take an example. Suppose you spend $150 a year on micropayment purchases and that on average once a year someone breaks into your micropayments account and appropriates the balance which averages $5. Would this “extra expense” be worth it for the convenience of simply being able to click on a link in order to make a payment, rather than having to type in a password every time? The answer for almost everyone is a clear “yes”.

The only thing that matters for users is the ability to place a limit on their possible losses from a micropayments system that operates at a comparatively low-level of security compared to those designed for standard merchant purchases. As long as users can set the limit according to how risk adverse they happen to be and the degree of inconvenience they find in frequently topping-up their micropayments account then all will be well.

Account Characteristics

There are many ways in which a micropayments system could operate. In this section we’ll outline a possible mechanism for operating a micropayments system and the sort of characteristics that an account might possess, demonstrating, we hope, that it’s relatively easy to satisfy the needs and address the potential concerns of user, merchant, and micropayment systems service provider alike.

Initialization

When the first payment on a site is made the merchant transfers the user to a page on the micropayments system’s web site. The user enters one very simple password, and presses OK. The form is sent to the micropayments system service provider (MSSP), who then gives the merchant permission to draw funds from the user’s account for a specified period of time, up to a certain limit, both of which were set by the user when the account was created.

As the user browses the site and clicks on links that incur payments, the merchant keeps a total and at intervals sends the total to the MSSP who debits the user’s account, credits the merchant’s account, and charges one or both a small commission.

Even though the amount of each payment is small no significant additional web traffic is generated, since the merchant simply accumulates the amounts owing until either the limit is reached, the user has stopped generating additional payments for some period of time, or the maximum period of time over which the merchant can collect payments has expired.

The merchant never knows the identity of the user since the merchant generates a payment identifier at the beginning of each session which is included in the form that the user sends to the MSSP, and which is returned by the MSSP to the merchant along with the payments limit and timeout information.

The merchant uses a cookie on the user’s computer to store the payment identifier, so that the merchant can separate payments into separate streams with a cumulative total held in the merchant’s database against each payment identifier (if the user deletes or modifies the cookie, the total owing is not lost, and a new session is started should the user continue to click on payment links).

For efficiency, the merchant could settle up with the MSSP on a daily basis, sending to the MSSP a single file containing a complete list of all payment identifiers and corresponding payments. The MSSP could then update the corresponding user accounts.

Termination

On a publicly accessible computer it would be important for the user to either delete the session cookie or indicate to the merchant that the session was at an end by pressing a “no more payments” button on the merchant’s site. But the potential problems here are less serious than those associated with sessions left open on a financial site where the sums available to be appropriated would be much higher.

Account Limit

When creating an account with the MSSP the user sets a limit on the maximum amount that can be in the account at any one time—the MSSP might default this to some low value, and might even set an absolute maximum. The account limit represents the maximum amount that the user could lose if security is breached. If the user attempts to fund his account above this limit then the funding transaction is rejected. If the user changes the account limit then warning messages appear stating that this is a low security account and the user should not put in it more by way of funds than he’s prepared to lose by way of peculation.

Timeout

Each session with a particular merchant could be time limited. Before the time limit expires the merchant must terminate the session and send a demand for payment to the MSSP. If access is typically from a home based computer and the user does not delete selected cookies then the timeout could run into weeks, so that the merchant steadily accumulates small amounts as the user browses the merchant’s site. If access is typically from a publicly accessible computer and the user spends a few seconds checking some stock market prices, then the timeout could be in minutes. There is a trade-off between storage and communications overheads. Short timeouts require the merchant to generate much more web traffic to and from the MSSP. Long timeouts require the merchant to maintain long lists of payment identifiers and associated payments owing. Irrespective of the user specified timeout, the merchant can terminate the session at any time, forward the current amount owing to the MSSP, and require the user to start a new payments session.

Single Payment Limit

The user could place a limit on the maximum value of any one micropayment. A user who did not want to spend more than 50 cents when clicking on any one link without specific authorisation could say so, ensuring that he is not charged $50 for a miss-colour-coded payment link (though the enforcement of this rule would be up to the merchant if only aggregate totals are sent to the MSSP).

Spend Rate

The user could limit the total amount that can be spent in any particular time period, say a day or a week. When starting a new session the limit sent to the merchant would be the lesser of the account balance and the difference between the spend rate less the amount already spent within the current time period.

Approved and Excluded Merchants

As micropayments systems lend themselves to paying for articles or downloading images and music, and users tend to have favourite sites, a user is very likely to use the system frequently, but with only a small number of merchants.

The user could specify that micropayments can only be made to, or can never be made to, certain merchants. This would allow the user the convenience of one-click micropayments for most purchases, while being able to revert to the “always enter a password” mode for others.

Account characteristics, such as the timeout, the single payment limit, and the spend rate could be customized for each approved merchant.

Record Keeping

Given that the amounts spent are small there should be no need for a conventional transaction history detailing the name of every link that the user has clicked upon and its cost. We suggest that the following information about a session should be sufficient for the user’s purposes:

Merchant’s name
Web address
Date
Time of first micropayment
Time of last micropayment
Total number of micropayments
Total cost of micropayments
Average cost of micropayments (derived)
Cost of highest value micropayment

The merchant’s name, web address, date and times would be sufficient to raise suspicion if anyone had gained unauthorised access to the user’s password. The number and costs of the micropayments would be sufficient for the user to judge whether he was getting value for money, and would make it easy to perform inter-site comparisons for the respective costs of accessing similar material.

By restricting records to totals, averages, and outlying values in this manner the storage requirements for those merchants who have millions of users browsing their sites on a daily basis would be kept to a minimum.

The Telcos

The Telcos have not yet developed useful micropayments systems. Typically, a merchant places a code against each item to be purchased. The user sends the code by SMS text or touch tone to the telco who returns an authorization code which the user then enters into a merchant form. This method is even more cumbersome than password entry, as two codes have to be typed in and there is a delay while the item code is authorized. It is totally unsuitable for micropayments.

However, it would not be difficult to automate this procedure. A Bluetooth USB fob plugged into the computer could talk to a Bluetooth enabled phone, and software could then send the codes back and forth automatically. When suitably equipped mobile phones reach a critical mass we can expect the Telcos to move into the micropayments marketplace.

The E-currency Issuers

It would not be difficult for an e-currency issuer to add a micropayments service to its existing portfolio. But the big three still require the tedious entry of passwords no matter what the value of the payment. The potential revenue from this market is vastly more than that available from either asset storage or conventional merchant sales: the reason is simply that in the long-term almost everything on the Internet is likely to come with a small price tag attached—this is the logical end point of itemization. It would solve the pressing and ever-growing problem of how to pay for the infrastructure that is needed to cope with ever higher bandwidth services—it’s a better solution than the “two-tier Internet” which is the only alternative on offer.

If they don’t get their collective acts together soon the e-currency issuers will be overtaken by the Telcos. And a micropayments service provides an ideal opportunity to be number one: even if the market is small to begin with, the e-currency issuer who is first on board is likely to retain the lion’s share of the market as it grows, and the “johnny-come-lately”s will have the difficult task of playing catch-up. Most of the potential merchants in the micropayment market place are unlikely to be using e-currencies at present, providing an ideal marketing opportunity for either Pecunix or 1mdc to claim the blue ribbon within this sector.

Because of the intrinsically lower security requirements of micropayments systems it would be unwise for an e-currency issuer to just add micropayment functionality to its existing service. That might damage its reputation for security in the asset holding and conventional merchant payment sectors. A sub-brand would reinforce the main brand while providing a sufficient degree of separation so that users would appreciate that the two payment systems offered very different levels of security—anyone for a Pecunix-Lite or a 0mdc?

An empty niche

It’s arguable whether there are any micropayment systems available at present that are easy to use for both merchants and their customers, and which provide a clear separation of payment and content—we don’t like what we’ve seen. And there are certainly no anonymous micropayment systems at present. So there is a definite niche here to be filled by anyone who is prepared to make a modest investment.

You don’t have to be an existing e-currency issuer to develop a micropayments system. You can take a leaf out of 1mdc’s book and piggyback your system on top of Pecunix, e-gold, or even 1mdc itself. With the interfaces provided by these merchants it’s easy to bolt on additional services, and since the big three show no interest in micropayments at present there’s a window of opportunity for any small enterprising organisation to make its mark. But don’t delay. It won’t be too long before the e-currency issuers, and indeed the Telcos, realise that they’re missing out on a very big opportunity, and start mining this seam of pure gold!

Where E-Currency and Digital Cash Meet

2006-07-26T20:45:00.000+01:00

Is digital cash so different from e-currency?—one needs an account and the other doesn’t—but what about transaction history?—nearly perfect processing! ... Masochistium Clickium Hic!

Is Digital Cash so different from E-Currency?

As we said in a previous blog entry anonymous digital cash is a wonderful thing. Now while conceptually it’s quite different from e-currency, when you look at how it works in practice the infrastructure begins to look very similar. For anonymous digital cash the double spend issue forces each exchange of a note to be verified by the issuer. So the issuer must be contacted. But this is just what every e-currency transaction involves; the e-currency issuer must be contacted. So while there are clear marketing advantages to promoting digital cash as a separate entity, it’s worth asking if an e-currency issuer could provide the same level of privacy as that provided by digital cash by altering the way in which it operates.

(We should say that there are some quasi-anonymous offline digital cash systems that don’t involve devices like smart cards, and which are anonymous in the case of no double spends. But if someone copies your digital cash note unbeknownst to you and spends it, then you and the transaction in which you spent the note would be identified. Apart from being dubious in respect of privacy these systems also assume that the possibility of being caught will prevent people from making double spends. Hmm! If you could make a few million on your computer right now, spent it, and only possibly be caught in the future would you do it? You wouldn’t. We wouldn’t. But our guess is that there are a sufficient number of people who would be tempted so as to make the system unworkable!)

One needs an Account, but the other doesn’t!

The most obvious difference between e-currency and digital cash is that to use e-currency you need to create an account whereas to use digital cash you don’t—you just need to verify each note you receive and this you can do anonymously. Now when an account is created some e-currency issuers, such as e-gold, require personal information to be entered, while others, such as Pecunix, do not. So while creating an account might be an inconvenience, it need not necessarily reduce your anonymity if you choose the right e-currency issuer—the Proxy chain that you use to verify a digital note is the same proxy chain that you use to create an anonymous e-currency account. So in respect of account creation there need not be any diminution in anonymity.

But what about Transaction History?

With digital cash there is no record of transactions as a note is passed from one person to another. But what about e-currency? Well if Tiffy pays Morpheus’ Undies Emporium $100 for her French frillies, the record of the transaction might look like “20-07-06 12:34 Transfer of $100 from account 827526 to account 927827 Order #: HG728”.

Now what information does the e-currency issuer need to keep for business purposes—rather than for Big Brother purposes? Well, the delightful and simplifying aspect of e-currency is that transactions are non-repudiable, so from a business point of view the e-currency issuer needs to keep no information whatsoever. Before and after the transaction the amount of e-currency issued remains exactly the same. From the point of view of external audit what matters is the match between the total e-currency issued versus the physical reserves in precious metal. A transaction in which the e-currency issuer buys or sells precious metal needs to be recorded. The cumulative commission charged on all e-currency transactions needs to be recorded. The current credit or debit balance on each account needs to be recorded. But records of the individual transactions in which e-currency moves from one account to another serve no useful business or auditing purpose.

So why do e-currency issuers keep transaction records other than to act as unctuous servants of Big Brother? Well, Tiffy wants a record of what she spends and Morpheus’ Undies Emporium wants a record of what it receives. Yes, but why don’t they just keep their own records? Well, there’s no good reason why not. Let’s suppose Tiffy makes the transaction “20-07-06 12:34 Transfer of $100 from account 827526 to account 927827 Order #: HG728”. When the e-currency issuer prints out the confirmation web page on Tiffy’s screen, Tiffy can save it to disk if she wants to keep a record. And Morpheus’ Undies Emporium will receive a POST transaction or an email containing the same information plus its order number all hashed together for the purpose of verification.

So an e-currency issuer who respects the privacy of its users could offer within its accounts configuration section a “tell no tales” check box. If ticked then the transactions for that client are never recorded. If, for example, Tiffy had ticked the box but Morpheus’ Undies Emporium had not, then the Emporium’s transaction log held by the e-currency issuer would contain the entry “20-07-06 12:34 Transfer of $100 from anonymous to account 927827 Order #: HG728”. Since the Emporium will have all Tiffy’s details stored in its own database against its own order number the Emporium has full details of the transaction.

This “tell no tales” facility makes an e-currency issuer’s database less of a honey-pot for the sort of mass surveillance that is in favour with today’s Big Brothers. Because an e-currency issuer’s database contains records in a uniform format it can be read and readily dumped into a “personal-networks analysis” computer program, whether one run by Big Brother (as seems to have happened recently in the case of e-gold) or Big Business. If one side of a transaction is suppressed then Big Brother will have to trawl through the databases of individual merchants. This is time consuming and ensures that Big Brother focuses on a small number of criminal suspects rather than playing peeping-tom and ogling the financial transactions of the population at large—well, at least until the metadata web is rolled out!

An e-currency issuer could provide a radio button in the account configuration section (or indeed on a per transaction basis):

Public
Private
Not on my side
Not on both sides

This provides the user with a range of options: “private” would be the default, implying that transactions are recorded and the transaction history is made available to both parties to the transaction; “public” would mean anyone could view the transaction history, an option that may be useful to some public bodies and organisations; “not on my side” would mean that the user’s side of a transaction is never recorded, but the other side is recorded as “private” or not at all depending on the other side’s preferences; “not on both sides” would mean that no record of the transaction is kept, with the implication that if both parties do not have the same setting then the transaction is refused. The “not on both sides” option should not cause any difficulties for merchants or buyers alike, since each gets information about each transaction by a web POST or by email, which allows them to update there own records. So with the “not on both sides” option in place e-currency effectively provides the same degree of privacy as digital cash. If Big Brother cannons through the door all he will find is lists of account numbers with current balances against them, but no information as to how those balances got to be that way, no information as to who has been doing business with whom.

The only downside we can see to the “not on both sides” option is from the point of view of buyers and small merchants. Larger merchants would automatically use the web POST mechanism to insert details of each transaction into a database in real time, and they could run their own reports against this database. But buyers and small merchants who rely on email notifications would just have a collection of emails from which they would have to manually extract the information.

But can we do better? Can we live in a perfect world? Yes we can! The e-currency issuer could record all transactions so that a user could see what’s been bought and sold, but could still prevent Big Brother from getting access to the data, even when Big Brother turns up at the door with a warrant. How is this magic accomplished? How could the e-currency issuer smile sweetly and say to Big Brother, “There is our transaction database, 100 Gb in size, containing complete details of every transaction, including IP addresses, going right back to the year dot. Take a copy. Do as you please. We have nothing to hide?”

Well, an e-currency issuer that allows users to store PGP public keys with their account details could very simply encrypt each user’s transaction with that user’s public key and store the encrypted transaction in its database. Then the only person who could view the transaction history would be the user, as only the user would have access to the private key. Imagine the joy of being a fly on the wall when Big Brother arrives to rifle the database of such a privacy-friendly e-currency issuer!

To view the transactions a user would first download encrypted transactions to his computer, with neighbouring transactions delimited by a separator. A simple program—one provided by the e-currency issuer or available on the Internet for free download—would then take each encrypted transaction in turn, decrypt it to recover the plaintext, and then concatenate the results together to reconstruct the original transaction log on the user’s computer.

Nearly Perfect Processing!

Now businesses are obliged to comply with the law, and the law invariably obliges them to make their records available for inspection. However, often the law does not stipulate what records a business needs to keep. Even if a business wishes or needs to keep adequate records for the purpose of external audit these records can often be uninformative as far as Big Brother is concerned. So if you, dear reader, run a business we suggest you divide your data into three categories: what you need, what the law requires, and what you keep for your customers’ convenience. For data in the latter category give the customer the option of not having it recorded or of having it encrypted with the customer’s public key. You could always sign the plaintext with your private key before encrypting it with the customer’s public key, so the customer would have evidence that you created and approved the transaction details should he ever need to raise a query in the future.

The nice thing about encrypting client transactions with the client’s public key is that even businesses operating onshore may be able to maintain client confidentiality in the face of warranted searches of their premises while still complying with the law. For businesses that operate offshore there is always the risk of Big Brother gaining access by illicit means, so the same principle applies. If transactions are always encrypted with one-time-keys when sent over the Internet and always encrypted with a public key whose private partner is unknown to the business when written to disk, then the plaintext is only accessible in memory for a very short period before being consigned to oblivion. An example of perfect transaction processing? No! Of Nearly Perfect Processing! Yes!

Digital Cash: Or how to make Big Brother ...

2006-07-26T20:40:00.000+01:00

How digital cash works—why security is not a problem—why privacy is unexcelled—the obstacles—digital cash as an add-on for the e-currency issuers. ... Masochistium Clickium Hic!

The Prof launches ProCash

What’s the most anonymous form of transaction? That’s easy. It’s a transaction that involves cash. True, a note has a serial number on it, but no one records that serial number as the note passes from person to person—at least not yet, and the story about a future that contains RFIDied notes owned by RFIDied people must wait for another day.

So is there a digital equivalent to paper notes and metal coins? Well, “yes” and “no”. “Yes” in the sense that some people have created digital cash systems, but “no” in the sense that very, very few merchants are prepared to accept any kind of digital cash. The main reason is that no candidate digital cash company has been prepared to burn vast sums of cash—the ordinary kind—to promote the system until it reaches a critical mass.

Various types of digital cash systems have been devised, some anonymous and some not, some online and some offline. We don’t approve of those systems make use of smart cards or similar devices as there is no way to verify that such devices preserve the user’s privacy. And, of course, we certainly don’t approve of those systems deliberately designed to identify their users!

If an anonymous digital cash system became widely used it would be the single must important factor in preventing Big Brother from snooping on people’s financial affairs. It’s actually very easy to create and issue digital cash. Let’s suppose that the Prof decided to set himself up as an issuer of anonymous and untraceable digital cash using the brand name ProCash. Then all he needs is a PGP public key pair. He generates a unique set of serial numbers and allocates various amounts of either fiat or metal currencies to those serial numbers. For example, here are three digital notes:

Digital Notes

ProCash 183873 $100
ProCash 258323 £100
ProCash 397625 100 grams gold

Sitting as character strings on the Prof’s computer they’re worthless, but once the Prof signs them with his private key then they are as good as...as good as the Prof’s word. They become like IOUs.

Suppose I’m a merchant running Morpheus’ Undies Emporium and I sell my silky merchandise in return for ProCash USD. Tiffy espies something nice in my virtual window and wants to purchase something French and frilly for ProCash $100—expensive, non Madame, zit’s cheap at the price! Well, Tiffy pays ProCash $100 in some suitable form plus a small commission, and then ProCash issues Tiffy with a ProCash note “ProCash 183873 $100”.

Now the first thing to note is that Tiffy can be sure that the note is genuine. No one can forge ProCash notes since no one has access to ProCash’s private PGP key—and Tiffy can verify that the note is genuine using ProCash’s public key. Now if Tiffy changes her mind—not very likely with silk in sight—she can return the note to ProCash and get $100 in exchange. The risk here is no more or no less that than encountered in dealing with any financial institution, be it an e-currency issuer or a bank.

So far so good. But the Prof was not born yesterday, or the day before that for that matter. The Prof realised that while no one can forge a ProCash note, anyone can duplicate it. In fact Tiffy might duplicate it millions of times. The result would be that the ProCash note would be subject to inflationary pressures that would make the President of Mupoobay Land jealous, and ProCash would quickly go bust. So in the T&Cs of ProCash there is a little clause that says that where multiple instances of the same note are passed to ProCash for redemption only the first instance will be honoured. It is the responsibility of the recipient of a note to ensure that it has not been duplicated. With this clause in place the Prof gets around the “double spend” problem that dogs all digital cash systems. He simply keeps a list of the valid notes in circulation and removes them from the list as they are redeemed.

Now Tiffy, in the course of purchasing that new acquisition to adorn her nether regions, sends her note to me at Morpheus’ Undies Emporium. Now I have a little problem here. ProCash knows the note is valid; Tiffy knows the note is valid; but I don’t. What if Tiffy had made millions of copies and had been purchasing undies left, right, and centre with the duplicates. What if when I go to redeem the note ProCash says “tough cheese”!

Now of course the Prof had the foresight to help me out in this little dilemma. And to do so he instituted a free note swap. Anyone who possesses a ProCash note can send it to ProCash and if the note is valid ProCash will issue for free another note of exactly the same value. So now when Tiffy sends me the note, but before my web site tells her that the note has been accepted, I send the note to ProCash. ProCash issues me with another for the same value. Now I know that I have a valid ProCash note for $100, so I can wrap those undies in some nice pink tissue paper and dispatch them to Tiffy post-haste.

Since all these operations can be automated a digital cash system is easy to set up and to use.

Security

There are no special issues with digital cash as far as security is concerned. Given the rapid turnover of digital cash one would expect it to be fully backed by assets of equivalent value.

Privacy

This is where it gets a little more interesting. Let’s say that Tiffy purchases her note for some e-currency issued by ECI (yes, it’s fictional). ProCash might record this as: “ProCash 183873 $100 for $101 from account Tiffy at ECI from IP 121.45.98.198”. This record contains quite a lot of information about the transaction. In particular, it lists the source of the funds.

When I do a swap the information recorded might be: “ProCash 183873 $100 swapped for ProCash 832637 $100 from IP 76.276.28.176”.

When I buy a box of silk undies with ProCash I pass the note on to the supplier who in turn passes in on to someone else. Eventually, the note will be redeemed, which ProCash might record as: “ProCash 849898 $100 for $100 to account JG Publications at ECI from IP 97.833.973.834”.

So the transaction log held by ProCash might look like:

ProCash Transaction Log

01-07-06 ProCash 183873 $100 for $101
From account Tiffy at ECI from IP 121.45.98.198

02-07-06 ProCash 183873 $100 swapped for
ProCash 832637 $100 from IP 76.276.28.176

05-07-06 ProCash 832637 $100 swapped for
ProCash 636394 $100 from IP 375.48.376.26

10-07-06 ProCash 636394 $100 swapped for
ProCash 849898 $100 from IP 486.376.927.27

15-07-06 ProCash 849898 $100 for $100
To account JG Publications at ECI from IP 97.833.973.834

Now you can see why the Prof is beginning to spoil Big Brother’s plans for mass surveillance. During the intermediate steps when notes are exchanged the only information that is available about the transaction is the IP address used to swap the note, and this could be hidden behind a proxy chain making the participants in the transaction anonymous.

However, the Prof respects people’s privacy so he only keeps information that is needed for business purposes. There is no need to record the IP addresses associated with the swaps: ProCash receives a note, sends a new note, and the recipient presses a button to acknowledge safe delivery of the new note. Equally, as input and output transactions are non-repudiable there is no need to record the IP addresses once the transactions have been completed. So the transaction log held by ProCash might look like:

ProCash Transaction Log

01-07-06 ProCash 183873 $100 for $101
From account Tiffy at ECI

02-07-06 ProCash 183873 $100 swapped for
ProCash 832637 $100

05-07-06 ProCash 832637 $100 swapped for
ProCash 636394 $100

10-07-06 ProCash 636394 $100 swapped for
ProCash 849898 $100

15-07-06 ProCash 849898 $100 for $100
To account JG Publications at ECI

But Procash has no interest in recording information about what is swapped for what. Just the status of the individual notes is all that is required. So at the beginning of the transaction chain ProCash’s business records might look like:

Business records at beginning

01-07-06 ProCash 183873 $100 for $101
From account Tiffy at ECI

ProCash 183873 $100 Issued
ProCash 832637 $100 Unissued
ProCash 636394 $100 Unissued
ProCash 849898 $100 Unissued

and when the chain is complete:

Business records at end

01-07-06 ProCash 183873 $100 for $101
From account Tiffy at ECI

15-07-06 ProCash 849898 $100 for $100
To account JG Publications at ECI

ProCash 183873 $100 Redeemed
ProCash 832637 $100 Redeemed
ProCash 636394 $100 Redeemed
ProCash 849898 $100 Redeemed

All that has happened is that the issuing and redeeming transactions are recorded and the individual notes move from a status of “Unissued” to “Issued” to “Redeemed”.

If ProCash wishes to boost its credentials by employing an external firm of auditors to report on its business, everything that an auditor is interested in is present in the business records. All flows of funds into and out of the business are recorded so changes in assets can be determined. A complete list of all notes currently issued is available so the current liabilities of the business can be calculated.

But we can do even better as far as privacy is concerned. What if a user is worried that ProCash may be a Big Brother sting operation and is recording IP addresses. Now there is nothing to stop anybody setting up as an independent digital cash swap shop. Let’s say The Swap Shop sets up in business as an independent verifier of ProCash notes. So instead of swapping my note directly with ProCash I can send my note to The Swap Shop. The Swap Shop sends the note to ProCash, which sends a replacement note back to The Swap Shop, and then The Swap Shop sends it to me (for a small commission paid in ProCash). So if ProCash were a Big Brother sting operation the IP addresses that it would record would be those of The Swap Shop, and completely uninformative. In practice The Swap Shop will keep a pool of notes of different values which it knows to be valid, so when it receives a swapped note back from ProCash it will not send that note to its customer, but instead one of equivalent value drawn at random from its pool.

Clearly there can be many swap shops, and, like newsagents that only need to record how many newspapers they’ve sold, all that these swap shops need to do is to record how many notes they have verified. Even if The Swap Shop were collaborating with ProCash in recording IP addresses, others would not. So the anxious whistleblower could swap a note any number of times with different swap shops to make sure it was not traceable by Big Brother. The integrity of swap shops is easily monitored since it’s a simple matter to select at random notes received from a swap shop, and verify them directly with ProCash. If ProCash concluded that the note is not valid because it had been double spent then the business of the associated swap shop would collapse overnight. So in this scenario we could expect to see a number of swap shop verifiers spring up, who regularly verify that swap shops are not cloning notes. New swap shops would be regarded with suspicion at first and would initially have to work at low volumes and with small denomination notes until their trustworthiness was established. Swap shop verifiers would be in a position to offer insurance policies against fraud by individual swap shops so that customers would be able to receive compensation in the case of fraud. Since swap shops with the highest rating would attract the most business it would be in their interest of swap shops to encourage verification by well established verifiers.

Secondary currencies can be derived from ProCash. For example, 1mdc receives Pecunix or e-gold and then issues a 1mdc equivalent in return, an equivalent that can subsequently be used in transactions. This makes 1mdc a secondary or derived e-currency. Whereas Pecunix and e-gold have the overheads of storing and auditing physical gold bars, 1mdc is an entirely electronic operation. In the same way a digital cash reseller can receive a ProCash note and issue its own digital cash in return without incurring the overheads associated with issuing and redeeming that ProCash incurs. And just as we would like to see many secondary e-currency issuers like 1mdc to provide more opportunities for privacy so too we would like, in this hypothetical scenario, to see many secondary currencies derived from ProCash. Secondary currencies are useful in distributing the processing burden of verification. ProCash is likely to focus on issuing higher value notes, leaving it to derived secondary currencies to produce notes of smaller value. In practice, the functions of swap shop and secondary currency issuer are likely to be combined in many cases.

With digital cash we have the best of both worlds. Good business records for the purpose of audit, but no records of cash swaps. So transactions using digital cash can be just like their paper cousins: invisible to Big Brother’s Sauron-like eye!

Obstacles to overcome

So digital cash is easy to set up, is as secure as an e-currency, and provides an exquisite level of privacy. But there are two problems.

The first problem is the same as that of any e-currency that’s a new boy on the block: without a substantial market share merchants won’t offer it as a payment method; and without it being readily available as a payment method it won’t increase its market share. One way around this obstacle is to burn a modest amount of capital in return for a high degree of penetration in specific niche markets. For example, Internet gaming already has some niche payment systems that aren’t used elsewhere. If you can add enough niches then in time your digital cash may become mainstream, but it’s very hard work.

The second problem is that the degree of privacy that digital cash affords causes Big Brother to ..., and to assuage his suffering he is likely to take drastic action, like banning all merchants operating within his domain from offering digital cash as a payment method. The way around this obstacle is a third-party payment chain, which works well and is reasonably cost effective for non-repudiable transactions, but that’s for another day.

Digital Cash as an E-currency Add-On

There is one group of businesses that are ideally suited to offer digital cash, and they are the existing e-currency issuers. The important factor here is the difference between setting up a digital cash operation from scratch and the cost of providing it as an additional service for an existing e-currency issuer. The marginal costing to an e-currency issuer is nominal. The issuer already has the technical infrastructure in place. The programming requirements are negligible. More importantly, if the e-currency issuer insists that the purchase and redemption of digital cash takes place using its own e-currency, then the process simply becomes one of internal bookkeeping. The marginal cost of issuing, swapping, or redeeming is no more than the cost of a few web page accesses and the running of a few scripts against a database. Hence, the commission charged for issuing a note can be very small.

There are a number of advantages for an e-currency issuer in adding digital cash to its portfolio. We had a chat with JG about the marketing potential of digital cash. We came up with the following ideas.

Digital cash becomes a marketing plus for an offshore business that, like Pecunix or 1mdc, is selling itself on its privacy credentials. It provides a “golden opportunity”—sorry for the awful pun—for an e-currency issuer to overtake e-gold. Much as we like e-gold for boldly going where no financial institution had gone before, we feel it has probably made a strategic mistake by being based onshore. It’s highly improbable that it will ever offer digital cash, and indeed it has already made negative comments about digital cash on its web site. And the US government would go “ballistic” if e-gold ever attempted to do so. Given the fractious relationship that already exists between e-gold and the US government, e-gold seems very keen to calm the waters. The danger for e-gold is that it is forced to operate on a know-your-client basis or even to become another Paypal. Even if it retains the distinction of offering non-repudiable transactions it would be operating on the same ground as the big boys in the world’s financial marketplace. These players have vast amounts of cash to burn by way of advertising and promotion and could easily step in and offer alternative e-currencies that would rapidly eclipse e-gold. The most likely scenario would be that after a slide in its fortunes e-gold’s assets and technology would be acquired by a major player that would then market them under its own brand name—anyone for MicrosoftGold! So should e-gold be forced to operate on a know-your-client basis its star is likely to fall very rapidly.

So for those e-currency issuers who operate offshore there is the opportunity for future press coverage to read “while Pecunix, 1mdc, and e-gold all offer e-currencies, in addition Pecunix and 1mdc offer digital cash”. Think of the impact that this sort of statement makes on newbies to the e-currency market. It makes Pecunix and 1mdc seem more substantial than e-gold.

People with an interest in privacy will be attracted to digital cash so it provides a new stream of revenue. As there is no digital cash system of comparable size to the e-currency issuers it is easy for an issuer to leverage its position within the e-currency market place to become number one in digital cash. And we all know the marketing advantage of being number one irrespective of the quality of the product on offer—remember VHS and Betamax? How important digital cash will be in the world’s financial system in the long term is impossible to forecast, but if it does take off in a big way then the small cost of positioning oneself as number one right now could yield an “Intel” or “Microsoft”-like payback.

If customers with an interest in digital cash wished to have notes issued or redeemed then they would need to open an e-currency account with the issuer, which would boost the issuer’s mainstream e-currency business—once someone has gone to the trouble of opening an e-currency account and has put some funds in it they are likely to use it. Therefore the introduction of digital cash would provide a means of taking market share away from competitors.

The same script provided by an issuer to a merchant for a customer to make an e-currency purchase could also be used to make a digital cash purchase. This would be attractive in gaining new business as the merchant gets both an e-currency and a digital cash payment system for the same amount of effort.

While many of these prospective benefits are small we feel that in total they probably outweigh the marginal cost of adding digital cash to an existing e-currency operation.

Can you trust the PGP Corporation with your Data?

2006-07-22T18:20:00.000+01:00

What’s gone to that great computer room in the sky—why relativistic software that would do Einstein proud doesn’t always please—why what goes in doesn’t always come out, easily—why size really matters, honestly—why Luigi is invoicing the PGP Corporation for his doctor’s bill—why the PGP Corporation could do a great deal better! ... Masochistium Clickium Hic!

The Great Computer Room in the Sky

Now once upon a time our friend Luigi was a fan of the software produced by the PGP Corporation. He would use the latest version of PGP Desktop Professional, currently version 9.0, to store his data on an encrypted virtual disk.

After having suffered a few major data losses early on in his computer career Luigi had become careful. At the end of each day he would perform an incremental backup of his data to a USB memory stick containing a second PGP virtual disk. At regular intervals he would back-up his data to a PGP self-decrypting archive stored on an external disk that he kept onsite, and less frequently from that external disk to an external disk that he kept offsite (he even used a pair of disks for offsite backup so that his data was always physically present at two different locations at any one time). And he maintained hashes of his backup files and tested them regularly to ensure that they had not become corrupted. All in all, Luigi had the makings of a good systems administrator.

So when one day a thunderstorm interrupted his uninterruptible power supply and the ghost in his machine left for that great computer room in the sky, Luigi was annoyed but not despondent. After all, with backups generated by such a sterling product developed by such a large and reliable organization as the PGP Corporation what was there to worry about? Ah, what indeed dear reader!

Relativistic Software that would do Einstein proud!

Let’s join Luigi as he begins his quest for the holy grail of restored data.

Now-a the most-a recent backup is-a my onsite-a backup. So let’s-a copy the SDA to my new computer. Wow! It’s-a big file. ... Takes-a the time.

Now double click on the SDA and off-a we go. Hey, where’s-a the password screen? Maybe I no double click proper. So let’s-a press Enter instead. Nothing! Oh! Bugger-a! Computer’s-a locked up. Okay, so try Ctrl-Alt-Del to reboot. Ah! Shit-a! Even Ctrl-Alt-Del not-a work. Try hard reset.

Run SDA again. Nothing! Nothing! Nothing! Wait a few minutes. ... No! It’s-a still doing nothing. SDA must-a be corrupt. Have to go get the offsite backup. What-a pain!

Some days passed—dataless days for our valiant hero—before he got hold of the offsite backup. Let’s join him again.

I-a lost-a whole month of data. It-a just as well I keep-a the offsite backup or I lose everything. Okay, let’s-a double click on the offsite SDA. No! No! No! I don’t believe it. Nothing! Computer frozen again. What’s-a the odds? Two-a backups corrupted, even though I-a test each one after I create it! Very suspicious. Check-a the hash I-a make of offsite SDA. I don’t believe. Hash fine. Offsite backup not corrupted. Check-a the hash I-a make of onsite SDA. Again, hash-a fine. Onsite backup not corrupted. Ah! Maybe PGP software corrupted. I-a reinstall and try again.

Shit-a! Shit-a! It-a still no work. I have-a backup copy of PGP software. I-a try to reinstall from that. ... Not again! Still nothing! But this same CD I-a use to install PGP on previous computer where-a everything work-a fine, and I-a using the same version of Windows!

Shall we put Luigi out of his misery and explain what’s gone wrong? Now when you double click on a PGP SDA the password entry screen pops up immediately—well, it pops up immediately apart from those computers on which it doesn’t pop-up immediately that is!

We had a theory that the reason for this delay is all down to the increase in processor speeds. If electrons are travelling at relativistic speeds close to the speed of light then they will experience time dilation effects. So, perhaps some whiz-kid in the PGP Corporation decided to add a time dilation calculation into the software. That would explain why a password screen that normally appears within half a second can take the order of 5 minutes to appear on some machines. We suggested this to the Prof, but, sadly, he wasn’t at all impressed with our theory. But he’s patient with us non-technical types, so he banged a few buttons on his calculator before announcing that “defects in the crystal lattice would certainly not allow electrons to travel at 99.83% of the speed of light”—hmm, ah, well, there goes our Nobel Prize! Let’s just call it a feature!

More realistically, it seems that the problem relates to the way different computers handle large executables. Given two computers running the same version of Windows, with the same amount of physical memory and swap file size, one may start executing the executable immediately, while the other first makes a copy. This would explain why the extent of the delay before the password window appears is proportional to the size of the SDA.

Now during the time that the SDA is communing with Einstein’s ghost the computer is frozen, giving the impression that it has crashed. Very few people are going to sit around for five minutes looking at a frozen screen on the off-chance that some kindly deity will step in and unfreeze it. Most people are going to reboot. And after a few equally unsuccessful attempts they are going to conclude that they have lost their much cherished data for good, and will soon be searching eBay for a voodoo doll with “PGP Corporation” stamped on the front!

Now since a PGP SDA is the only place where most users are likely to encounter multi-gigabyte executables it would be nice if the PGP Corporation forewarned a user in the documentation that the user’s “crashed” computer had not really crashed. We explained to Luigi that his SDA could still be used. There was a look of horror on his face for a moment as he tried to recollect whether he had wiped the “non-working” SDAs. Fortunately for Luigi—and we suspect for the PGP Corporation as well—he had not!

What goes in doesn’t always come out—easily!

So let’s join Luigi again as he waves his magic wand over his SDA for the second time.

I-a start the onsite SDA again. I-a note the time. ... One minute, nothing. ... Two minutes, nothing. ... Three minutes, nothing. ... Four minutes, nothing. ... Five minutes, nothing. Ha! Now-a the password screen appear. Ah! I-a waste so much time. These PGP Corporation people. Slime-a! Slime-a! Slime-a! Type in-a password and off-a we go. It’s-a big SDA so it-a take-a long time to decrypt, maybe half-a hour. So-a I do some work. Come-a back later.

Okay, let’s-a have a look. It-a should-a be done long ago. What’s-a this message, “Filename exceeds maximum length – try decrypting to the root of the volume.” Oh, no!

Now we all save web pages to our hard disks. And some of these web pages have rather long titles. And these rather long titles are used as the default file names. Now PGP will create an SDA using files with long file names without any difficulty—it doesn’t matter what directory the files are in. But when it comes to decrypting an SDA it’s a different matter. The SDA must be in the root directory of some partition if a filename exceeds a certain length. Otherwise, the poor user is forced to cancel, move the SDA, and start all over again.

Luigi’s response, “Why-a they-a not-a tell me this?” Why indeed! Given that it takes the order of 30 minutes to decrypt a large SDA, it’s not the sort of task Luigi—or even you dear reader—would wish to repeat too often! We explained to Luigi that product testing is not one of the PGP Corporation’s strong points.

Wouldn’t it be nice to have a little message during the encryption process telling the poor user that the SDA can only be decrypted from within a root directory? Wouldn’t it be nice if a little flag were set in the SDA so that the executable could inform the poor user that the directory in which he is attempting to decrypt the SDA is a “no-hoper” at the very beginning of the decryption process, and not 20 minutes later when the decryption process first encounters an “unsuitably” long file name? Of course we suffer from the strange conceit that software, even if it is not user friendly, should at the very least not be downright malicious, malevolent, and take a perverse pleasure in torturing its users—a conceit that’s clearly not shared by the PGP Corporation.

Size really matters!

Let’s rejoin Luigi and his ever increasing blood pressure!

Root directory. Start-a the SDA. Wait-a the five minutes while it’s-a communing with-a nature, or whatever it does. ... Now enter password. Now go away for-a long time while it-a maybe decrypt, or maybe not decrypt!

Ah! It’s-a done. Success! Four days! Four days to restore a backup of my data! Now let’s-a create a new PGP virtual disk. ... Okay, that’s done. Now let’s-a copy the backup files from the decrypted SDA to the virtual disk. Here-a we go. That little sheet of paper flying across from one-a folder to another. Who-a needs-a goldfish when he’s-a got-a Windows file copy?

Wow! It’s-a taking a long time with this file. Must-a be big. Maybe I leave it a little bit. A watched-a file-copy never-a finish!

Okay, I’ve-a had-a lunch and taken my blood pressure medication. Maybe I-a invoice PGP Corporation for my doctor’s bill. It’s-a been copying for over hour. Should-a be finished long, long time ago. No! No! No! It’s-a still copying the same file. Oh, no! It’s-a only a 50 Mb file. Should-a copy in a few seconds. I cancel. ... Now Windows it’s-a locked up! Try Ctrl-Alt-Del. It-a does bugger-all! Hard reset. ... Logon on. ... Nothing! Screen frozen. It-a look like PGP bugger up Windows operating system. I-a wait. ... One minute. ... Two minutes. Ah! It’s-a coming back! Message from Windows say it has reinstalled drivers and must restart. It seem this PGP it-a crap all over my registry. Reboot.

Now-a only one thing remain-a to do. Only one-a thing I need to do to-a be happy, to-a lower blood pressure. And this-a thing is to delete all software produced by PGP Corporation from my computer!

Shall we tell Luigi what’s gone wrong. Well, Luigi’s computer happens to use an SIS IDE driver. And...and...PGP virtual disk does not work on computers with SIS IDE drivers. Well to be fair it does work as long as your files are small. If you’re one of those strange people who wants to copy files larger than about 20 Mb—a music file, or, perish the thought, a PGP SDA file, for example—onto your virtual disk, then PGP will throw a tantrum and crash Windows (and if you backed up the PGP virtual disk file instead of first copying the contents to some other medium then...then you’re stuffed—though we’re sure you’d think of a more energetic expletive should it ever happen to you!).

If you’re lucky Windows will repair itself after the hard reboot. If not, then you’d better have a system image tucked away somewhere, or have a spare few days to hand so that you can reinstall Windows and all your software.

We explained to Luigi that product testing is not one of the PGP Corporation’s strong points—hmm! hmm! A glitch in the Matrix, or at least in that portion of it that passes for neural matter within the “Testing Division” of the PGP Corporation! They may not know how to test their software, but they’re certainly experts at testing their users’ patience!

For on-the-fly encryption Luigi is now very happily using TrueCrypt—its developers seem to have mastered the art of copying files greater than 20 Mb to a virtual disk! Luigi’s one question to us—in between gulping down his pills for high blood pressure—was, “How’s it-a possible for an organization as big as PGP Corporation to produce such a crap product?” Hmm! Difficult one that. If the PGP Corporation was a “one man and his dog” operation then all would be forgiven, but it’s not. It’s big, and its products are targeted squarely at the corporate sector, a sector that has a habit of getting a little testy when software doesn’t work straight out of the box.

It’s very difficult to envisage how a large corporation could have such a poor testing regime, one that allows the litany of sins, both of omission and commission, described above to get out the door. While no product is going to run on every custom-built box, well-tested products from major suppliers should at least run on the standard boxes produced by the main manufacturers. If you’re a company producing encrypted file system software, then you develop relationships with the developers of hard disk drivers, and you test them with your product while those drivers are still in beta, so that when a driver is released and used by the PC manufacturers you know that it will work with your product.

Much as we like the PGP Corporation, even in these post Zimmerman days, their report card must state, “Could do a great deal better!”

E-Gold: Passphrases

2006-07-01T11:25:00.000+01:00

Why “Timmy”, “Timothy”, and “123456789” won’t do—why “Timothy1” and “Khsu7nnH2ghgZ” would do, but not very well! ... Masochistium Clickium Hic!

Now why, you might ask, do you need two passphrases. Well, it’s for security purposes. One thing you’ll find with most e-currencies issuers is that they take security far more seriously than any bank or credit card company. And if you think e-gold is bad, just you wait till we get onto Pecunix. It’s easier to break into Fort Knox—pure conjecture on our part, of course—than to sign-in to a Pecunix account!

But let’s not digress too far from the subject at hand. The “Alternative Passphrase” is only needed for transaction verification purposes, whereas the “Passphrase” is what you use to sign-in to your e-gold account.

Now when is a “passphrase” a “passphrase”? The answer in the case of e-gold is when it has at least six characters, and contains both letters and numbers. So “Timmy”, “Timothy”, and “123456789” do not pass e-gold’s test, the first being too short, the second being deficient in numbers, and the third being deficient in letters. But “Timothy1” would pass. Of course, it’s a poor choice of passphrase, one that is easily cracked by a dictionary attack. Now “Khsu7nnH2ghgZ”, or something similar, would do nicely—nicely that is until you forgot it, or wrote it down so that you wouldn’t forget it, an action which might well ensure that someone else came to remember it! Ah! You can never win!

RIPA Part III - Again

2006-06-30T16:55:00.000+01:00

Why Mr. Reid might be a terrorist—why you can’t “encounter” what you can’t see—why human intelligence is an optional extra for government ... Masochistium Clickium Hic!

On Good Excuses

With regard to RIPA Part III the government is being either naïve or disingenuous. The legislation will not work as intended for the simple reason that it is predicated on two assumptions, neither of which is valid.

The first is that it assumes that “criminals and terrorists” cannot produce a good excuse as to why they have in their possession encrypted material for which they do not possess the decryption key. For example, what if following the introduction of RIPA Part III we were to encrypt this blog entry using standard PGP encryption, email it to the home address of one Mr. Reid, and then tip-off the anti-terrorist squad that Mr. Reid was a terrorist operative (not an unreasonable assumption given the subversive answers that the same Mr. Reid invariably gives to Radio 4 listeners!) Mr. Reid would doubtless delete our spam email, but it would still be physically present on his computer disk, and accessible by means other than his email program. Should the anti-terrorist squad follow up on this “reliable source”, a basic forensic scan of Mr. Reid’s disk would reveal the telltale PGP headers, indicating that Mr. Reid was indeed in possession of encrypted material. And he would be unable to make the plaintext available. The question is would Her Majesty, and the rest of us, then have the pleasure of seeing Mr. Reid do time with, say, some psychotic, chair-leg wielding, and racially prejudiced cell-mate for two years?

While such a prospect would doubtless bring pleasure to many, it would not be fair, for Mr. Reid, miserable sinner though he may be, is not responsible for the emails people send him, and we could hardly expect a government minister to be possessed of the “intelligence”—be it intra- or extra-cranial—to locate and securely delete emails that his email program already tell him have been deleted. Assuming that Mr. Reid cares to extend a similar courtesy to the population at large, then what is there to prevent the “criminals and terrorists” from using the email storage area as a safe repository for encrypted material? Or, what if Mr. Reid regularly downloads some newsgroup, say “How to smile, and smile, and be a villain.” If some of the posts are encrypted, are we to oblige Mr. Reid to decrypt them? And if not, then might not “criminals and terrorists” avail themselves of this facility.

In short, with the increased use of encryption there are simply too many sources from which the guilty and the innocent may wittingly and unwittingly download encrypted material to their computers.

On “now you see it, now you don’t”

The second assumption is this: “Even though we may not have the keys needed to derive the plaintext from the encrypted material, we will always be able to detect the presence of the encrypted material.”

Paragraph seven of the government’s summary begins with the following sentence, “Over the last two to three years, investigators have begun encountering encrypted and protected data with increasing frequency.” Ay, there's the rub, investigators have begun “encountering” encrypted data. Part III of the Act rests on the singularly risible assumption that “criminals and terrorists” will continue to allow investigators to “encounter” encrypted material.

But this will not be the case. Software programs that are easy to use, that are available on the Internet for free, and that have already been downloaded by millions of people make it possible for data to be encrypted in such a manner that it is undetectable by the analytical techniques available to forensic science. People who use such software will never be caught by the proposed legislation should it be implemented.

Software of this type provides an “aleatory defence” by making encrypted material indistinguishable from random and pseudo-random data. For example, a USB memory stick containing this type of encrypted file system looks exactly like a USB memory stick that has been securely erased. For example, hidden volume filesystems make it impossible to detect whether a hidden volume is, or is not, present in any particular instance, so that investigators can only demand the encryption key to the outer volume.

In the absence of RIPA Part III “criminals and terrorists” have been content to use methods of encryption that shout out loud and clear “encrypted material—come and get it” by the presence of characteristic headers—as is the case with PGP. With RIPA Part III in place these same “criminals and terrorists” will simply move over to non-disclosing software, whose encrypted output investigators will never “encounter”. For more information on non-disclosing software see our blog entry at "No Keys" Campaign.

In summary, short of banning the use of personal computers there are no technical methods available to law enforcement authorities to prevent material from being encrypted in such a manner that it either cannot be discovered or the owner can plausibly deny knowledge of the means to decrypt it.

On Human Intelligence

There is, however, a reliable and well-proven method of tackling the “criminals and terrorists” should the government ever be minded to use it. It’s not glamorous, and it doesn’t lend itself so easily to mendacious “spinnery”. It’s called “human intelligence”. Neither the security services nor the government possess it at present. In the case of the former the deficit might be remedied by additional financial resources; in the case of the latter, we are sad to say that the only word that comes to mind is “irredeemable”.

Why your Browser is cheating on you

2006-06-16T14:10:00.000+01:00

You’ve installed that proxy chain, you’ve done everything correctly, by the book—you’ve called up your favourite search engine, entered your favourite topic, and soon you’re clicking away on one link after another, sure in the knowledge that Big Brother doesn’t know what sites you’re visiting—right?—wrong!—some of those clicks will be putting a smile on Big Brother’s face. ... Masochistium Clickium Hic!

Putting your life on the line

For many people in the West privacy is something of a fashion accessory. But just imagine for a moment that you live somewhere else. Just imagine that you live in China. Your name is Ms. Li Yinping. You live in Majia Village, Shouguang City, Weifang Region. You’re a member of the Falun Gong, a Chinese religious movement, one that is greatly despised by the regime. If they find out that you’re a member then you stand a good chance of being tortured, and quite possibly executed. So imagine that the search you are about to make could cost you your life if you make a mistake, if you haven’t set up your proxy correctly (needless to say, if you’re actually living in China, don’t perform this search, just read what follows, and then scrub your browser cache when you’re finished!)

Now you’ve heard a rumour about Jiang Zemin's regime rigging an event involving self-immolation in Tiananmen Square to discredit the Falun Gong. First set up your browser and proxy so that all your browsing activities will make use of the proxy and any DNS requests you make will be resolved remotely (for example, if you’re using Tor, point your browser at Privoxy, and then point Privoxy at your Tor client).

Now start your browser and go to Google—let’s assume you’ve managed to get a line out to “www.google.com”, and you’re not restricted to “www.google.cn”. Now type the following into the Google search box “Self-Immolation Tiananmen Square”. Let’s examine a few links from the page of hits returned by Google. If the page you see is similar to the one we see, then you’ll find a link called “Falun Dafa Clearwisdom.net”. Click on it. When the html page downloads you’ll see something beginning with “After July 20, 1999, Jiang Zemin's faction launched a far-reaching campaign of disinformation to justify its persecution of Falun Gong”. Press the “back” button on your browser to return to Google. Let’s try the link entitled “[PDF] Investigation of the So-Called Self-Immolation in Tiananmen Square”. Click on it. When the pdf file downloads you’ll see something beginning with “Ever since the so-called self-immolation incident occurred in Tiananmen Square, the Chinese authorities' persecution of Falun Gong – a popular Qigong practice in China outlawed by the Jiang regime – has clearly intensified”. Go back to Google again.

Now what happens behind the scenes when you click on a link? When you requested the first page, your browser passed the DNS lookup request along the proxy chain, the IP address of the site was returned, the browser sent a request along the proxy chain to return the page, and finally the page was displayed in your browser. And similarly for the second request, the browser passed the DNS lookup request along the proxy chain, the IP address of the web site was returned, the browser sent a request along the proxy chain to return the file, and finally the file was displayed in your browser. Correct?

Did you miss the Sleight of Hand?

No, not correct! If you had a sentinel installed (and if privacy is important to you then you should never browse without one), then by now you’d have that sinking feeling in your stomach. And with good reason. When you clicked on the first link the sentinel would have sat there sphinx-like, not uttering a word. But when you clicked on the second link, corresponding to “www.upholdjustice.org/English.2/s_i_investigation.pdf”, the sentinel would have awakened from its slumbers and would have reported something like this:

Sentinel Output

IP: 166.111.232.19.2760
>>
IP: 222.212.39.104.53
Data: A? www.upholdjustice.org

IP: 222.212.39.104.53
>>
IP: 166.111.232.19.2760
Data: 1/0/0 A IP: 207.44.152.163

The first set of data represents a DNS request originating from port 2760 on your computer with IP address 166.111.232.19. The request is sent to port 53, the standard DNS port, on the computer acting as your ISP’s DNS server, with IP address 222.212.39.104. The request asks the DNS server to find the IP address of “www.upholdjustice.org”. The second set of data represents the reply from the DNS server, indicating that the IP address you requested is 207.44.152.163.

So the second DNS request did not go through your proxy. Instead it went to the DNS server at your local ISP—let’s call it “www.shouguang.cn”. Now this DNS server will do more than just look up the IP address corresponding to the web address. Like many DNS servers around the world it will, in addition, determine whether the web address lies on Big Brother’s blacklist. And, in the present case, “www.upholdjustice.org” is not a web site that any “patriotic” Chinese citizen would wish to visit!

But I thought Tor would warn me?

If you’re using the Tor network as your proxy then you will have been told that Tor warns you when DNS look-ups are done locally. Let’s take a look. Right-click on the TorCP icon, then select “Tools”, followed by “Message History”. A pop-up window called “Recent Log Messages” will appear. Now if Tor had detected a local DNS look-up then you would find in the log a message similar to the following:

[Warn] fetch_from_buf_socks(): Your application (using socks4 on port 14839) is giving Tor only an IP address. Applications that do DNS resolves themselves may leak information. Consider using Socks4A (e.g. via privoxy or socat) instead.

But, even though you have been using Privoxy as suggested, you will find no warning message in this case. So even though the DNS look-up has been local, Tor has not detected it. As far as Tor is concerned everything is working perfectly!

More to Adobe than meets the eye!

Let’s examine what’s gone wrong:

Conversation Piece

Browser: “Hey Adobe, you there?”

Adobe: “Yep, ready and waiting.”

Browser: “Well, User wants to display “www.upholdjustice.org/English.2/ s_i_investigation.pdf.”

Adobe: “Okay! I’m on my way…now, let’s see…this Windows machine must have an Internet connection…let’s have a look…okay, the default Internet connection is to ISP ‘www.shouguang.cn’…and here’s the address of its DNS server. Hi there DNS server. Need the IP address of ‘www.upholdjustice.org’.”

DNS Server: “The IP address you need is…wait for it…yes, it’s 207.44.152.163.”

Adobe: “Ta DNS.”

DNS Server: “Hey Big Brother, did you know that someone at IP 166.111.232.19 is trying to download something from ‘www.upholdjustice.org’?”

Big Brother: “No I didn’t. But I do now!”

Adobe: “Hmm…this browser seems to have some proxy settings… perhaps I should use them instead…hey there Proxy, can you fetch the contents of ‘www.upholdjustice.org/English.2/ s_i_investigation.pdf?”

Proxy: “Sure can do…coming…coming…here it is.”

Adobe: “Ta Proxy.”

Adobe: “Hey Browser. I’ve got what you were looking for. Just move over for a moment so that I can squeeze into your window and display this pdf.”

Browser: “Hey User. Deed done. Here’s that pdf you were looking for.”

Well that’s only a guess as to what’s happening. What we do know from the sentinel is that a local DNS look-up has been performed, but that the network traffic involved in fetching the pdf file passes through the proxy. Yet the proxy does not seem to be getting the IP address alone, as if that were the case Tor would produce a warning message.

Exactly what’s happening here we can’t be sure of without knowing the internal workings of Adobe. It seems that your Internet browser doesn’t fetch the pdf for you; it simply sub-contracts the task to Adobe. Apart from passing the request to Adobe at the beginning, and providing a window for Adobe to display the file at the end, your browser has done nothing. Adobe, like many software programs these days, is Internet savvy. Adobe seems to be bypassing the proxy when it comes to doing the DNS look-up. However, rather than just passing the IP address to the proxy, it seems to be passing the full request, so that the proxy does a remote DNS lookup before it fetches the pdf file (that’s the only explanation that seems to be consistent with the lack of a warning message from Tor).

So just think back on all those pdf files that you’ve downloaded over the years. Did you ever download anything that did not have “Approved by Big Brother” stamped on it? Well, for most people who use proxies the situation is not too bad: first, pdf files come up in web searches far less frequently than html pages (and if you select the html version of a pdf, when it’s available, then all will be well); second, most sites that—how shall we put it discreetly—contain material that Big Brother would not approve of are less likely than their “kosher” cousins to make use of pdfs. Nonetheless, if you’re doing a little research on privacy or on your regime’s shortcomings, then—as the above example illustrates—it won’t be long before you download an “inappropriate” pdf, thereby inviting Big Brother to “re-educate” you.

It was obvious, wasn’t it?

Once you think about it, it’s all rather obvious. If you had been using Adobe directly you would not have fallen into the trap: if you’d opened up Adobe, then before you started to type a web address into its Internet search box, you would have paused, and asked yourself, “How can I make Adobe use my proxy?” You’d have been looking to see if Adobe had any proxy options among its preferences, and, if not, then you’d be well on your way to socksifying it.

Now this problem is likely to occur whenever a browser calls some Internet enabled program in the background and then displays the results in the browser window. The vast majority of people who use proxies will assume that once they have set up their browser to use a proxy correctly, then anything that they do with the browser will also use the proxy correctly. And as web-based computing—a la Google—is becoming more and more common, the browser is becoming the interface for more and more applications, so this problem is likely to grow.

The only satisfactory solution is to ensure that either you (1) use a sentinel; or (2) use a firewall to block connections to IP addresses other than that of your proxy for all outbound traffic.

How to download PDFS using a Proxy

Now different versions of Adobe may have different preferences, so we’ll deal here with Adobe Reader v7. Open up Adobe and then select in turn the following menu items:

Edit => Preferences => Internet => Internet Settings

The “Internet Properties” window that appears is the standard set of Internet property tabs that you get when you select “Internet Options” from the Control Panel. This version of Adobe has no preferences to directly use a proxy.

It’s possible to change the settings of your default Internet connection so as to use a proxy. Select the “Connection” tab, select the default Internet connection, click on the “Settings” button, tick the “Use a proxy server for this connection” check box under the “Proxy server” sub-heading, and then fill in the “Address” and “Port” fields with the values used by your proxy server.

Now, we’ve found that setting up a proxy in this manner works with other Internet enabled software, but for some reason it doesn’t work with Adobe. When we tried it our sentinel still recorded the local DNS look-up going out the door to our ISP’s DNS server. Adobe seems to ignore the proxy settings and just use the default Internet connection, as is. But try it out, it might work for you—just make sure you’ve got a means to verify that it is working correctly.

The alternative is to socksify Adobe, using a product like “SocksCap”, available here, or “FreeCap”, available here (we’ll explain more about socksification another day, but these products are easy to install and to use). We’ve tried “SocksCap” with Adobe, and it works fine, with our sentinel showing no DNS leakage. Just start up Adobe from within the SocksCap window, then open your browser and start browsing (but, as always, use a sentinel to verify that everything is working as intended).

Postscript

And as to Ms. Li Yinping? Yes, there was a real Ms. Li Yinping. And yes, she used to live in Majia Village, Shouguang City, Weifang Region, People’s Republic of China. But Li was a member of the Falun Gong, just an ordinary member, peacefully practising her religion. She couldn’t even be called a dissident for she had never protested against the regime or its edicts. But in June 2001 she was arrested by the local police, and after being tortured for several days with electric batons she died. She remains just another statistic amongst the millions of people who have been tortured and executed for displeasing the regime since the founding of The People’s Republic of China.

Dual-Purpose Software

2006-06-13T18:20:00.000+01:00

Typology of disclosure: overt, sequestered, covert, invisible—ethical considerations—manipulating the aleatory pool. ... Masochistium Clickium Hic!

Introduction

There is one aspect of aleatography that we have yet to address. We need a means of hiding the software that we use to extract software from within an aleation. We also need a means to create and distribute pure aleations without giving the impression that we have any interest in privacy. These objectives can be achieved through the use of dual-purpose software.

Dual-purpose software performs two very distinct functions: the primary function can be anything whatsoever, as long as it is not associated with privacy and is not likely to cause offence to any Big Brother; the secondary function is one that is associated with privacy, either because it helps to develop the aleatographic infrastructure or because it implements some information hiding technique.

The great advantage of dual-purpose software is the defence of plausible deniability that it affords to anyone who possesses it. Since most people will use the software for its primary purpose alone, and may well not even know of the software’s secondary purpose, there is no reason to suspect anyone who possesses it of having an “unhealthy” interest in privacy.

Typology of Disclosure

We can divide dual-purpose software into two categories according to whether or not it discloses its secondary purpose: disclosing and non-disclosing.

We can divide disclosing dual-purpose software into three categories according to the manner in which information about its secondary function is disclosed to potential users: overt, sequestered, and covert.

Overt

If disclosure is “overt” then both the primary and secondary purposes of the software are proclaimed for all the world to hear. The home page might start off by saying, “This software has two distinct purposes. You can use it to create crossword puzzles, or you can use it to hide information within images.” With overt dual-purpose software it is very likely that most users will understand that it can perform two unrelated functions.

Sequestered

If disclosure is “sequestered” then information about the secondary purpose of the software is made available to its users, but in such a manner that the average user is unlikely to find it. For example, the information may be buried in the depths of the documentation under an obscure sub-heading; and to initiate the secondary function it may be necessary to click on a button with some enigmatic label, having first ticked a certain check-box that lies buried within some a collection of option tabs. With sequestered disclosure the vast majority of people using the software will be unaware of its secondary purpose.

Covert

If disclosure is “covert” then information about the secondary function of the software will not be found within the software itself; and to initiate the secondary function it will be necessary, for example, to enter a specific code into a specific field that as far as the primary function is concerned serves some other purpose. The documentation needed to initiate and make use of the secondary function will not be available on the site from which the software is downloaded but will be distributed amongst privacy forums or, perhaps, only to select groups of individuals. No ordinary user will be aware of, or able to initiate, the secondary function. In the absence of documentation, it would be necessary to disassemble the executable code in order to determine that a secondary function exists.

Invisible

If disclosure is “invisible” then information about the secondary function of the software is never explicitly documented. Instead, the reader can infer from a description of how the software works that it could be used to support some secondary function. Unlike the other three methods of disclosure, this method protects the author of the software from accusations that he is writing software to support aleatography or information hiding.

Comparison

These disclosure mechanisms serve different purposes. In regimes that are merely restrictive then overt dual-purpose software is the best choice, as while no one can prove that by possessing the software a user is making use of its secondary function, the existence of that secondary function will be widely known.

Within proscriptive regimes, sequestered and covert dual-purpose software are far more useful. It is entirely plausible that an individual who possesses such software has no knowledge of its secondary function. On the other hand, fewer individuals are likely to discover that secondary function.

Of course, it’s possible to incorporate the same secondary function into different software products that are made available from different websites, where one product makes overt disclosure and the other does not. The website offering the product with overt disclosure could then mention the existence of its counterpart, and where to obtain it, for the benefit of those individuals living under proscriptive regimes.

Of particular interest is non-disclosing dual-purpose software. If the secondary function can be automated, then there is not even a need for documentation from which the existence of a secondary function might be inferred. If some automatic, non-disclosing dual-purpose software tool became popular, then its secondary function would be executed very frequently. We see this type of software as playing a very useful role in the creation and dissemination of pure aleations.

Ethical Considerations

Now, just because Big Brother is entirely lacking in morals, doesn’t mean that we have to follow suit! Certain kinds of dual-purpose software could put some users at risk. With dual-purpose aleatory software there should be no problem, but with dual-purpose information hiding software there might well be. What if the software is unwittingly downloaded by someone living under a proscriptive regime, and is subsequently found by Big Brother? If disclosure is sequestered or covert then its discovery would not in itself arouse suspicion, so there should be no difficulty. However, if disclosure is overt, then Big Brother may well conclude that the person who downloaded the software was aware of its secondary purpose. So if you’re making software with overt disclosure available for download, then we suggest you succinctly display the information about its secondary function alongside a check box that the user is required to tick before the download starts.

The second issue concerns non-disclosing dual purpose software that performs its secondary function automatically. The secondary function should not do anything that would compromise the user through the use of information that the software may gain in carrying out its primary function, and its use of computer and network resources should not be excessive.

Manipulating the Aleatory Pool

The single most valuable secondary function that dual-purpose software can perform is to create and maintain an “aleatory pool”. An aleatory pool is a collection of one or more aleations. Typically these will be stored in some working directory on the hard disk. The aleatory pool is created and manipulated by the software as part of its primary function, so the primary function needs to be one that can make use of random data. The user can insert or remove ciphertext that masquerades as aleations from the aleatory pool using the standard file copy functions provided by the operating system. The aleatory pool can be used for (1) storage; (2) transformation; and (3) communication.

A user can copy ciphertext obtained from some other source into the aleatory pool. As the ciphertext will be indistinguishable from the aleations produced by the software, the user has the perfect storage location for encrypted material.

If the software uses the aleations to modify some other data, such as an image, in a reversible manner, then by substituting ciphertext for an aleation a user would be able to insert the ciphertext into, and later retrieve it from, the data. The modified data would provide an alternative means of storage and could possibly act as a useful carrier of the ciphertext for the purposes of communication.

Communication software that creates and manipulates an aleatory pool performs some of the basic functions of a janionic network. Even users who have no interest in privacy are still creating and exchanging aleations. If the software became popular then it might well generate a nascent janionic network consisting of millions of users. Users with an interest in privacy could then replace aleations with ciphertext and have it shipped to a recipient’s aleatory pool as part of the software’s primary function.

Aleatography

2006-06-12T17:40:00.000+01:00

Aleations: the people-friendly aliens who will consume Big Brother from the inside out—the pure and patterned varieties—why the aleation provides a good approximation to the janion—why we need to separate information hiding and aleatography if we are to conquer Big Brother—why distributed aleatography is best. ... Masochistium Clickium Hic!

Introduction

Now in theory janography is all very well, but without a practical implementation we won’t have Big Brother quaking in his over-sized boots. And to start with we must have a concrete candidate for a janion.

Aleations

If we’re going on a journey, then the best place to start from is where we happen to be right now. Of the four dimensions of information hiding, the only one that has been widely implemented to date is HEye. And these implementations have been based on cryptography. And what do the techniques that are employed to encrypt data have in common? Well, when we remove any identifying headers and footers the resulting ciphertext looks just like “aleatory data”, like random or pseudo-random data. So let’s take aleatory data, or the “aleation”, to be the practical embodiment of a janion.

Pure and Patterned Aleations

Aleatory data comes in two flavours: the pure and the patterned. The former is random or pseudo-random data, through and through. The latter consists of mixed data, with a certain percentage of the data following some non-random pattern, and with the remaining percentage consisting of pure aleatory data. In practice, the patterned aleations that are found on most computers consist of image, audio, and video files. Typically, the higher portion of each byte, or set of bytes, is patterned and represents file content, while the lower portion is just random noise generated by physical processes within the camera or microphone.

Pure aleations are efficient carriers of information, as we can produce ciphers where the length of the ciphertext is comparable to the length of the plaintext that has been encrypted. Patterned aleations, on the other hand, offer poor storage densities as the percentage of “noisy bits” present in a typical media file is very small compared to the percentage that represents content.

Inscrutability

By definition, aleatory data, whether or not it is masquerading as ciphertext, looks the same to any statistical technique that might be used to characterize it, and so the criterion of “inscrutability” is satisfied.

Versatility

If the only constraint on an information hiding technique is that it should produce aleatory data, then we have a vast number of techniques to choose from, so the criterion of “versatility” is satisfied.

Duality

Many computer processes produce pure aleations, and it would not be practical to ban these processes, or to modify them so that they do not. However, it would be very helpful if there were rather more pure aleations on the average computer than is the case at present, particularly in those directories that are used to store personal information. But this shortcoming is one that we can do something about.

As far as patterned aleations are concerned then we are spoilt for choice. The computer world is overflowing with image, audio, and video files. Almost everyone has, or can reasonably be expected to have, such material in directories that contain personal information. Patterned aleations therefore satisfy the criterion of “duality” extremely well.

Aleatory Software

We can easily store any software tools that are needed to manipulate aleations inside aleations. Then we can use dual-purpose software to extract the aleatory software and convert it into runnable code.

Aleatory Exchange

Pure aleations are rarely exchanged. Such transfers could, of course, be hidden inside encrypted tunnels, but such tunnels are not the norm for Internet communications, and the presence of encrypted communications is easily detected by monitoring software. Now, the occasional and short duration use of SSL while downloading payment pages on merchant sites is to be expected. But the frequent use of SSL, its use for lengthy periods, or its use while downloading non-payment pages would soon be flagged as anomalous behaviour. So, we need to take active measures to increase the exchange of pure aleations.

Patterned aleations are extremely widely exchanged and are well suited for the purposes of aleatory exchange provided that the volume of plaintext that needs to be hidden inside them is relatively small.

A Good Starting Point

Aleatory data provides a good approximation to what we have required of a janion. There is a trade-off between pure and patterned aleations: the former has some weaknesses when it comes to duality and aleatory exchange, but offers excellent storage densities. The latter is excellent on all janioning criteria, though it only offers a low storage density.

We should therefore adopt a strategy of promoting the creation and exchange of pure aleations to extend the janographic infrastructure. And provided we can think up a good reason why a program needs to produce aleations, we should be able to produce them with impunity, even within those regimes that proscribe encryption. When it comes to using information hiding techniques an individual can then choose between pure and patterned aleations, depending on the level of risk involved should the hidden information be discovered.

Divide and Conquer

It is important to separate the development of aleatography from the development of the various techniques that might make use of it for information hiding. Proscribing particular information hiding techniques is easy to do. Proscribing aleatography—it would be tantamount to banning Internet access and all personal computing—is not practical in any country that hopes to develop and maintain a modern economy, so with the exception of a few maverick states, such as North Korea, the roll-out of a janographic infrastructure that is based on aleations should meet with few obstacles. However, if the same individuals and organizations are too closely involved in both activities then the banning of information hiding by a particular regime might also curtail the development of aleatography.

Distributed Aleatography

Tyranny flourishes in a hierarchical environment; freedom flourishes in a distributed one. The Internet as a janographic infrastructure illustrates this point very well. The Internet was not developed with privacy in mind, but its distributed nature, one that spans the fiefdoms of the world’s Big Brothers, makes it very useful for constructing privacy solutions. Had governments any inkling of what this once military/academic network would become then they would have strangled it at birth. As the Internet has now become essential to the successful functioning of a modern economy, it cannot be destroyed; but its use can be monitored, and its use for certain purposes and by certain individuals can be prevented—witness the successful attempt of China to curtail access to those web sites that it disapproves of. By developing aleatography we will be steadily reducing the capacity of regimes to extract useful information from the web traffic that they monitor, thereby strengthening the Internet still further.

It’s important that the development of aleatography is done in a distributed and uncoordinated manner. While banning aleatography would be very difficult, targeting the individuals who develop it would not. Because aleatography relies on dual-purpose software, it does not advertise or draw attention to itself. It is one thing for Big Brother to know that aleatography exists; but it is quite another for Big Brother to appreciate the threat that aleatography poses to his very existence. If it is developed independently by individuals and by small groups it can grow and spread in a relentless and invisible manner, hidden even from Big Brother’s Sauron-like eye. If we have a fair wind in our sails, then by the time Big Brother fully appreciates the nature of the threat it will already be too late for him to do anything about it.

Janography

2006-06-11T19:45:00.000+01:00

Why the foundations are more important than what is built upon them—the janion: the building block of privacy solutions—janionic properties: inscrutability, versatility, duality—the bootstrapping of janioning software—janionic exchange: nodal and pseudonymous public key pairs, closed and open routes, routing keys, intermediate nodes, inbound and outbound nestings, high-frequency subnets, directed and random janionets, drop-off points, forked routing—network properties: nodal myopia, self-monitoring and self-adjusting, consensus—active attacks: delaying, injection, deletion, transformation—passive attacks: collation, tracing, flow rate, timing, penetration. ... Masochistium Clickium Hic!

Focusing on the Foundations

Now the future is not looking bright. But if the four dimensions of information hiding could be implemented, then even though the contest would still one of David versus Goliath, we would, at least, have a fighting chance. So how easy is it to implement the four dimensions of information hiding? That depends on the structure of the world, particularly the online world, in which we live. So rather than considering particular techniques for information hiding, let’s take a step back and ask the more fundamental question of what infrastructure is needed so that privacy solutions can be easily implemented in a variety of different ways? This underlying infrastructure has nothing in itself to do with information hiding, but it can greatly facilitate or frustrate our efforts—when the big bad wolf wants to spy on the domestic arrangements of Kermit and Miss Piggy perhaps a “house of straw” built high-up on top of a rocky pillar will serve them better than a “house of brick” built on the quicksands of today’s Internet. The development of an infrastructure that facilitates the implementation of information hiding is what we call “janography”.

Focusing on janography rather than on information hiding has two benefits: (1) it does not tie our hands as to the “how” of information hiding; and (2) because it is peripheral to, and clearly separated from, the “how” its development is less likely to be proscribed by Big Brother.

In essence, the battle for freedom is being waged on two fronts. Big Brother hopes that his steadily increasing monitoring of individuals will go unnoticed by society and will eventually reach a tipping point where privacy becomes impossible. Big Brother’s opponents hope that their steadily improving janographic infrastructure will go unnoticed by Big Brother and will eventually reach a tipping point where the elimination of privacy becomes impossible. If we can get this janographic infrastructure sufficiently well established, then Big Brother will be powerless to stop the implementation of privacy solutions that are based upon it. We’ll have Big Brother by the “short ’n curlies”, and we’ll be able to squeeze to our collective heart’s content!

Janion

Let’s give a name to the building block out of which we can construct privacy solutions that satisfy the four dimensions. Let’s call it a “janion”. A janion is something inside of which we can hide information. Any particular janion may, or may not, contain hidden information. And what properties should a janion possess?

Janionic Properties

Inscrutability—it must be possible to hide information inside a janion without distorting any of its natural properties. Janions that contain hidden information should be indistinguishable from janions that do not.

Versatility—a janion must be sufficiently flexible so that it can be used as the basis for many different privacy solutions. It should be possible to hide information inside a janion in many different ways, since we want to decouple the infrastructure that facilitates the hiding of information from the information hiding techniques that make use of it.

Duality—a janion must also be produced as a by-product of computer processes that have nothing whatsoever to do with privacy. And it must be impractical to ban these processes, or to enforce their modification in such a way so that they no longer produce janions.

In other words a janion—like the Roman God “Janus” after which it is named—must face in two ways: while being flexible enough to allow information to be hidden inside it in a variety of different ways, it must not draw attention to itself; it must be the embodiment of the ordinary, the commonplace, the unremarkable—it must be something that you’d expect to find on any computer.

Imagine a world containing trillions of janions residing on computers everywhere. In such a world Big Brother has a problem. Some of these janions are being used by people to hide information. But it’s impossible to tell which janions are and which janions are not being used for this purpose. Hence, on the basis of the hidden information alone, it is not possible to tell which people are hiding information and which are not.

Janioning Software

Thus far we have a world where individuals can keep private matters private—we have the world of H2Eye. But if Big Brother inspects our computers he will find the software that we use to hide information inside janions. So, in order to satisfy the software hiding requirement of H3Eye, we require certain properties of the software that we use to manipulate janions:

Bootstrapping

The software that is used to manipulate janions must be stored on a computer in the form of a janion, and it must be possible to extract the software from the janion and convert it into a runnable form using dual-purpose software: software whose primary, and ostensibly only, function is totally unrelated to the nurturing and promotion of privacy.

Bootstrapping makes it impossible for an adversary to determine whether or not we possess the capacity to manipulate janions, including the capacity to hide information inside janions.

Janionic Exchange

One of the characteristics of present day governments is their capacity to automatically construct extensive networks, consisting of nodes that represent individuals, and connecting links that represent communications between those individuals. Even though the contents of the individual communications may not always be known, these networks are very easily used to manipulate, suppress, and control those individuals who would otherwise draw attention to governmental failings and corruption. In this manner, governments seek to subvert, undermine, and impair the democratic accountability that they owe to their citizens.

Now unless janions that don’t contain hidden information are routinely exchanged in large numbers, the exchange of janions would, in and of itself, betray the likely presence of hidden communications between senders and receivers, allowing governments to create networks of people who communicate with one another and who also have an interest in privacy. So to implement the communications aspect of H3Eye we need to ensure that janions that don’t contain hidden information are exchanged in large numbers.

However, even if janions are exchanged in large numbers for reasons unrelated to the protection of people’s privacy, these exchanges still allow governments to create networks that detail who is communicating with whom. We have failed to be “eternally vigilant”, and the price we have paid for our inattention is that governments have accrued the powers they need to spy upon us with impunity. But to wrest back those powers is likely to prove well-nigh impossible, at least in the short term, so a more subtle approach is needed. Now the monitoring of communications by governments does not, in and of itself, diminish our freedoms; instead it is the capacity of governments to extract useful information from the data they collect—it is this information which acts as the oxygen of tyranny. What we propose is a method of janionic exchange that makes the construction of any kind of “informative” network as a result of communications monitoring impossible.

Now, take a deep breath; let it out; and then employ those speed-reading skills—when we applied our “Susie Test” to the following section the answer we received was “Yuck”!

Janionic Network

A mechanism that moves janions around a network according to the following principles:

A network consists of nodes. Each node has a “nodal identifier”, a “physical address”, and an associated “nodal public-key pair”. The triplets consisting of nodal identifier, physical address, and nodal public-key are made available to all nodes and are held in “distributed directories”. The “nodal private key” associated with a node is known only to that node. In addition, a node may have one or more “pseudonymous public-key pairs”: the private key of a pair is known only to the node, as before; the public key, while circulated in public, is not associated with the identifier or the physical address of the node and cannot be used to identify it.

A “route” consists of an ordered collection of network nodes. A route is “closed” if the last node in the route is the same as the first; otherwise, it is “open” (almost all the routes used for janionic exchange will be closed). The “originating” node is the first node of an open route, and the common first and last nodes of a closed route. All other nodes are “intermediate”.

Associated with each intermediate node on a route is a set of “instructions” that tell the node what operations to perform and provide the data that is needed to perform these operations. Mandatory data elements that appear in all instructions are the physical address of the next node on the route and a one-time “routing key”. An optional data element is a “drop-off identifier”.

Associated with each intermediate node on a route is a “report” that is created by the node, and which details the results of the operations that it has performed.

An “outbound nesting” for a route begins by taking the “instructions” for the last intermediate node and encrypting them using the nodal public key of that node. Then each intermediate node is taken in turn in reverse order and its instructions are appended to the outbound nesting before being encrypted using its nodal public key. An outbound nesting is constructed at the originating node of a route when the route is being planned.

An “inbound nesting” for a route begins by taking the “report” for the first intermediate node and encrypting it using the routing key allocated to that node. Then each intermediate node is taken in turn in forward order and its report is appended to the inbound nesting before being encrypted with the routing key allocated to the node. An inbound nesting is constructed in stages, with each intermediate node that comprises a route making a contribution.

A janionet consists of a janion, an outbound nesting, and an inbound nesting, each of which has a fixed-size.

A random janionet is prepared automatically by selecting at random from the network a fixed number of intermediate nodes which are to form the associated route. A directed janionet is prepared by the operator of a node for the purposes of communicating with some other node.

A janionet is sent from the originating node to the first intermediate node on the route. That node decrypts the outbound nesting of the janionet using its nodal private key, and extracts its instructions and the outbound nesting for the next node. The default instructions for a node are as follows. If the instructions contain the inverse routing keys of previous nodes, these are applied to reconstruct the janion dispatched by the originating node. Then the node attempts to decrypt the janion using its nodal private key to determine if the janion contains a message for the node. If the node wishes to make a reply it modifies the janion accordingly. The node then encrypts the janion (the modified version in the case of a reply, the decrypted version in the case of a message with no reply, and the version received from its predecessor node in the absence of a message) using the routing key found in the instructions. It updates the inbound nesting by appending the timestamp at which the janionet was received and encrypts the combination using the routing key. It creates a new janionet consisting of the encrypted janion, the updated inbound nesting, and the extracted outbound nesting. This janionet is then held in a storage area, the janionic pool, for a period of time selected at random from some probability distribution (or as otherwise directed by the instructions) before being forwarded to the next node on the route.

A janion can be encrypted using the nodal public keys of multiple intermediate nodes when no replies are expected. Different messages for multiple intermediate nodes can be placed inside different hidden volumes within the same janion by encrypted them to the nodal public keys of different nodes, allowing each node to reply by modifying its own hidden volume.

A node may be given instructions to clone, replace, or destroy the janionet, or to create one or more new janionets.

A node may be instructed to send the janionet along multiple routes.

A node may be instructed to hold a janion tagged with an associated identifier in its janionic pool for a specified period of time and then destroy it.

A node may be instructed to search its janionic pool for a janion corresponding to a specified identifier and then forward that janion along a specified route.

A node may be instructed to ask the nodal operator to take some manual action (for example, to remove a janion from the janionic pool and to forward it elsewhere by snail mail).

Each node records statistics on the rates at which janionets are absorbed and emitted. When janionic flow rates are disturbed by the origination of directed janionets, by the actions of an adversary, or by network malfunction, a node will adjust the rate at which it originates random janionets so that the stochastic properties of the janionic flow rates into and out of the node remain unchanged.

When a node is added to the network the nodal operator asks the node to automatically negotiate membership of one or more “high-frequency subnets”. In addition to the standard random exchanges with nodes selected at random from the network as a whole, the node will also make random exchanges at much higher frequencies along routes chosen at random from the high-frequency subnets. At intervals, a node will randomly remove some nodes from each subnet and add a similar number of nodes selected at random from the network as a whole.

Sending and Receiving

Now you know why Susie said, “Yuck!” Don’t you hate it when people trot out these formal, “snooze-inducing” definitions? So, let’s consider a few examples to breathe a little life into what is rapidly becoming a torrid text.

Let A be an originating node. Let B, C, D, and E be intermediate nodes, with respective routing keys of b, c, d, and e. Then a closed route and its instructions can be represented by:

A => Bb => Cc => Dd => Ee => A

Send Only

Suppose node A wishes to communicate with node C. It encrypts the janion using C’s nodal public key and sends it along the following route: A => Bb => C-bc => Dd => Ee => A. Node C’s instructions contain the inverse of node B’s routing key. So when node C receives “b(janion)” from node B it first computes “-b.b(janion)”, to give “janion”, which it can then decrypt using its nodal private key. It then applies routing key “c” so that it passes “c.decrypt(janion)” on to node D. The originating node receives e.d.c.decrypt(janion). By applying the inverse of keys “e”, “d”, and “c” node A can verify that node C has received and successfully decrypted the message.

Note that though the sender knows the identity of the recipient, the recipient does not know the identity of the sender, unless the sender wishes to sign the message—clearly an advantage in a whistle-blowing context.

Send and Reply

Suppose node A wishes to communicate with node C, and node C wishes to make a reply. The only difference from the previous example is that instead of passing “c.decrypt(janion)” on to node D, it passes c(reply) instead. By applying the inverse of keys “e”, “d”, and “c” node A can read node C’s reply. As above, the sender is unknown to the recipient, but the two can still communicate.

Drop-Off Points

Two nodes A and L can communicate without knowing each other’s physical location. All they need to do is to exchange pseudonymous public keys, and then agree a drop-off identifier and a drop-off node. Node A encrypts the janion using node L’s pseudonymous public key and sends it along the following route: A => Bb => C-bc1 => Dd => Ee => A. The instructions given to node C tell the node to put the original janion into its janionic pool, tagged with a drop-off identifier for a specified period of time and then delete it. Before the janion is deleted, node L sends a janion along route L => Mm => Cc2 => Nn => L. The instructions node L gives to node C are to replace the janion it receives from node L with the janion in the janionic pool that matches a drop-off identifier given to node C by node L. If this identifier matches that given to node C by node A, then node L will receive “nc(janion)” from which it can extract the message using the inverse of routing keys “n” and “c2” and its pseudonymous private key.

Any node that is prepared to act as a drop-off point will allow other nodes to publish the information needed to initiate such exchanges: a pseudonymous public key, a drop-off identifier, and a drop-off node, as well as any other information that the originator of the communication wishes. Any nodal operator can then initiate a communication. Ideally every node on the network would offer this facility, and senders and receivers would move the drop-off node around the network in a random manner, changing it with each new communication. If every node can function as a drop-off point and drop-off points are selected at random, then tracking down communications becomes much more difficult as it becomes necessary for an adversary to identify pairs of intersecting routes.

Network Properties

Forked Routing

The instructions for a particular intermediate node may request it to send a janion on one or more routes in addition to the main route. So if the main route is A => Bb => Cc => Dd => Ee => A, then node C’s instructions may require it to send the janion along route Cc => Xx => Yy => A as well. Multiple forks, forks within forks, and random forks are all possible. Any or all of the forked routes can be open as well as closed. Forks can be used for a number of purposes, as we’ll see shortly.

Nodal Myopia

Each intermediate node will know from which node it received a janion. And the outbound nesting will tell it to which node it should forward a janion. But that’s all it knows about the route along which a janion is travelling. It knows nothing about the other nodes. In particular, it knows nothing about the originating node.

The Self-Monitoring Network

The janionic network can monitor itself and automatically determine if a node is malfunctioning. It can also determine if a compromised node or an adversary with access to the links between nodes is perturbing the flow of janions in some manner. This self-monitoring is possible due to:

Closed Routes
Nodal Myopia
Inbound Nestings
Routing Keys

Closed routing allows any node to examine the workings of any other node, as what any intermediate node does will be fed back to the originating node. Nodal myopia minimizes the knowledge that a compromised node has of the routing, which makes it impossible for a compromised node to avoid carrying out its instructions and escape detection. The encryption of inbound nestings and janions at each node using a one-time routing key ensures that the originating node has feedback to analyse, which helps it to determine which node, or which link, is malfunctioning.

Network Consensus

An adversary with access to a node or to a link between nodes can do various things to perturb the network. If the originating node suspects that a route has been compromised, it can send probes along multiple routes that pass through each of the intermediate nodes on the problematic route in turn, and thereby determine which node has been compromised. The compromised node can then be blacklisted by the originating node.

Furthermore, the originating node can send a message signed using its nodal private key across the network using a non-encrypted janion to inform other nodes of the compromised node. These nodes can then perform their own tests by way of confirmation. They can then, in turn, send out warning messages signed with their nodal private keys. As a result a “network consensus” regarding the compromised node will develop, and it can be blacklisted by the network as a whole, rather than just by individual nodes. It’s impossible to spoof such warnings without adding new nodes to the network. And any compromised nodes that send out denials would be in danger of disclosing their real purpose. Hence, as long as less than 50% of the network has been compromised, a correct network consensus regarding the status of an active compromised node can be obtained (compromised nodes can of course be silent and just record information, rather than perturbing the network).

Network Statistics

Let’s get mathematical—sorry Susie! Let’s assume that our network has n nodes, that each route possesses m intermediates nodes, and that on average r janions are originated per day by each network node. Assume that by default all routes are closed, so that the number of janions emitted by a node is the same as the number absorbed.

Let’s assume that the number of network nodes is large and that the number of janions emitted or absorbed by a node during a particular time interval has a Poisson distribution. This is a good choice since it means that the numbers emitted in non-overlapping time intervals will be stochastically independent. Hence, if r janions are originated on average by a node each day, then the probability distribution of the number originated during a time interval t has a mean of rt, a variance of rt, and the probability that exactly k janions will be originated during the time interval equals:

rt**k.exp(-rt)/k!

The total number of janions emitted or absorbed by a node in a time interval t will have a Poisson distribution with a mean and variance of r(m+1)t.

By way of example, consider a network of one billion nodes (after all, the Internet now has one billion users), with 9 intermediate nodes per route, and with each node originating 100 janions per day (imagine that each Internet user sends 100 emails per day to randomly selected email addresses). Hence, on average 1000 janions will be emitted and absorbed by each node every day, with a standard deviation of about 32. Assuming that the Poisson distribution is approximately normal, then about 95% of the time the number of emitted or absorbed janions will lie within two standard deviations of the mean. Hence, we can say that on 19 days out of every 20, the number of janions emitted or absorbed by a particular node will lie between 936 and 1064.

Given the large amount of variation in the numbers of janions emitted and absorbed it will clearly be easy to slip in the occasional directed janion without it being detected. This is exactly what we need from a good janographic infrastructure: even though it is possible to monitor communications, it is not possible to extract any useful information from that monitoring; every node behaves in exactly the same manner as every other node; and each node’s default behaviour is entirely devoid of “intentionality”.

Active Attacks

An adversary with access to a node or to a link between nodes can do various things to perturb the network:

Delaying Attack
Injection Attack
Deletion Attack
Transformation Attack

Delaying Attack

In principle, an adversary could systematically delay janions sent by a node and then examine another node to see if statistical variations in the arrival times of janions at the latter confirm that both nodes frequently lie on the same route. However, this type of attack will not work because both nodes that are the subject of the attack can detect it as it develops and can take action to undermine it.

Let’s assume that node A frequently originates janions that are targeted at node B with far greater frequencies than if the routes were chosen at random. Let’s assume that an adversary suspects that this might be the case and monitors all janions emerging from node A, delays them in some random manner, and then monitors the arrival times of all janions at node B. Now the adversary may be able to estimate how long it takes on average for a janion to travel from node A to node B in the absence of any perturbations. If so, then as soon as node A emits a janion he can determine the expected time of arrival, and set counting windows on each side of that arrival time. With no delays then on average both windows will have the same count. But if he delays a janion, then the second window will on average have a greater count than the first.

Let’s suppose that on average each node originates 100 janions per day, and that on average node A sends one directed janion per day to node B. Since the adversary doesn’t know which of the janions emitted from node A might be targeted at node B he has to delay all of them, or delay a random sample of them. Now node A knows the statistical distribution of transfer times for janions around a closed route. If will therefore see a statistical anomaly begin to arise as the average transfer time increases. And for every janion targeted at node B that the adversary could use to glean some information, node A will have 100 times as many. Hence, node A will have solid evidence that something is wrong long before the adversary. Furthermore, node A can examine the inbound nesting to determine the exact arrival times of janions at intermediate nodes, and can thereby determine that the problem lies with all links exiting node A. Even better, node A can send probes that have zero holding times to intermediate nodes, allowing it to detect the precise statistical distribution of the delays inserted by the adversary.

Node A can defeat the adversary by changing the instructions to the first intermediate node on each route, telling that node not to hold a janion for a specific random delay, but to hold it until a specific time of day has passed. Once node A knows the magnitude of the longest delay being inserted by the adversary, it can set the emission time from the first intermediate node to be equal to the time of emission from node A plus that longest delay; hence, the time between emission from node A and emission from the first intermediate node becomes fixed.

Let’s assume, for the sake of argument, that node A does nothing. Let’s see what action node B can take in these circumstances. Now node B will be keeping track of the numbers and arrival times of janions (as part of its instructions node A can inform node B at what time it dispatched each janion). Hence, node B and the adversary both have access to the same information and can both examine the same statistics. As soon as the data begin to look statistically unusual, but before they become statistically significant, node B can send closed circuit probes with zero holding times along routes that pass through node A (assuming that node A is prepared to disclose its identity). Since the adversary does not know the origin of janions he will apply the delays to these probes and immediately reveal his presence. Node B can then inform node A to take action, and can inform the network of the presence of the adversary. Once a network consensus has been obtained, if node A has not addressed the matter, all nodes can either blacklist node A, or inform other nodes to override its instructions by holding its janions until a specified time has passed rather than for a random interval.

Injection Attack

Since an adversary knows nothing about the route apart from the next node he cannot send a janion to either the originator or to an intended recipient. So, inserted janions can’t be used for tracking purposes. As each node monitors the numbers and the nodes from which it receives janions, and can share that information with other nodes, a node that suddenly started producing large numbers of janions without good reason would be detected and blacklisted.

Deletion Attack

An adversary who suspects node A of communicating with node B may try to delete some or all of the janions exiting from node A in the expectation of seeing a dip in the number of janions arriving at node B. This attack can be defeated in the same manner as the delaying attack considered above.

Transformation Attack

Let’s suppose a compromised node modifies the outbound nesting. Since the node doesn’t know the originating node, its effect is to delete the janion, and insert a new one at random (an attack which has already been covered).

If a node modifies a janion then the originating node will be able to determine that it has done so. For example, suppose that on route A => Bb => Cc => Dd => Ee => A node D takes “cb(janion)” from node C and changes it to “modified” before passing it along the route. Then the janion received by node A will equal “ed(modified)” instead of “edcb(janion)”. The originating node can then probe the nodes individually to determine the compromised node, and if the originating node had been attempting to send a message to node E, for example, it could then send the message along a different route.

Passive Attacks

An adversary with access to a node or to a link between nodes can do various things to examine the behaviour of the network without introducing any detectable perturbations:

Collation Attack
Tracing Attack
Flow Rate Attack
Timing Attack
Penetration Attack

Collation Attack

Two or more compromised nodes may record the information that is available to them as a janion passes through, share it, and then try to infer the behaviour of some other node.

For example, suppose that on route A => Bb => C-bc => Dd => Ee => A nodes B and D are compromised, and suspect that node A is communicating with node C. Now, neither node knows the instructions given to node C: when node B had the outbound nesting it was still encrypted with C’s nodal public key; and when node D received the outbound nesting, node C’s instructions had already been removed from it. Neither node has access to node C’s report: it did not exist when node B had the inbound nesting; and it had already been encrypted using node C’s routing key by the time it was passed to node D. Node B knows the original janion and “b(janion)”. Node D knows “c(message)”. But it’s not possible to distinguish “c(message)” from “cb(janion)” without knowing routing key “c”. Hence, nodes B and D have no way of knowing whether node A is communicating with node C.

Tracing Attack

The most obvious way to determine if two nodes are communicating would seem to be to trace the flow of janions leaving the first node and see if a disproportionate number of them enter the second node.

Let’s examine a particular node. Janions arrive at the node at random, and depart from the node at random. Because the respective sizes of janions, outbound nestings, and inbound nestings are fixed, it is not possible to distinguish the emitted from the absorbed based on size. Because each janion, outbound nesting, and inbound nesting is encrypted / decrypted between absorption and subsequent emission it is not possible to distinguish the emitted from the absorbed based on their contents. Because janions are held in a node’s janionic pool for random times before they are forwarded and because a node will also be originating its own janions, the best that can he said of a janion emitted by a node is that it is very likely to be one of the janions absorbed by the node within some period of time prior to its emission. For example, an adversary might be able to say the probability is 95% that the janion that was emitted by node A at 16:00 is one the 250 janions absorbed by node A between 10:00 and 16:00.

Now it’s possible to track all the janions emitted by node A and determine which nodes they enter. And for each of these nodes it’s possible to determine which of the janions that are subsequently emitted by the node might be node A’s janion. And it’s possible to repeat the process node by node. Let’s say the number of candidate janions per node is c (250 in the above example). Then if we follow the flow through n nodes, we will have encountered c**n different nodes (ignoring cross-backs). Tracing these flows very quickly results in a combinatorial explosion. For example, suppose that the network contains a billion nodes and that the number of candidate janions per node is 250, then after following the flows from node to node for four iterations an adversary will have encountered nearly 4 billion nodes—even allowing for cross-backs an adversary will have encountered almost every node in the network. In other words, if an adversary was hoping to determine whether janions emitted by node A subsequently pass through node B, the answer will be that all janions emitted by node A will appear to pass through node B even when no communication between node A and node B is taking place.

Flow Rate Attack

A nodal operator who originates directed janions will increase the total traffic emitted by the originating node and absorbed by the target node. This increase in nodal traffic could allow an adversary who monitored one of the nodes to determine that it was actively communicating with some other node.

If r random janions that pass along closed routes containing m intermediate nodes are originated on average by every network node each day, then the probability distribution of the number emitted or absorbed by any node during a time interval t has a Poisson distribution with a mean of r(m+1)t and a variance of r(m+1)t. Suppose that in addition to these random flows node A originates k directed janions per day targeted at node B. Now an adversary who is monitoring node A (node B) will detect an excess of kt janions being emitted (absorbed) during time t. How long would an adversary have to wait until the probability of the excess occurring by chance had dropped to no more than, say, 1 in 40? Assuming that the Poisson distribution is approximately normal, then, as only the upper tail is relevant, the excess must equal twice the standard deviation of the distribution of the number of random janions emitted during the same time period:

kt = 2sqrt(r(m+1)t)

t = 4r(m+1)/k**2

If each network node originates 100 janions per day, if there are 9 intermediate nodes on each route, and if 10 directed janions are originated by node A per day, then an adversary would have to wait 40 days for the probability of the number of excess janions being emitted to drop to 1 in 40.

Clearly the janionic infrastructure hides the flow of directed janions very well in the short to medium term. However, if the network is self-monitoring and self-adjusting then long before an adversary could detect a statistical anomaly, the originating and target nodes will have adjusted the flow rates of the random janions that they originate to ensure that the default flow rate statistics are re-established.

If communications are bidirectional or the routes selected for directed janions are closed, then each node will emit as many extra janions as it absorbs. Hence, each node can automatically reduce the rate at which it originates random janions—by one random janion for each directed janion—so that the total average flow rate through each node returns to its default value.

If communications are predominantly unidirectional and the routes are open (with node A at one end of a route and node B at the other), then the originating node needs to reduce the number of outgoing random janions while keeping the number of incoming random janions unchanged, and visa-versa for the target node. The originating node can reduce its outgoing random janions by the number needed to restore the average outgoing flow rate to its default value. It can then add instructions to its outgoing random janions so as to create as many closed forked routes as are needed to raise the average flow rate of incoming janions back to its default value. The target node can emit the same number of outgoing random janions as before, but it can send an appropriate number of them on open routes, so as to lower the average flow rate of incoming janions to its default value.

Timing Attack

An adversary could gain evidence that node A is communicating with node B by correlating the emission of janions by node A with the absorption of janions by node B.

If a particular starting time is selected at random, and the count of the number of janions absorbed by node B that occurs in a time interval t that succeeds the starting time is subtracted from the count occurring in a time interval t that precedes the starting time, then the resulting probability distribution will have a mean of zero and a variance of 2r(m+1)t. Now suppose that an adversary knows that it takes up to time t for a janion to get from an originating node to a target node. Suppose the adversary waits until node A emits a janion. Suppose he monitors the count of the janions absorbed by node B during a time interval t, and then again during a second contiguous time interval t. If all the janions originated by node A are random and the network is large, then the probability that any of them will pass along a route that contains node B is negligible (see next section). Hence, the mean and variance of the difference in the counts between the two windows should be the same as when the starting point is selected at random. However, if s directed janions per day are emitted by node A and targeted at node B, then the probability that the janion monitored by an adversary is directed will be s/r(m+1), so that on average the difference in the counts between the two timing windows will be s/r(m+1), as the earlier window will always contain the count associated with a directed janion. If the adversary repeats this process, at the maximum rate of 1/t times per day for k days, then the excess count will be ks/tr(m+1) and the variance will be 2kr(m+1).

Assuming that the adversary wants to wait until the probability of the excess occurring by chance has dropped to no more than 1 in 40, and that the probability distribution of the difference in the window counts is approximately normal, then, as only the upper tail is relevant, the excess must equal twice the standard deviation of the probability distribution of the difference in the counts between the two windows:

ks/tr(m+1) = 2sqrt(2kr(m+1))

k = 8t**2(r(m+1))**3/s**2

If 10 directed janions are originated by node A per day and the width of the counting window is 6 hours, then an adversary would have to wait for about 13,700 years to gain solid evidence of communication between the nodes. The reason why this correlation proves so difficult to detect is that the adversary doesn’t know which 10 of the 1000 janions emitted by node A per day are targeted at node B. In other words, only 1 in 100 of the measurements he makes contains any useful information. And even then as the transit time for janions across the network is high many random janions will arrive at the target node during each of the counting windows—for every excess janion detected some 25,000 random janions will arrive in each of the counting windows.

On the other hand, if nodal holding times were negligible and janions took at most one second to get to the target node, then an adversary would only have to wait for about 15 minutes to get the evidence he needed. This difference in the amount of effort that an adversary must expend between these two scenarios illustrates the importance of long holding times and demonstrates why suspected routes can easily be confirmed on fast, low-latency networks, such as those associated with Internet browsing.

This type of timing attack will only work if the probability distribution of holding times is not uniform. Suppose that node A sends out a directed janion at about the same time each day and instructs the intermediate nodes to select random holding times so that the janion is equally likely to arrive at its target at any time during the next 24 hours. In this case, no matter how the counting windows are chosen they will record on average the same number of directed janions. If a lower latency is required, node A could emit janions about once per hour with a uniform distribution of transfer times spread over an hour. Many of these janions would of course be dummies. Alternatively node A could send out a small number of important messages with fast transit times, and let the network delay the less important messages so as to balance the statistics.

A target node can also detect statistical anomalies. If the sending node includes the time at which a janion is emitted as part of its instructions, then the target node can perform its own statistical analysis on the distribution of transit times. And it can do this far more efficiently than any adversary (100 times more efficiently in the above example). Hence the target node can detect the development of a statistical anomaly long before an adversary could do so. The target node can then request the sending node to adjust the instructions that are given to the intermediate nodes, and can subsequently confirm that these adjustments cause the anomaly to disappear.

Penetration Attack

A penetration attack occurs when an adversary progressively compromises more and more of a network’s nodes. Effectively, this attack removes nodes from the network, so that it shrinks. Now, with an active penetration attack it is possible to determine which nodes have been compromised and then blacklist them, so that, even though the network shrinks, at any time the proportion of compromised nodes that have not yet been discovered will always be small. Unfortunately, with a passive attack it is not possible to determine which nodes have been compromised. Hence, as more and more nodes are compromised, the average number of uncompromised intermediate nodes on a janion’s route decreases. At some point janions will occasionally be sent along routes that consist entirely of compromised nodes. Eventually all routes along which janions travel will have been compromised.

For all the other attacks considered so far it has not been possible for an adversary to determine the routes along which janions travel. So we need to ask (1) at what level of penetration does it become possible to routinely detect routes, and (2) does knowledge of routes allow an adversary to determine which nodes are communicating with one another.

So the first question is how likely is it that an adversary will be able to determine the route followed by a particular janion—how likely is it that all nodes other than the originating and target nodes have been compromised? Suppose that a fraction f of the network has been compromised and that janions are sent along closed routes that contain m intermediate nodes. Then the probability, p, of the entire route being compromised is given by:

p = f**(m-1)

f = exp(ln(p)/(m-1))

Let’s assume that there are 9 intermediate nodes. Then with 92% penetration the probability of detecting each route is 1 in 2; with 75% it is 1 in 10; with 56% it is 1 in 100; with 42% it is 1 in 1000; and with 18% it is 1 in a million.

Now we can ask for a given degree of network penetration, how long will it take before the routes corresponding to directed janions are detected? Suppose, as above, that the probability that any particular route is compromised is p, and that node A originates k directed janions targeted at node B every day. As time passes the probability that at least one directed janion will have been detected increases. If we wish to ensure that this probability rises no higher than q, then for how many days, d, can we continue to send directed janions? The number of routes followed by directed janions in d days equals kd. The probability that none of these routes has been compromised is (1-p)**kd. Hence, the probability that at least one route will have been compromised is given by

q = 1-(1-p)**kd

d = (1/k)ln(1-q)/ln(1-p)

Let’s assume that we want the probability that one or more routes have been compromised to be no more than 1 in 100, and that node A originates one directed janion per day. Then with 56% penetration an adversary will have to wait for 1 day; with 42% for 10 days; and with 18% for 27 years.

So we now have an answer to the first part of our question: at what degree of network penetration can an adversary frequently detect the route along which a directed janion is travelling? The next question to ask is does this matter? Effectively, we have a situation where an adversary can see that a janion travels from node A to node B and back again. Now an adversary can never prove that a janion is directed without compromising one of these two nodes. However, the size of the network determines the frequency with which randomly selected routes will contain both nodes A and B. If the frequency with which an adversary finds nodes A and B on the same route is much higher than it should be by chance, then he can conclude that the routes are selected intentionally for the purposes of communication.

So how likely is it that two nodes will be found by chance on the same route in a network containing n nodes. The probability that a random janion emitted by node A will pass immediately through node B is 1/n. If it passes first through some node X and then through node B, the probability of this occurring is 1/n**2. However, as there are n possible choices for node X, the probability that the janion passes through node B after two hops is still 1/n (and the same for multiple hops). Hence, the probability that node B will be found amongst the intermediate nodes by chance equals m/n.

Over a period of k days, an average of r(m+1)k janions will have been emitted by node A, and the probability that node B will appear on none of these routes equals (1-m/n)**r(m+1)k. Hence, the probability, p, that node B will appear on the same route as node A one or more times is given by:

p = 1 - (1-m/n)**r(m+1)k

k = (1/r(m+1))ln(1-p)/ln(1-m/n)

n = m/(1-exp(ln(1-p)/r(m+1)))

Suppose that the probability p is 0.5, that the network has a billion nodes, and that there are 9 intermediate nodes per route. Then the time that must elapse before there is at least a 50% chance that node B will appear on the same route as node A equals 211 years. This is fine if node A only needs to communicate with node B once every 211 years!

Suppose we only wished to wait one day before there was at least a 50% chance of node B appearing on the same route as node A? Then the network should contain about 13,000 nodes. Hence, if node A and node B wish to communicate every day, they need to belong to a high-frequency subnet containing about 13,000 nodes. If they do, then an adversary will have no evidence to conclude that the janions they exchange are directed, rather than random. Note that as the network is progressively compromised an adversary will be able to estimate the size of the subnet and the frequency of communications within the subnet, so the size and the frequency need to be selected for consistency before penetration becomes too deep.

The size of the subnet places restrictions on the number of nodes that a particular node can communicate with on a frequent basis, but as can be seen from the example above this is far from being restrictive. The nodes belonging to the subnet should not be fixed, but should shift over time. If node A wants to start communicating with node C and it has not done so in the past, then an adversary may already have determined that node C does not belong to the subnet. If the subnet were fixed, then the sudden appearance of high-frequency exchanges with node C would provide evidence for communications. If subnet membership is fluid, then it may just have happened that node C has been added to the subnet purely by chance.

Summary

The analysis above is of the broad-brush variety, with various details omitted, and our rather rusty mathematics has doubtless led to some errors. Now, we’re not suggesting that such a network should be constructed, and, in any case, a detailed simulation of its properties would be needed before such a task was attempted.

Instead, our objective has been to illustrate that even if an adversary can monitor all nodes, and has compromised all nodes, except for those that are actually communicating with one another, it is still possible to construct a network in which it is plausible to deny that any communication is taking place.

We’re also interested in promoting certain principles. We like the ability of random flows to disguise directed ones. These random flows need not be wasteful. In a fully distributed network, directories, information, and searching would be distributed amongst the nodes. So the task for some “clever person” is to find an efficient mechanism for using random flows to implement distributed services!

We like the idea of a self-monitoring and self-adjusting network: one that can detect the perturbations caused by network users and external adversaries, and which can then adjust the network flows to prevent any statistical anomalies from developing. We like the ideas of closed circuits and nodal myopia that allow any node to secretly test that a particular node is performing as it should, without the node in question having any idea that it is being tested. And we like the idea of a network being able to arrive at a consensus, with each node voting with its own nodal private key.

We like the idea of route-based rather than point-based communications. At present, a downloaded web page or an email has a definite destination. With route-based communications, the best that can be said is that the web page or email may have had a particular destination. And we like the idea of drop-off nodes, so that two parties never have to communicate directly, but can use a node that is randomly varied with each exchange between the parties.

Hiding Information: A Typology

2006-06-09T16:20:00.000+01:00

Yes, you must hide that information—but you must hide it so that no one knows that it is hidden in the first place—then you must cover your tracks by hiding the infrastructure that you used to do the information hiding—and finally you must hide the person who hid that infrastructure, namely yourself! ... Masochistium Clickium Hic!

A Four Dimensional Space

Now that Big Brother is actively engaged in recording every moment of everyone’s life—from first cry to last gasp—we need to develop a sound framework on which to base our privacy solutions if they are to withstand this growing menace. There are four different activities that are important to the success of privacy solutions:

Hiding the Information (HEye): hiding information in such a way that it cannot be found, while making no attempt to disguise the fact that it has been hidden. Big Brother concludes, “I don’t know what has been hidden, but I do know that this data contains hidden information.”

Hiding the “Hiding of the Information” (H2Eye): hiding information in such a way that Big Brother cannot determine that it has been hidden, while making no attempt to disguise the infrastructure that has been used to do the hiding. Big Brother concludes, “This data may contain hidden information, or it may not; I just don’t know; but what I do know is that these software tools that I’ve found can be used to hide information.”

Hiding the “Hiding of the Hiding of the Information” (H3Eye): hiding the information, hiding the fact that the information has been hidden, and hiding the infrastructure that has been used to hide the information, while making no attempt to hide the interests of the person who does the hiding. Big Brother concludes, “This data may contain hidden information, or it may not; I just don’t know; and I have found no software tools that might have been used to hide any information; but what I do know is that this person is one of those dangerous people who believes that at least some aspects of their lives should remain private.”

Hiding the People who “Hide the Hiding of the Hiding of the Information” (H4Eye): hiding the information, hiding the fact that the information has been hidden, hiding the infrastructure that has been used to hide the information, and hiding the interests of the person who does the hiding. Big Brother concludes, “This data may contain hidden information, or it may not; I just don’t know; I have found no software tools that might have been used to hide any information; in fact, there is nothing to suggest that this person is not a ‘good citizen’, one who does not wish to keep even the smallest aspect of his life hidden from my all-seeing eye.”

These activities are like layers of armour, the more vicious and ruthless the enemy the more layers you need to protect yourself.

HEye

A characteristic of most privacy solutions that have been developed to date is that they focus on hiding information in such a way that it “cannot be found”, while making no attempt to conceal the fact that “it has being hidden”. Typically, HEye equates to cryptography. For example, Alice emails her PGP encrypted file to Bob. The headers contained in the file shout out loud and clear “Encrypted Material”.

Now there is nothing wrong with HEye in principle. But its utility as a privacy solution is predicated upon the assumption that we live under a “permissive” regime. There is an implicit assumption that Big Brother will play by the rules of this game. Yes, he will try to find the hidden information, and yes, he may or may not succeed depending on the strength of the algorithms employed and on the quality of the passwords chosen by us, his opponents. But it is Big Brother who makes the rules, and it is Big Brother who can change the rules, as and when he pleases. And, like a petulant child who has lost far more often than he has won, he may soon decide to pick up his ball and walk off the pitch. Rather than try to find the weaknesses in the privacy solutions we use, Big Brother may well decide to ban their use outright.

The assumption that most developers of privacy solutions have been making is that the regime in which the software will be used is, and will remain, a permissive one. Now most privacy solutions have been “born in the USA”, a land where privacy is often assumed to be an inalienable right. And these privacy solutions have been “fit for purpose” as far as the Western world is concerned, though they have been of much less benefit to those people who live under the proscriptive regimes commonly encountered elsewhere.

But, we see daily that the once permissive regimes found in the Western Alliance are becoming increasingly restrictive. If encryption were banned tomorrow, just think how easy it would be for Big Brother to identify the offending software, its by-products, and its users—the encrypted PGP file and the Tor node all too readily announce their presence to the world. Current privacy solutions, both the data produced and the software that produces them, are far too easily identified by the tell-tale header and the file hash.

H2Eye

So, let’s be frank, “HEye is dead, long-live H2Eye.” The characteristic of H2Eye privacy solutions is that they are based on an understanding that it is not sufficient to hide information, but it is, in addition, necessary to hide the fact that the information has been hidden. Typically, H2Eye equates to steganography, where, for example, a message is hidden inside a digital image by altering some of its pixels in a characteristic way so that the message can be retrieved, while the image still looks just like any other image to both the naked eye and to the forensic scientist’s toolbox (now that forensic science is being abused universally, its once principled practitioners are being replaced by those who have “something of the night about them”—Dr. Jekyl may cradle the polygraph in one arm, but in the clenched fist of the other Mr. Hyde wields the electric cable).

While some steganography software is available on the Internet, the technique is very rarely used today, and very little is known about it even amongst scientists specializing in computer forensics. And this is not just our impression, for whilst Googling one day we came across an FBI endorsed report on steganography which came to just that conclusion, and if our “incorruptible Agent Starling” says so, then it must be true, mustn’t it!

So while it makes good sense to continue encrypting our personal information as in the past, we would be wise—now that political global warming is raising the “totalitarianure” of once democratic regimes—to start hiding the encrypted material using some steganographic technique.

One program we particularly like is TrueCrypt. This program makes it possible to hide large quantities of information in an efficient manner by disguising the encrypted material as random data—think of it as symmetric PGP encryption without any headers. A disk partition or a USB stick with a TrueCrypt volume looks just like unformatted space. In addition, as a second line of defence, TrueCrypt allows the user to create a hidden volume—you store the information you want to disclose in an “outer volume” that you make available for inspection, while you store the information that you do not want to disclose in a concealed “inner volume”, the existence of which you can plausibly deny should you be interrogated by Big Brother’s “goon” brigade (you can find TrueCrypt here).

H3Eye

Now while H2Eye is better than HEye it’s far from perfect. Why? Well, Big Brother has arrived, and he’s examined your computer. He hasn’t found your TrueCrypt volume, but he has found a program called “TrueCrypt.exe”. Now if you possess the software to hide information, Big Brother will immediately conclude that you’ve used it. In some countries that conclusion might herald torture or a summary execution, as many Big Brothers work on the “better safe than sorry” principle. Elsewhere in the world, even if Big Brother hasn’t the evidence to convict, he has the intelligence needed to justify watching your activities very, very closely. So you also need to hide the software that you use to do the information hiding.

Now where did you get that TrueCrypt software? You downloaded it from some web site. And the web sites that offer privacy software for download are delicious honey pots for Big Brothers worldwide. You can be pretty sure that the lines leading in and out of such sites are groaning under the weight of wire taps. So you also need to hide the sources from which you get the software that you use to do the information hiding.

The software and the sources from which it is obtained are part of the infrastructure of information hiding, and this infrastructure needs to be hidden with the same diligence as the data files that it produces.

H4Eye

Now with HEye, H2Eye, and H3Eye in place Big Brother has no evidence that you have hidden, or even have the capacity to hide, information. So what more needs to be done? Well, have you ever gone parachuting? Just imagine you are about to do so. You’ve packed up your kit and are just about to board the aircraft when your instructor says, “Hey, you’ve forgotten your reserve!” Now do you say, “Oh, it doesn’t matter, I’m sure my main shoot will work just fine.” No you don’t. The consequences of the main shoot failing to open are far too “grave” for you not to carry a spare. Certainly for the Herr W.S. Blooers and Ms. D.S. Dents of this world the consequences of their information hiding activities being discovered are far too “grave” for them not to carry a spare also. But even if you’re a Mr. N. Boodie you have cause for concern now that the NSA is engaged in harvesting everyone’s personal details from across the entire web, particularly from social networking web sites such as MySpace.

But what exactly in the current context would constitute a spare? Let’s say that under H3Eye Alice is able to hide information successfully. But Big Brother still knows that Alice exists. To a greater or lesser extent he knows what web sites she visits, what she writes in her emails, and what she says on the phone. And from all this monitoring Big Brother may well come to the conclusion that Alice has an unhealthy interest in privacy, an ailment that may well incline Big Brother to seek out and apply a suitable corrective. The existence of a world in which Big Brother has vast databases of information about people—and about the people they communicate with—is a world in which there is no room for error—make one slip in your information hiding procedures and it’s “iron curtains” for you. And since we all make errors from time to time, we need a world that has a degree of “fault tolerance” built in to it.

The challenge of H4Eye is to erase Alice and her communications from Big Brother’s mind and his databases. We need to create a world where governments know nothing whatsoever about individual citizens. To function properly a government only needs to know aggregate statistics: how many people do this, have this, need that. At the very lowest level of government some personal information is, off course, required, but it’s at that level that it should remain—for example, while you may not mind your doctor keeping a record of your medical condition and prescriptions, you are very likely to mind when the same information is stored on a national database, one accessed by hundreds of thousands of public servants, amongst whom will be those “self-serving servants” who are ready to sell that information to any interested party for a few hundred dollars.

Extraordinary Rendition slated byCouncil of Europe

2006-06-08T11:55:00.000+01:00

Council of Europe slates European nations over their support for the CIA’s policy of extraordinary rendition. ... Masochistium Clickium Hic!

Now you may remember that last November the CIA was “outed” for kidnapping people from around the world and transporting them to repressive regimes so that they could be tortured by proxy. Of course, when put in such stark terms it doesn’t sound quite like “motherhood and apple pie”; however, change the wording to being “rendered for the purposes of interrogation” and it seems far less menacing, more like an accountant balancing his books than a torturer brandishing his blades.

Following these revelations the Council of Europe began an investigation into the extent to which the nations of Europe had been complicit with their behemoth of a transatlantic bed-fellow. The conclusion, in a report published by Swiss Senator Dick Marty, is that there was “intentional or grossly negligent collusion".

It appears that Cyprus, Germany, Greece, Ireland, Portugal, Spain, Turkey, and the UK have been turning a blind eye to CIA flights through their territories, or have been actively assisting them with refuelling. Italy, Macedonia, and Sweden have been waving goodbye as their residents were being abducted. And Romania and Poland have been hosting secret prisons, a la World War II—you didn’t think that all that post-cold war largesse by the US to Eastern European countries was gratis, now did you?

Of course, the CIA denies that people are kidnapped for the purpose of torture—it’s just “more efficient” for them to be interrogated elsewhere. But why would it be more efficient? Is the CIA really claiming that countries like Syria and Egypt possess more sophisticated interrogation techniques than it does itself? If foreign countries had relevant information to put to suspects during interrogation, then does it not seem a great deal more “efficient” to send the “information” to the country holding the “suspect” than to send the “suspect” to the country holding the “information”? And we don’t doubt that the CIA could fly foreign interrogators to the US for a lot less effort—and without the accompanying unfavourable publicity—if they really needed to have them present at an interrogation.

The inescapable conclusion must be that the CIA finds the provisions of the US Constitution rather irksome, and looks wistfully to those regimes whose constitutional arrangements permit more flexible, creative, and informative interrogation procedures.

Children’s Section: A Just Reward!

2006-06-08T00:00:00.000+01:00

The director of the NSA meets his maker—on the similarity of divine and mundane mottos—on being kidnapped—on letting the director of the CIA take a little more of the heat—the Devil as a good employer—on 21,763 eyes and two teeth—on having consideration for the heavenly hosts—on getting one’s just reward—on the dangers of looking in the mirror. ... Masochistium Clickium Hic!

“Well children, are you all sitting comfortably? Good, now let’s begin our story.”

As the director of the NSA lay dying, he offered up a little prayer. Of course, he wasn’t much used to praying, since he had never had to curry favour with anyone before. But, he thought it best to hedge his bets—his stock broker had told him this once—and praying was the sort of thing you’re supposed to do when dying, so he did some.

Suddenly God appeared in a flash of light. “Ah!” said the director, “Nice of you to come so promptly.” And then, suddenly becoming anxious for a favourable judgement, the director continued, “Look God, see our motto on the wall.” God looked, and there on the wall was the motto of the NSA, “In God we trust; all others we monitor.” “How extraordinary!” said God, “Why, we have one that’s almost exactly the same.” “Ha!” thought the director, “I’m in. That was easy.”

Suddenly there was another flash of light—now children don’t be surprised, for improbable things happen in stories, such as two flashes of light occurring “suddenly” in quick succession, and directors of the NSA who pray to anyone other than themselves. In any case, to continue our story, the director suddenly found himself transported to Heaven, and there, arranged in a great arc across the sky, was the Heavenly motto, “In the People we trust; the NSA we monitor.”

Suddenly—yes children, “suddenly” appears a lot in children’s stories—a black mist appeared. It enveloped the director, and then in a flash of anti-light—not yet discovered by science which is why the word may seem unfamiliar to you if you’re reading this prior to the year 2734—the director found himself surrounded by glaring imps, with saucer-like eyes, each burnishing a firebrand, in a dark, dank cavern with slime dripping from the walls. “Welcome! Welcome!” said the Devil. “I’ve tried to make it look just like the office, so you’d feel at home.”

“Why…you’ve kidnapped me,” said the director, outraged at his treatment—you see when he was alive no one had ever kidnapped him. “Now, now,” said the Devil in soothing tones, “No need to get upset. We don’t call it ‘kidnapping’ these days.” “Well, what do you call it?” said the director in angry tones. The imps who had gathered around the director parted to reveal a large cauldron of boiling metal, on whose side was emblazoned the words, “Extraordinary Renditions: NSA Top Brass Only.”

“But,” wailed the director, “you’ve got the wrong man.” “Really,” said the Devil, “I wonder where I’ve heard that before?” “No, no, it’s the director of the CIA you want,” petitioned the director of the NSA in the most earnest tones. “You see,” said the Devil, tenderly placing a scorching hand on the director’s shoulder, “Down here, we weren’t born yesterday.” (Actually children we don’t know exactly when the Devil was born, or even if he was born, but, if he was, then it happened a very, very long time ago.) The Devil continued, “Now you’ve heard of ‘Aiding and Abetting’. Where exactly do you think the CIA got their intelligence—they certainty weren’t born with it? And, as to the director of the CIA, just you look over there. The metal in his cauldron boils at a slightly higher temperature than yours, so there’s no need to complain that you’re being treated unfairly. Sorry, if all this seems a little Hollywood, but my imps really took a liking to those Terminator films, so as a good employer I felt it best to humour them.”

The Devil picked up a large iron-bound book and began leafing through its singed, dog-eared pages. “Ah! Yes!” he said, “Here we are.” And putting on his glasses—which immediately started to melt in the intense heat—he quickly did a little mental arithmetic. “Wish we could get some of your technology to work down here. Don’t need one of those supercomputers, just a PC would do fine—Billy Boy’s already offered us a deal on the software in exchange for a lower temperature when he retires—but I’m afraid those Intel chips…well…they just melt in the heat. We’ve applied for a dispensation to have some localised air-con installed, but no joy, no joy.”

“Now, now,” said the Devil admonishing himself, “you must think me very rude pouring over my problems, when I should,” he smiled broadly, “be pouring over yours! You’ve heard the phrase, ‘An eye for an eye, a tooth for a tooth,’ I believe. Now, according to my calculations, I make it 21,763 eyes and two teeth.” “This must be a dream,” wailed the director, “I can’t believe that God would let this happen to me.” “Oh!” said the Devil, “the real ‘God’ wouldn’t, but your ‘God’ would.”

You see your God wouldn’t like to have you tortured up there in his Heaven. It would upset the heavenly hosts, and the divine scriveners would start writing tracts about it being incompatible with the Heavenly constitution—what with all that peace and love and that sort of thing. So your God and me…well…we have an agreement, a pact you could call it. He sends the undesirables he wants to be tortured down here, out of the way as it were. Yes, yes, I admit it’s not original, but, at least, you must admit we’re quick learners!”

“Now boys,” said the Devil to his imps, “Off we go. Thirty minutes per eye, five minutes per tooth, with 24 hours in between dunkings, so that our dear director can contemplate the nature of his sins and look forward with eager anticipation to his next deboning.” The excited imps eagerly closed in and, with sharp claws digging into the director’s flesh, they carried him aloft towards the waiting cauldron, which bubbled even more vigorously in anticipation—you see children, in stories caldrons are allowed to do this!

“Oh! By the way,” said the Devil, “We, too, have a motto.” And as the director looked up at the low-slung ceiling, there in black Gothic letters, dripping with the fat of many former directors of the NSA were the words, “To every man his just reward.”

“And now children, every story has a moral to it, so that, hopefully, none of you will grow up to become a bad person like the director of the NSA. And what is the moral of this story? ... Yes, that’s right children. Confucius, he say, ‘Wise man, when he searching for God, remember not to do so while he look in mirror!’”

Welcome to the Future

2006-06-07T18:20:00.000+01:00

Why the cold winds of autumn are beginning to blow—foretelling the future—perdition: technologies, drivers, and obstacles—why we’ve “had it so good”—and why these “good times” will not last. ... Masochistium Clickium Hic!

The Gathering Storm

Now, it’s not news to say that governments worldwide are deploying increasingly intrusive techniques to monitor, profile, and control their citizens. So why don’t we continue to do what we’ve done in the past and make incremental adjustments to our privacy solutions to cope with this growing threat? The reason is that this “business as usual” approach might well prove to be a fatal mistake: new legislation and new technologies adopted over a relatively short period of time might defeat our attempts to create any privacy solutions at all. We don’t think it’s possible to quantify the likelihood that this scenario will come to pass, but we are beginning to feel uneasy. The first squalls of what may well prove to be autumn are beginning to blow through the once bountiful land of “Permissive Privacy”, and the winter ahead may well be very hard indeed. Perhaps we would be wise to look at what threats may present themselves over the course of the next few centuries, and then prepare, in a timely manner, the foundations upon which we can build privacy solutions to weather this gathering storm.

Crystal Ball Gazing

Now, we don’t claim to have a better crystal ball than anyone else, but cross our palms with silver—or should that be gold—and we’ll stare into its misty depths, where we see:

Utoria

It was the year 2284. The peoples of planet earth had resolved their differences, and a utopian age of peace and goodwill had dawned in the newly founded global state of Utoria.

As soon as a child was born he was interfaced to the “hypernet”. The interface, or the “helmet” as it was called, consisted of an organo-metallic construct, a polly-alloy of tungsten, from which nanoscale fibres grew into the developing brain along genetically engineered chemical gradients, and then branched out to form a dense network that had intimate neuronal contact at both the cellular and synaptic levels.

Just as the internal connections of the helmet monitored each individual’s thought processes and affective functioning, attached to its outer layers was a vast array of sensors that recorded in meticulous detail his experiences of the external world.

In accordance with the policy of “techstasi”, the contents of both worlds were automatically published to the “hyperzines” for all of Utoria’s citizens to view. This policy, encouraged by centuries of “Reality-VTV”, was modelled on a social analysis of East Germany, the twentieth century’s nation state most noted for its solicitous concern for its citizens—the “histozines” recorded how the Stasi had encouraged the populace to be attentive to the welfare of their neighbours, and to report any signs of distress or unhappiness, so that remedial action could be taken in a timely manner. The Council of Utoria had found that distributing its “welfare state” software amongst the billions of hypernet nodes led to very efficient processing, and had the added benefit of providing vicarious entertainment for the “RVTVers”.

Germ-line genetic manipulation had ensured that about eighty percent of the population now fell into the biddable RVTV category. The other twenty percent still showed varying degrees of reluctance to conform to the “happiness” edicts passed by Utoria’s Council. Indeed, there were still a small number of “info-terrorists” who sought to disconnect themselves, at least temporarily, from the hypernet, who tried to prevent some of their personal experiences from being shared with their fellow citizens, and who showed a dismal lack of respect for both authority and correct orthography by consistently doubling the “l” whenever called upon to spell the word “helmet”. There were, of course, laws to help reintegrate such individuals into Utorian society. It was, for example, a criminal offence to possess a computing device or to wear a helmet that was not connected to the hypernet 24/7.

To care for these “lost sheep” the Council relied upon the services of a vast army of software agents, called “pastors”. The pastors patrolled the hypernet. They entered every node in turn and inspected its contents—the construction of a “hyperscreen” to exclude a pastor was a criminal offence. Once in a node, a pastor would scan the mandatory logs of its owner’s experiences and his reactions to them, and ensure that there was no sign of any malfunction, no intimation of incipient mental illness, no desire of not conforming to the correct world view. Where a malfunction was detected the individual would be taken off-line while the diseased circuitry in his neuronal matrix was replaced or reprogrammed.

It was into this Arcadia, into this Elysian and Edenic world, that Winston Smith’s great-great-great- great-great-great-great-great-great-great-great grandson was born.

Why this will come to pass

Now, we don’t want to be alarmist. We’ve deliberately painted a bleak picture of the future in order to engage you, dear reader. But, how likely is such a future to come to pass? Where in a range of “probable-possible- improbable-impossible” would you place it? Well, our “guesstimate” falls somewhere between the probable and the possible. If you disagree, then why? Let’s have a look at the technology, the drivers, and the obstacles.

The Technology

Now, it does not look as though Moore’s law—the doubling of processor speed and memory capacity about every two years—will be disproved any time soon. A decade ago it looked as though we might well be stuck in “microland”, but nascent developments in nanotechnology make it reasonably certain that “nanoland” awaits, heralding a billion-fold increase in processor speed and memory storage capacity. Add to that the recent developments in clustering states of entangled qubits, developments that may well lead to quantum computers with “attitude”, in contrast to the “wimpish” proof-of-concept specimens that we have today.

If the “helmet” seems improbable then we suggest you review the developments in “wearable computers”, in self-assembling nanoscale structures, and in the understanding of the genetic switches that control the growth and differentiation of biological structures. Apply the above to the early mammalian brain, one characterised by a great degree of neuronal plasticity. Then throw in a few centuries of hard graft by scientists, heavily funded by both the business and military sectors. We suggest that the fruit of these labours may well bear an uncanny resemblance to the “helmet” envisioned above.

The Drivers

Now, if you look at the leaders of today’s world you’ll be spoilt for choice when it comes to selecting candidates for whom the above scenario would prove an attractive one. Wouldn’t it be nice to have so much information and so much control? Wouldn’t it be nice to be permanently in government, because those “diseased” individuals who might wish to have you out of government could be, thanks to the marvels of modern science, cured of their affliction?

Obstacles, what Obstacles?

Who will stop governments from using these newly available technologies to bring about our “2284”—for example, we gather that two-thirds of all Americans claim that they don’t mind the US government spying on their activities, and in a “democracy” two-thirds will do very nicely indeed. Why, in time, not wearing your “helmet” might be seen as positively unpatriotic.

The perennial problem with democracies is that the vast majority of the populace only focus on the immediate past and the immediate future. These people react to “clear and present dangers”, but are oblivious to dangers that develop in small incremental stages—“the road to hell lies open night and day; soft the descent and easy is the way.” In some ways the threat from Big Brother is like the threat from global warming: its menace grows slowly, and it’s easy for governments and other naysayers to claim there’s no definite proof. But the problem is that the “tipping point” beyond which change is inevitable and cannot be stopped may well occur before that “conclusive” proof becomes available.

Borrowed Time

The reason that privacy is often relatively easy to maintain in today’s world is that we do not live in a world with one Big Brother, but in a world with many—recall that the world of Orwell’s Winston Smith was the sealed world of Oceania, dominated by one Big Brother. However, unlike Winston, we live in a world possessed of the Internet which spans the territories controlled by many warring Big Brothers. And we are able to use the hostility between them to maintain our privacy—by, for example, distributing the nodes of our proxy chain amongst the contending parties—for each Big Brother only seeks to vanquish his own dissidents, all the while holding fast to the maxim that “my enemy’s enemy is my friend”.

We also live in a world where, until recently, many nation states took a “permissive” view towards the use of encryption within their own national borders. And in those regimes that have taken a “proscriptive” view and have completely banned encryption there has often been such a degree of internal disorder and corruption that, in practice, the use of encryption has still proved possible.

But this relatively happy state of affairs will not last. We have seen a steady coming together of nation states, as they merge into superblocks. For example, the US, Canada, Europe, Australia, and New Zealand for many purposes form the “Oceania” of today, and while the degree to which they share information on their respective citizens is still patchy, it grows steadily. Within Russia, China, India, and the non-aligned block, the past few decades have seen convergence on both the political and economic fronts. It seems inevitable that within the course of a few centuries, there will be—allowing for a considerable degree of devolution to regional and local governments—one state, ruled over by one Big Brother.

Feedback from Pecunixie Land

2006-05-27T03:40:00.000+01:00

Blesseth is the sinner who repenteth—well, let’s see—dancing all the way to the fabled Pecunixie Land. ... Masochistium Clickium Hic!

Blesseth is the Sinner who Repenteth

To err is human; to correct your errors with expedition is divine. Well, according to this definition Pecunix has deity potential. You may remember, dear reader, that we blogged on the problems that our friend Luigi was having with the Pecunix account creation process a short while ago. Well, we got an email from Pecunix in response, and despite the fact we gave their derrière a very thorough kicking, they said they found our blog entry “very helpful”. Ah, if only every organization was as willing to take criticism on the chin in such a square-jawed, testosterone-filled, and manly fashion!

Well, let’s see

However, what is always more important than mere words is affirmative action, and the good folks at Pecunix also said in their email that they had “corrected the problem”. Well, we had a quick look, and indeed they have. We started out with cookies and Javascript disabled as Luigi had done previously in his mountaineering attempts. As soon as we got to the T&Cs screen, there at the bottom was the message:

The Pecunix site uses Javascript. Please activate Javascript in your browser before you continue

We enabled Javascript and pressed “I Accept”. And then we were greeted with the message:

You have a COOKIE problem!

Please set your browser to accept COOKIES from this site, then begin the account creation process again.

More Information

The Pecunix site uses cookies to establish a secure session for you while you use the secure site. The cookie will be deleted from your browser when you close your secure session with Pecunix. If you set your browser to accept cookies from the Pecunix site you will be able to continue.

You have a Javascript problem!

Please activate Javascript in your browser , then begin the account creation process again.

Yes, we did have a cookie problem. But, oops, it’s Pecunix, rather than us, who has the Javascript problem!

But, as requested, we went back to the beginning, enabled cookies (only first-party cookies are required), tried again…and…and success! There were no messages this time, and led by the Pied Piper with his siren song of gleaming gold we danced with ease all the way into the fabled Pecunixie Land.

Now, it would help the user to display the cookie and Javascript warnings on the same page. And given that some potential users, like Luigi, may never have heard of cookies or Javascript, a link to a help page, explaining how to “do the deed” with the major browsers would add that warm, glowing, “they care about me” feeling. But, all in all, these are minor quibbles.

Luigi says, “He who make-a de amends, make-a de money!” And we agree. Well done Pecunix, a responsive organization is one the world likes to do business with!

The Scam Ratio

2006-05-27T03:35:00.000+01:00

Higher mathematics—yes, it separates the “scrupulous sheep” from the “gulling goats”—but there’s a fly in the ointment—why a “scammy” site might be ideal for a knight in shining armour—why you need not have read this blog entry in the first place (hint!). ... Masochistium Clickium Hic!

Doing your Sums

For the accountants amongst you who like to reduce everything to ratios we have a candidate to add to your portfolio. We call it the “scam ratio”. Here’s how to calculate it:

Find a search string that uniquely identifies the site in question. Use Google to calculate the total number of hits (TH). Then repeat the search, but this time append the word “scam” to the search string to calculate the total number of scam hits (SH). Then the scam ratio, expressed as a percentage, equals (100 x SH / TH)—makes you feel as though you were back in school, doesn’t it!

Now, does this statistic provide a simple means to separate the “scrupulous sheep” from the “gulling goats”? Well, let’s investigate.

It’s looking Good

Let’s take some major sites that don’t operate scams—well, at least not overtly:

Brand	Scam Ratio
Amazon	0.3%
Intel	0.3%
Microsoft	0.2%

Some Good Guys

Scam ratios of less than 1% are typical of major companies operating in non-controversial business areas.

Now, let’s take some well-known scams:

Brand	Scam Ratio
Prof Resources System Int.	63%
Fortuna Alliance	56%
Drivers Seat Network	52%
Bounty International Lottery	49%

Some Bad Guys

Scam ratios of around 50% are typical for the most palpable of scams. So clearly, the scam ratio delivers the goods?

But, not so fast

Let’s calculate the scam ratios for the major e-currency issuers:

Brand	Scam Ratio
e-gold	36.0%
Pecunix	25.0%
1mdc	1.2%

E-currency Issuers

A naïve interpretation of these figures would suggest that e-gold and Pecunix were operating scams, and that only 1mdc could be relied upon.

However, the reason for the high scam ratios for e-gold and Pecunix is that these e-currency issuers are very widely known and are usually mentioned in general articles dealing with e-currency. But these same articles will almost invariably refer to the scams that so often make use of e-currencies. Because 1mdc is less well known (and is a pseudo-issuer) it does not appear so frequently in these articles, and hence the scam ratio grants it an unwarranted reputability in comparison to its more illustrious bed-follows.

So if our scam ratio is to be of any use at all, then it’s important to read a specimen number of the entries which contain hits for the word “scam” and the site in question, and then determine if these entries are accusing the site of being directly involved in a scam, or whether references to the word “scam” are simply commonly associated with the business sector within which the site operates.

Clearly, what matters is how the scam ratio varies between different businesses operating within the same sector (and even given these strictures anomalies can still arise, as with the case of 1mdc).

Is it too clean?

So should you choose from amongst those businesses with the lowest scam ratios in the sector of interest? Not necessarily!

Let’s take the example of web hosting. A typical on-shore web hosting company will keep detailed logs and pass these logs over to Big Brother at the first whiff of a court order. On the other hand, a web hosting company that respects your privacy will destroy all detailed logs, and will be based in a jurisdiction that respects the privacy of both its citizens and its businesses.

Now those businesses operating scams have very good noses for where they can keep their operations private. And even if a web hosting company takes down a site as soon as it discovers that the site is operating a scam, those web-hosting companies that respect their client’s privacy will still get a reputation for being associated with scams. So, if you want to blow the whistle on Big Brother, then a web hosting company with at least a modest scam ratio might well be just what you need, for the anonymity that helps protect the scammers from the scammed is the very same anonymity that will help protect you from Big Brother!

Conclusion

So now you can see the reason why we introduced you to the “scam ratio”: it was to illustrate that, in practice, when it comes to determining whether a site is operating a scam it just isn’t that simple!

E-Gold: On beingeconomical with the Truth!

2006-05-27T03:30:00.000+01:00

What Big Brother expects—on supping with someone who sups with the Devil—why Pecunix has far better table manners than e-gold. ... Masochistium Clickium Hic!

What Big Brother expects

The “Name”, “Address Details”, “Email Address”, and “Telephone Number” that you enter into the e-gold account creation form should be just what e-gold and Big Brother expect them to be—namely yours! Now, of course, you could enter “pseudonymous” details for these fields, and we suspect a fair proportion of the existing e-gold account holders have been—how shall we put it delicately—“economical with the truth”.

Supping with the Devil

We’ll have more to say about “pseudonymous” entities on another occasion, but suffice it to say that if a web site asks you to enter personal details, then the validity of those details forms an integral part of the contract, often implied, between you and the web site service provider.

In the case of e-gold, your personal details aren’t verified when you create an account. But beware, that doesn’t mean never-ever! If, one day, your personal details need to be verified for some reason and that verification fails, then you might find your assets frozen. And that day might not be too far in the future now that e-gold is “supping with the Devil”—in his incarnation as the U.S. Treasury—but without the requisite “long spoon” of having a data processing centre that is based off-shore! So, if you’re struck by a sudden bout of amnesia when entering your personal details, then it would be wise to maintain the balance on your e-gold account at a suitably low-level—one that won’t bring tears to your eyes should the contents be “appropriated” by some criminal organization, be it “little” or “large”!

Pecunix: Details, what Details?

But, if you want a really, really private e-currency account then why not try Pecunix, an e-currency issuer who takes your privacy very, very seriously—well, apart from one not-so-wee aspect that we shall harp on about in due course! Now, with a Pecunix account, the divulging of personal details during the account creation process is entirely optional, as indeed it should be. And you can’t be asked to verify information that you were never required to provide in the first place!

Your Keys please: RIPA, Part 3

2006-05-26T15:00:00.000+01:00

The dilemma—why you should hand over your encryption keys—why you can still keep your secrets safe—a British Big Brother with no sense of fair play—our campaign against RIPA. ... Masochistium Clickium Hic!

Between Scylla and Charybdis

Well, Herr W.S. Blooer, you have a problem. Big Brother is breaking down your door. Now he’s just found those encrypted files on your computer. Now he’s offering you a choice: (1) hand over your encryption keys, or (2) go to prison, be tortured, be executed, or be forced to listen to a lecture by Billy-Boy—none of which was on your to-do list for today!

Do it with a Smile

Well, of course, it’s best not to get into this situation in the first place. But, if you do, then you should…then you should hand over your encryption keys with a smile, for you have nothing to hide! Why? Here’s why. Now Big Brother has decrypted your files. Now he’s marching through your digital jungle along a well-trodden trail to a clearing where he finds…where he finds “everything that you wanted him to find”, whilst remaining blissful unaware that behind an impenetrable thicket of digital trunks lies another clearing, one that contains “everything that you didn’t want him to find”.

Why now?

The reason we’ve decided to blog on this topic today is that we’ve received a request from a friend in the UK asking for advice. Now there’s nothing we like better than a good reason for a good rant. However, good rants generate lots of words, so we’ve decided to break our “rantations” into sections, most of which you can wisely skip!

Whilst this issue affects everyone, our focus is on the legislation currently being enacted in the UK. So, for those of you who think of the UK in terms of red telephone boxes and little old ladies pedalling their bicycles on their way to evensong we have some introductory polemic under the heading “Butcher Blair and Bubba Brown”. Next come sections detailing the legislation itself, “Crime and Punishment”; its affect upon the innocent majority, “Punish the Innocent”; and its affect upon the terrorist minority, “Exonerate the Guilty”. Finally, and this is the only really important part: what you can do to prevent this Big Brother style of legislation from being enacted, “‘No Keys’ Campaign”.

“No Keys” Campaign

Our “‘No Keys’ Campaign” provides details on how to download spoiling software that makes any “hand over your keys” legislation inoperable. The software can be used to encrypt your data in such a way that it appears indistinguishable from pseudo-random data, making it impossible for forensic analysis to determine that there is any encrypted material present on your computer.

If enough people in the UK were to follow our campaign instructions then the ensuing publicity would be sufficient to halt the proposed legislation. However, following the campaign instructions is even more important for people living in countries where such legislation has not yet been considered: the effort required to prevent anti-libertarian pressure groups from successfully promoting such legislation is very much less than that required to halt pending legislation that is well on its way to becoming law.

“Butcher Blair” and “Bubba Brown”

2006-05-26T14:55:00.000+01:00

Why all is not well in the “sceptered isle”—why “the great and the good” are misunderstood—the outstanding “Nucembaptists”—the foreign adventure—the other Siamese twin—where a hornet “wears his sting”. ... Masochistium Clickium Hic!

The “Sceptered Isle”

Now our knowledge of the recent political history of bulldog Britain is not extensive, but as it may well be better than yours, dear reader, let us explain why our friend is so perturbed.

It seems that life is changing in that sceptred isle. A land that was the birth place of freedom and that was once admired around the globe for upholding the rights of the individual has become—under the joint “stewardship” of what our friend calls “Butcher Blair” and “Bubba Brown”—a tyrant state.

And yes, those rumours are true: the freedom-loving Burnets of Barnstable are retiring to a bungalow in Beijing!

They’re Misunderstood!

Now we feel it’s most unkind to use the designations “Butcher Blair” and “Bubba Brown” respectively for the Prime Minister and Chancellor of Great Britain. We feel that “Dear Tone” and “Dear Gordy” are better names for these “regular guys”. And don’t go and email us saying that Dear Tone has killed over 100,000 people in Iraq and therefore deserves the epithet “The Butcher of Basra”. We would point out in his defence that Dear Tone didn’t personally kill all those people. It’s much the same misunderstanding that arises regarding all those local hospitals that Dear Tone has closed down in the UK. If your relative dies on the long journey to the nearest hospital you wouldn’t say Dear Tone killed your relative, now would you? He didn’t arrive by helicopter, commandeer the ambulance, and then personally throttle your beloved Granny, now did he? And it’s the same with all those people who were silly enough to be in the wrong place when clouds of poison gas spread through the town of Halabja in Iraq during the time of Saddam Hussein. Saddam didn’t poison them personally, now did he? The fundamental problem seems to be that we ordinary beings fail to understand great men of the stature of Hitler, Hussein, Blair, and Bush!

Might is Right!

Now there’s no need for the lawyers amongst you to start talking about the Geneva Convention, or the historians amongst you to recall that similar pleas of “not doing the deed directly” were entered at a place called Nuremburg, but that the accused still swung. We must point out that historians who make such claims have rather selective memories regarding the really important facts of history. The reason why certain persons swung at Nuremburg was because they were guilty, guilty of being on the losing side! You can’t accuse Dear Tone and Dear George of that sin, now can you? You see these two outstanding “Nucembaptists”, exemplars to Christians everywhere, understand the fundamental moral principle that we should all come to terms with: namely, that “might is right”!

The Foreign Adventure

Now, to return to recent UK history. Seeing his popularity fade, Dear Tone thought that a “foreign affair”—with Dear George, of course—was “just the ticket” to divert attention away from his dismal performance on the domestic front. After all, chapter one of that infamous tome How to Survive in Politics is entitled “The Foreign Adventure”.

Even better, as a lawyer, he had a precedent to go by. Once upon a time there was a woman called Maggie: she had “balls”; she fought a war to liberate territory that belonged to Britain; she won the war and received many plaudits for her valiant victory. Now Dear Tone figured that a similar war was just what he needed to boost his popularity. Unfortunately, like the man in the song that he seems so keen on emulating, Dear Tone has “no balls at all”; he fought a war to conquer territory that belonged to someone else; he won the war, lost the peace, and received many two-fingered salutes for his ignominious defeat.

Now if, in your quest for honey, you drive your fist into a hornet’s nest, you—or the citizens of the country who have the mischance to have you as their Prime Minister—are likely to get stung. However, for Dear Tone this fluttering of angry wings has proved somewhat of a godsend. It gives him the opportunity to wage war upon the hornets, a campaign that, once again, helps to divert attention away from his domestic disasters, disasters that grow in number by the day.

The other Siamese Twin

Of course, Dear Gordy has become increasingly anxious that his sharing of a body with this error-prone Puck of a Siamese twin may not augur well. What will happen when the twins are finally separated? What will he see when he gets to look in the mirror for the first time? Will he see a head that wears a crown, or one that bears an uncanny resemblance to Shakespeare’s “Bottom”?

Where a Hornet wears his Sting

In any case, as we were saying, Dear Tone is on the warpath again. And this time his “Oceania” is battling the hornets of “Mideastasia”. And where doth a hornet wear his sting? Not in his tail according to Dear Tone, but in his encrypted file!

Here endeth the history lesson. Now you can see why Dear Tone is targeting all those “villainous” people who possess encrypted files. Next we’ll discuss his “method”, while leaving you, dear reader, to ponder upon his “madness”!

Crime and Punishment

2006-05-26T14:50:00.000+01:00

The legislation, RIPA Part 3—the dummy consultation exercise—the powers—the penalties—and since the UK government already has similar legislation in place to deal with individuals who are suspected of being terrorists, what information is the UK government really after? ... Masochistium Clickium Hic!

Risible RIPA

Now back in the year 2000 Blair, with the aid of his “yes” men, bulldozed through the British Parliament the Regulation of Investigatory Powers Act (RIPA). But Part 3 of the act was not brought into force at the time. Blair is now engaged in a “consultation” process to see whether any amendments are necessary before bringing Part 3 into effect. We should point out that Blair has a different dictionary from the rest of us; he’s definition of “consult” may be found in more pedestrian dictionaries under headings such as “dupe”, “gull”, “hoodwink”, and “flimflam”.

The essence of Part 3 of the legislation is that it gives the police powers to force individuals to hand over their encryption keys or to force them to decrypt their data.

The Penalties

And what is the penalty for failing to comply with RIPA, Part 3? Under the new legislation you can get two years in prison for not handing over your encryption keys or for failing to decrypt your data.

The Real Reason

Now Blair is pedalling this snake-oil legislation using the “Will Protect you from Terrorists” label, while failing to mention that under current anti-terrorist laws you can get five years in prison for not handing over your encryption keys if Blair thinks you might be a terrorist.

Why then would Blair wish to introduce such draconian legislation to deal with people who aren’t suspected of being terrorists? … Well … Well, of course you just might have some commercial or diplomatic secrets that Blair could use, and if you belong to an opposing political party or to some tiresome pressure group then your correspondence would also make for interesting reading!

So, while it’s quite clear what the “punishment” is, we’ll leave it to you, dear reader, to decide upon who exactly is “the criminal”!

Punish the Innocent

2006-05-26T14:45:00.000+01:00

Why you need a memory implant—why you must “remember” not to grow old—why the innocent will be imprisoned. ... Masochistium Clickium Hic!

Why the Innocent are Guilty

What does RIPA mean for you in practice. Now operating systems and computer software are increasingly encrypting files by default. So if you buy a standard PC off the shelf at your local computer store, you may well—totally unbeknownst to you—be encrypting files. And what is this “encryption key” that they keep talking about? Well, it’s just what ordinary everyday people call a password. Now, have you ever forgotten a computer password? Yes, we all have. But you’d better get a memory implant, or take some of those smart memory-enhancing drugs, or make sure you never grow old because forgetting your password could cost you two years in the “clink”.

Why the Innocent will be Imprisoned

And don’t think that just because you’re innocent you’ll never be asked to hand over your password or to face imprisonment. When it comes to managerial competence, Blair’s government makes that of a banana republic look positively “Swiss”. Even within the last few days the UK government has admitted that 1500 people have been wrongly identified by the Criminal Records Bureau—and this “error” represents just a drop in the ocean of government maladministration. Now Blair told us that these 1500 falsely accused people don’t matter, since, statistically speaking, the numbers are small in comparison to the total UK population. Doubtless you’ll find it very comforting to reflect upon such uplifting statements when you’re rotting in prison because your name resembled that of some terrorist suspect.

Exonerate the Guilty

2006-05-26T14:40:00.000+01:00

Encryption that’s impossible to detect—not government naivety, just government mendacity—why RIPA will be a success for the government, but not for the people! ... Masochistium Clickium Hic!

Encryption that’s impossible to detect

Well, as is so often the case in life the guilty will go scot-free. Why? Well, there exist various methods of encrypting data in such a way that no forensic expert will ever be able to determine that the data is encrypted in the first place. Such software is readily available on the Internet, much of it for free. There are at least several million ordinary individuals worldwide who have downloaded and who make use of such software. Your teenage son may well have some installed on his PC. Now if ordinary individuals have access to such software, then you can be sure that organised groups of criminals and terrorists will also have access to it, and, indeed, will have access to even more sophisticated versions.

The availability of such software makes the government’s proposal to force individuals to hand over their encryption keys nothing less than a farce. Anyone who has anything worthwhile to hide will never be asked for his encryption keys since the encrypted files he possesses will never be found by forensic analysis. So the only effect of this legislation will be that some Granny from Greenwich with a touch of Alzheimer’s will get two years in prison because she’s forgotten her password to www.theknittingcircle.com.

The Hidden Purpose

Now it’s not credible to believe that Blair’s government doesn’t know that the proposed legislation will be totally ineffective. Her Majesty's Secret Service will have briefed government ministers on the capabilities of information hiding techniques such as “steganography” and “hidden volumes”. But, as with the case of the Iraq war and the “dodgy dossier”, Blair only wants to hear what he can sell. Fortunately for him, with the aid of a few carefully selected experts of dubious provenance, it is easy to fool the public in general, and parliamentary committees in particular, regarding the need for, and the likely success of, the proposed legislation.

The Success Story

Should RIPA Part 3 come into effect we will doubtless hear of trumped up success stories. Some foolish 16 year old in Bradford will write something incendiary about Blair on his Windows PC using the EFS encryption provided as standard on Windows NTFS filesystem volumes. He’ll be asked to hand over his password. And then some dim-witted chief constable will proclaim that RIPA is a success story. And he will be correct in his assessment. It will have been a success story because the media, blinded by science, will in reporting such stories help to convince a sceptical public that Blair’s government is actually protecting them from terrorists.

“No Keys” Campaign

2006-05-26T14:35:00.000+01:00

Our objective—the good guys—the bad guys—the people who matter—the various things you can do to help, from the simple to the elaborate—TrueCrypt, the software we’ve selected for this campaign—where you can get it—and why we’ve selected it. ... Masochistium Clickium Hic!

Our Objective

To prevent the draconian measures contained in Part 3 of the RIPA legislation from being implemented by the Blair government.

The Good Guys: Our Reasons

Software programs that are easy to use, that are available on the Internet for free, and that have already been downloaded by millions of people make it possible for data to be encrypted in such a manner that it is undetectable by the analytical techniques available to forensic science. People who use such software will never be caught by the proposed legislation should it be implemented.

Anyone who is strongly motivated to hide his data—which includes all criminals and terrorists—will make use of this type of software. Hence, the legislation won’t work as intended. It doesn’t punish the guilty.

Many PC users are not computer literate. They don’t understand that their computers may already be encrypting data by default, without their knowledge that this is happening. Given the Blair government’s record of maladministration—witness the recent scandal where the Criminal Records Bureau wrongly classified 1500 innocent people as criminals—innocent people will have their homes broken into, their computers seized, and they will then be asked to hand over their passwords so that the authorities can decrypt the data that is present on their computers. Almost everybody forgets passwords from time to time, especially the elderly. The result is that thousands of innocent people will spend up to two years in prison. Hence, the legislation won’t work as intended. It punishes the innocent.

The Bad Guys: Their Reasons

The Blair government has been briefed by the security services and has been informed that the legislation won’t work as intended. This does not disturb the government since it is neither concerned with punishing the guilty, nor with protecting the innocent (note that with regard to the recent CRB scandal the government dismissed the 1500 victims as being “statistically insignificant”). However, what the government is very concerned about is the “spin” that can be generated in the medium term to boost its standing with the public, and thereby prolong the Blair premiership. The government sees the legislation benefiting it by (1) diverting attention away from its many failings; and (2) giving the impression that it is proactive in dealing with crime in general and with terrorism in particular. It calculates that any backlash from the failure of the legislation will take some years to make itself felt, and that by that time Blair along with many of his ministers will no longer be in office.

The People who Matter

To stop legislation at such a late stage requires a major upwelling of public opinion together with a Parliament and a House of Lords that has received impartial advice on its consequences.

For people to be made aware that this legislation is coming and what its consequences will be a major campaign in the national press is required.

Parliament will not receive impartial advice from experts carefully selected by the government to support its own stance. Advice must be sought from independent academics with expertise in the security field, both in the UK and abroad.

What you can do in general

Well you can do the obvious things like writing to your MP and to the press to express your concerns. In particular, you can write to those investigative journalists who might be interested in doing some research into these issues, and who would then present their findings to the public before the legislation is brought into effect.

What you can do in particular

As with all campaigns the most important thing you can do is to grab the media’s attention. The way we suggest you do this is to download some of the very same software that will defeat the act (there is no need to install it). If hundreds of thousands of people did this it would attract media attention and would demonstrate clearly the futility of implementing the legislation.

Some of you might like to install the software, encrypt some material using it, and then offer an open challenge to the government’s forensic experts, one monitored by the media, to determine whether or not you have hidden encrypted material on your computer. For example, in the presence of media representatives you might prepare a number of files, some of them encrypted and some of them not, and then challenge the government’s experts to determine which is which. You can be sure the government would decline the invitation for fear of certain embarrassment, and that demurral, in and of itself, would help to demonstrate the government’s malign and ulterior motives regarding the legislation.

However, the best use that you could make of this software is one that will not only help to defeat RIPA Part 3 but one that will also help to preserve the privacy of future generations, generations that are likely to face far greater intrusions into their privacy than prevail today. To help in this project all you have to do is to use the software to generate some files of random data (you don’t have to encrypt any material, and it’s all explained very clearly in the accompanying documentation). Give these files any names you like and place them anywhere on your computer. Email some of them to your friends, and get your friends to create some files of random data and email their files to you. You could even set up a web site or a newsgroup that allows anyone in the world to post and download files of random data. Now, admittedly, this is not a very glamorous activity. But these files are like the straws that make a haystack. And within this haystack can be hidden the needles whose occasional pricks remind those who govern us that their common, allotted task is to serve the people and not themselves.

The Software and where to get it

There are many software programs that could be used to defeat Part 3 of the RIPA legislation. We have selected just one program. It’s called TrueCrypt. Over a million copies have already been downloaded worldwide, a statistic which should in itself demonstrate the impotence of the government’s proposals.

Download TrueCrypt

Go to web address www.truecrypt.org.

Click on the menu item called “Downloads”.

A page will be displayed containing two download links, the first for the Windows operating system, the second for the linux operating system. Click on the “Download” button corresponding to the appropriate link.

When a pop-up window appears, select “Save”, select the folder to which you want to save the downloaded file, and then click on the “Save” button. And that’s it.

Why we selected TrueCrypt

TrueCrypt provides an “aleatory” defence against RIPA, and, indeed, against any similar legislation. This defence works because TrueCrypt makes encrypted material indistinguishable from pseudo-random data. And before the authorities can insist that you hand over an encryption key, they would first be obliged to prove to the satisfaction of a court that you were in possession of encrypted material. Depending on how TrueCrypt is set up it might be obvious that you have some pseudo-random data in an atypical location on your computer, and you might well be asked how it got there. Now, there are many computer processes that produce pseudo-random data, and you are not obliged by the legislation to account for the origins of every file on your computer that contains such data—given the tens of thousands of files on the average PC this would be an impossible task. However, TrueCrypt can also provide you with an excellent and highly plausible reason as to why you possess such a file of pseudo-random data irrespective of where it is found.

The first reason we selected TrueCrypt is that its functionality illustrates very well the inefficacy of the proposed legislation.

The second reason is that even if you are not concerned about the government prying into your personal affairs, then you may well be concerned about other people doing so, either because they may gain physical access to your computer, or because you may, by accident, download some spyware from the Internet. TrueCrypt can protect you from both these hazards, which is, in itself, a good reason to download and install it.

The third reason is that if the legislation is passed and you are a whistleblower, a member of an opposition party, or a member of some political pressure group, then you may well wish to keep your future plans hidden from the government. With TrueCrypt you can do this with elegance and with ease.

E-Gold: Don’t verify your Client

2006-05-21T11:30:00.000+01:00

No one pries into your personal affairs—no one fingers your driving licence and passport—no one rings you at home in the middle of the night—and that’s the way it should be! ... Masochistium Clickium Hic!

One of the nice features about e-gold is that there’s no need to go through the tedious and extensive verification procedures required when opening a bank account. True, you’re asked to provide some personal details, but these details are not verified. No busy-body runs around prying into your personal affairs, insists that you to come in for an interview, fingers your driving licence and passport, and rings you at home in the middle of the night to verify that you live at the designated address.

Since e-gold doesn’t loan you any money and all transactions are irrevocable—they cannot be reversed—“who you are” doesn’t matter. And that’s the way it should be!

Scams: A Known Quantity

2006-05-19T19:40:00.000+01:00

Why, when scouring search lists, it’s sometimes good to dig deep—why the Law of Large Numbers might come to your rescue—and should you trust the new boy on the block? ... Masochistium Clickium Hic!

What do the People say?

Before committing yourself to a product or service offered by a particular site do a little amateur sleuthing. Go to Google and make a search on the name of the site in question. Now, of course, the same name is often associated with different products and services, so check a random sample of the search hits to see whether most of them refer to the product or service that’s of interest. If a high percentage do that’s fine. If not, then add some additional terms to your search string to disambiguate the products and services, and eliminate those that are not relevant.

To get a fair cross-section of opinion take, say, five hits from the top of the search list, five hits from towards the end of the search list, and five hits from somewhere in the middle of the search list. Have a quick read and see what all these good folks have got to say about the web site in question. Hits at the top of the search list may be the most informative, but they often represent the views of Big Brother and Big Business. On the other hand, hits that are lower down usually represent the views of Joe Bloggs (T: while Flo Slogs).

The Law of Large Numbers

“Yes! I know this site”. Now, if one person says it that's not much to go on. But, if a million people say so...well, then you're getting somewhere. As the number of people who comment on a site gets larger, then a certain consensus often begins to emerge, a consensus that frequently bears some resemblance to the truth. In short, if a large number of people have come to the same conclusion regarding a site, then that common, collective conclusion is probably right.

How well known are the privacy products that are likely to be of interest. Well, let’s take Google and look up the number of hits returned for a range of privacy products (plus some global brands by way of comparison):

Product	Total Hits
Google	2,230,000,000
Microsoft	2,150,000,000
Amazon	914,000,000
Intel	513,000,000
Firefox	404,000,000
Thunderbird	66,500,000
e-gold	7,820,000
Stunnel	1,090,000
Tor	586,000
Sockscap	182,000
Pecunix	138,000
1mdc	64,900
Quicksilver	15,300
Freecap	17,600
Torcap	60

Hits obtained using Google

Clearly, with the exception of “Torcap”, these are all well-known brands. They are sufficiently widely used to get a representative cross-section of opinion regarding the merits and demerits of the products in question.

A New Boy on the Block?

But how many hits is enough? Well, once they reach the tens of thousands then the world certainly has had enough experience with the product to come to a useful conclusion. If the number of hits is small—in the hundreds or low thousands—then try to determine how long the site has been around. If it’s a “new boy on the block” then the jury is still out.

If the site is not recent, then clearly the world at large has not taken a shine to the product. That means either the product is not worthwhile, or else it’s directed at a very specialised audience. To decide which of these categories it belongs to have a look at the number of hits generated by searches for similar products; if they’re all of the same order, then the product falls into the “very specialised audience” category.

Job Advert: Competent Tester?Pecunix needs You!

2006-05-19T09:05:00.000+01:00

If you’ve ever rolled your eyes heavenwards when confronted by some poorly-tested website then you’ll enjoy this—is life too short for you too?—what you must accept from strangers—the little blue number from hell—e-currency for psychics—Confucius, he say. ... Masochistium Clickium Hic!

Meet Luigi

M: Well, it’s not. Not a real advert that is. Which is a pity. We can’t help but feel that there is something of the “Italian motor” about the Pecunix web site: it looks good in the showroom, but it falls apart when road tested!

Picture a person with an interest in procuring e-currency, but with no interest in what lies underneath the bonnet of his browser. Well, that’s our friend Luigi to a tee (he’s also a little short-tempered, so if you’re offended by expletives read no further). He was curious about e-currencies, so we gave him the web site addresses of a few e-currency issuers. Let’s eavesdrop on his thoughts:

Pecunix! Pecunix! Sounds-a nice. Let’s-a set up a Pecunix account: www.pecunix.com. … It says-a press “Open” and then “Next Step” to create account. Easy peasy! … It says-a read terms and conditions then press “I Accept”. … Well … Ah! Life, it’s-a short. Let’s just-a press “I Accept”.

Terms & Conditions

T: Now and then you do hear about the existence of people who read the T&Cs on websites, but like most urban myths, the person who tells you about this strange, aberrant, and deviant behaviour has never witnessed it for himself. When he’s pressed, it always turns out to be “a friend of a friend”. Now, of course, Morpheus and I do read these things, but only on your behalf. They’re so abysmally boring! A speech by Billy-Boy seems positively riveting, by comparison.

Now, another easy to understand screen. Enter-a password. Enter-a again to confirm. Enter-a email address. Press-a “Next Step”.

Bugger-a! Back at the T&Cs screen again. … Guess I-a must-a mistyped the password on repeat. Can’t-a tell since they’re all asterisks. Here-a we go again. Just entered the password for second time. I was-a very careful this time. Should-a be alright now.

Shit-a! Shit-a! Shit-a! Back at the T&Cs screen again.

What you must accept from Strangers!

M: And so it goes on. Luigi, our poor, would-be Pecunixie tries strategy after strategy to scale the Himalayas of the Pecunix password screen. Shall we tell Luigi what’s gone wrong. Well, his browser does not have cookies enabled, very common in these security conscious days. Now Pecunix needs cookies enabled in order to progress beyond the password entry screen. Nothing terribly wrong with that you might say. Why Pecunix shares this requirement in common with many other sites. However, what it does not share in common with many other sites is its disinclination to tell the poor frustrated user that the reason why he cannot progress any further is because he is doing what … “My mama said to me”. Try logging into www.yahoo.com without cookies enabled, for example, and you’ll be told the nature of your sin, so that you can repent, and seek forgiveness! So what did our gold digger have to say when we explained all this:

Them Bastards! Bastards! Bloody-a bastards! I-a spend hour typing in-a password after password and now yus-a telling me it has nothing to do with passwords!

T: I’ve just thought of a suitable advertisement for Pecunix:

No hacker will ever break into a Pecunix account! … Why? … Because no would-be user will ever be able to create one!

The Little Blue Number from Hell!

M: Well, we showed Luigi how to enable cookies in his browser. So, a little disgruntled to say the least, Luigi is now making a second attempt to scale the towering fortress of the Pecunix account creation process. Success! He’s got past the password screen this time. Let’s listen in again:

Ha! Now it’s-a personal info screen. Easy! And to finish off I just-a click on the button with-a number that’s same as da blue number in da little box. Click! … Now that was-a not so bad. … Hmm! … Browser’s-a slow … Browser’s-a very slow.

Oh! Bugger-a! Bugger-a! It says-a “Done” down in left-hand corner. But it’s-a done nothing. … Maybe I-a click on wrong number. Try again.

Ah! Shit-a! Still nothing. … Maybe I misread number. It sure look-a like a “four”. I-a know, I’ll-a cancel the login process and start again. Get a different number next time.

Some minutes later Luigi has once again reached the personal info screen:

Ah! It’s-a clearly a two. Can’t-a be anything but a two. Click!

Oh! Shit-a! Shit-a! Shit-a! Still-a no bloody response! … Maybe-a my computer it’s-a locked up. Bloody-a hell! Let’s-a reboot and-a start from scratch.

Some more minutes later, bruised and battered by the climb, our hero has fought his way once again through to the personal info screen:

I-a so tired of typing in the same data, again-a, and again-a, and again. Click!

No! No! No! Sweet-a …

We regret to inform you, dear reader, that we’ve had to expurgate what followed in order to preserve the blushes of our most generous sponsor, Miss Prune of Pune.

E-Currency for Psychics

Well, shall we put Luigi out of his misery and explain what’s gone wrong? Unfortunately, clicking on the button corresponding to the blue number in that little box didn’t do anything because Luigi did not have Javascript enabled in his browser. When we explained:

Well, if I-a need to have this-a Javascript thing enabled in-a my browser why the bloody hell they-a not tell me? Why they-a let me sit here thinking that-a something else is-a wrong?

Well, why indeed! Many web sites need to have Javascript enabled, and most programmers—clearly possessed of a foresight not to be found in Pecunixie land—anticipate that Javascript might not be enabled, test for it, and inform the poor user when it is needed and missing—for example, try logging into www.hushmail.com without Javascript enabled and you’re told immediately what you must do to enter through its pearly gates!

Now, to be fair to Pecunix, they do mention the need for Javascript if—as a result of divine intervention—you do actually succeed in creating an account. Of course, Pecunix may well claim that worrying about the order in a case such as this is merely a tiresome quibble. Nonetheless, we feel bold enough to suggest that this does seem a little like putting the cart before the horse, and, moreover, that it would be good for business if Pecunix constructed its web site so as to assist users with disabilities—namely, those who do not possess the power of precognition.

A Moral to the Story

We did explain to Luigi how to enable Javascript in his browser, but he wasn’t really listening. And by the time we had finished our explanation he had already set up a new e-gold account—without enabling Javascript—and was well on his way to becoming a loyal, satisfied, and life-long e-gold customer.

We think there’s a moral to this story. Confucius, he say:

If market share much less than that of e-gold, wise e-currency issuer not make strenuous effort to drive away new business!

Geekshonary: Ageek—Billy-Boy

2006-05-18T19:15:00.000+01:00

On not being a geek—on the badly behaved child—on a curious combination of affection and condescension. ... Masochistium Clickium Hic!

Ageek—Pay attention: this does not refer to someone who is “a geek”, but to someone who is not a “geek”.

Bad Boy Billy (BBB)—When used as a noun, a bug in the Microsoft Windows operating system that causes your application to crash. When used as an expletive, what you say when a bug in the Microsoft Windows operating system causes your application to crash. The usage is restricted to those occasions when you haven’t lost any data and can easily resume work by just restarting the crashed application, thereby making invective of a more venomous nature unjustified. It’s a little like the fond ticking off you give to a badly behaved child who just will not do what he’s told—in this case, a child who bloats the operating system with functionality no one needs, while refusing to fix the bugs that everyone encounters!

Billy-Boy—A term that refers to Bill Gates, and evinces a curious combination of affection and condescension, all rolled into one. Don’t take it to heart William; you know how people are; they’re just envious of your fame and fortune!

E-Gold: Charges

2006-05-18T14:45:00.000+01:00

No charge to open an account—a small annual charge on the contents of your piggy-bank—no commission to transfer your gold to someone else—and a very low commission when someone else transfers his gold to you, though you’ll need a Ph.D. in mathematics to figure out what it is—all in all, it’s as “good as gold” ... Masochistium Clickium Hic!

Account Maintenance Charge

It costs you nothing to open an e-gold account.

It costs you nothing to maintain an e-gold account if you have no funds in it. If you leave some gold in your account, then you’ll be charged at a rate of 1% per annum (the charge, in gold, is deducted monthly, and is calculated on the average daily balance of the gold in your account).

It costs you nothing to transfer some of your e-gold from your e-gold account to someone else’s e-gold account.

Spend Fees

If someone transfers some e-gold into your account then you’re charged a small commission depending on the size of the transfer. As with the annual maintenance charge, the commission is charged in gold, rather than in any particular national currency.

On its home page e-gold waxes lyrical about how low its fees are, but when you, as a prospective e-gold user, click on the “fees” link to see what the fees actually are then you’re greeted by the following table:

e-gold Spends	Price Formula
>=	<

AUG 0.0004	AUG 0.1	5% + AUG 0.0002
AUG 0.1	AUG 0.5	1.25% + AUG 0.00375q
AUG 0.5	AUG 1	AUG 0.01
AUG 1	AUG 5	1%
AUG 5		AUG 0.05

We showed it to JG, who—when he had stopped laughing—said:

One thing’s for sure, e-gold doesn’t have anything that would pass for a marketing department. Do they really think that every Internet user who might be interested in a “low-fee” e-currency account knows what “>=” and “<” means? What is this “q” at the end of “0.00375q”? Does anyone at e-gold read the web pages they publish? And do they really expect the average punter to look up the price of gold in his own national currency, get out a calculator, and then translate this table into something other than gibberish?

If they had even an “ounce”, nay a “gram”, of common sense, then they would have provided a facility where the punter could see what this table looks like in his own national currency based on the current gold price. Plus a “spend fees” calculator. Two boxes: one where the punter types in the amount of his proposed spend, and one where he selects his national currency. Then he presses a button and he’s shown what the actual spend fee is. The message this table shouts out loud and clear is that “E-gold is complicated financial stuff. If you set up an e-gold account then you’re sure to be besieged with more stuff like this that you won’t understand. Best to take your business elsewhere.”

Well, JG’s first axiom of marketing is don’t make things any more complicated for your customer than they have to be. And we must agree. E-gold is selling itself short here, by hiding the “light” of its low spend fees under a “bushel” of AUGs. If you’d like e-gold to implement JG’s suggestions, then its derrière can be kicked at:

In simple terms, using typical gold prices: for piddling little spends—that you couldn’t give a toss about—the spend fee is 5%; for real-world spends below $100 it’s in the range (1-2)%, and for spends above $100 it’s a flat $1.

E-currency Price Tiering

As you can see from our summary, e-gold’s price tiering is unnecessarily convoluted, and achieves nothing other than to give the impression to a prospective user that using e-gold is far more complicated than it actually is in practice. Irrevocable transactions carry a fixed cost to the e-currency issuer irrespective of transaction size, and therefore you can expect an issuer to try to adjust its price tiering to recover this cost—plus an element of profit—across the transaction value range. A bottom tier with a comparatively high charge is necessary for the micropayments region—below $2 in e-gold’s estimation. A flat charge is needed for high value transactions—above $100 in e-gold’s estimation. But, for medium value transactions a single tier is sufficient, in stark contrast to e-gold’s three tiers, which exhibit very similar percentage charges.

Conclusion

Despite e-gold’s unwitting attempts to hide its spend fees from its prospective users, the news on this front, as with the annual maintenance charge, is good news. As with the other e-currency issuers, running the e-gold system costs relatively little compared to running a credit card system, and that’s reflected in the low transaction charges paid by you, the e-gold account user.

Scams: Idle Thoughts

2006-05-17T14:30:00.000+01:00

The “shower scene”: just as scary as the original, but for a different reason—liquid plant food on the 55th floor— “phishing” at www.egoldielocks.com—on the perils of being coney-cozened. ... Masochistium Clickium Hic!

With wonderful expression!

T: I crept into the bathroom this morning, just as Morpheus was taking a shower. ... Hmm! ... Nice! However, I should hasten to add that this blog contains no sexually explicit material whatsoever. Sorry, Mr. Mackintosh! Now that I've lost ninety percent of my audience, let me continue for the benefit of those few sexually fulfilled souls that remain.

Well, Morpheus was singing to himself. Remember B.S. and that song? If you do then just sing along to the variant that Morpheus was crooning:

Where is Advice?

“Isn’t it great,
Such a low price!
But, is it a scam?
Me to entice!

Where is advice?
Oh! Where is advice?
Advice, it is here!”

Now, I sneakily made a recording. My intention was to post it to this blog by way of retribution for a certain remark made by a certain person regarding a certain item of apparel! But I don’t wish to inflict upon you “cruel and unusual punishment”—Morpheus’ talents as a singer/songwriter are on a par with Dear George’s mastery of the English language! So I’ve thought the better of it!

M: Ha! I see that Tiffs has already started this blog entry without me. … Hmm! … Well, if I might adapt Algernon to the occasion: “I don’t sing accurately—any one can sing accurately—but I sing with wonderful expression. As far as singing is concerned, sentiment is my forte. I keep science for Life.” Now Tiffs, I’m sure that had our readers downloaded your MP3 they would not have forgotten us in a hurry.

T: I agree! The trouble is that whilst our readers would not have forgotten us, what they’re likely to have remembered is never again to visit us!

Is it a Scam?

M: Enough frivolity! We thought, dear reader, we might blog a little over the next few weeks about scams. How can you tell if a site is operating a scam? Now suppose you want to track down a source of liquid plant feed to encourage those beautiful roses to climb over the arch that dangles outside your window on the 55th floor of a tower block in the smog filled city of “Grownot”. So you search Google for gardening sites. Now the chances are that every site you examine will be genuine, the real McCoy—for some reason scammers don’t seem to have green-fingers!

But if you decide to search for a privacy product or service—particularly a financial product or service—then you won’t have to look too far down your list of hits before you come across a site that’s operating a scam, or is, at least, being somewhat economical with the truth regarding the product or service on offer. So, in trying to prevent the ordinary everyday scams you are at a greater risk than usual of being scammed—so be warned!

Perhaps, you’ve got a web site address from somewhere. Maybe you came across it whilst peeking at the contents of the spam in your inbox—naughty, naughty! Maybe the web address is a recommendation from a friend. Or, maybe someone was singing it’s praises on some message board. But is it the genuine article? Maybe someone is just “phishing” for your personal details?

Suppose, for example, that the address you’ve got is www.egoldielocks.com. Now, you’ve heard about e-currency and you’ve heard that Egoldielocks is a reputable e-currency issuer. So you go to the site; you sign up for an account; and you deposit some gold into that account. But, then you discover a few days later that someone—unbeknownst to you—has withdrawn that which you put in. You’ve been had! A little detective work reveals that the site you thought you were visiting is actually called www.e-goldielocks.com and not www.egoldielocks.com.

Now, how can you avoid making this kind of mistake? How can you avoid being scammed, fleeced, flimflammed, hoodwinked, hornswoggled, coney-cozened, led up the garden path on route to the cleaners?

E-Gold: My first E-currency Account

2006-05-16T10:55:00.000+01:00

Why, when it comes to e-currency, e-gold is a very good place to start—why charity begins at home—why we’re feeling a little guilty—want a link to a site that specializes in Russian dolls…ouch!…the kind that wrap themselves around one another in what the Prof thinks is a very “sexy” manner? ... Masochistium Clickium Hic!

Your very own Bar of Gold?

T: Owning some e-gold is much the same as owning some real gold: imagine that there in a dark and silent vault, protected by a vast array of security devices, gleams a bar of gold with your name on it. Or, to be more precise, imagine that there on some computer hard disk, protected by a vast array of security devices, sits an account entry which states that you are entitled to a certain fraction of a gold bar—perhaps not so romantic, but that’s life!

Why e-gold?

M: But why choose e-gold for your first adventure into the realm of e-currencies? Well, e-gold is the most widely used e-currency at present. So, since it’s not much fun having e-currency you can’t spend on something you want to spend it on, we suggest you start off with an e-gold account (sorry 1mdc and Pecunix; but, despair not, for we shall sing your respective praises in due course).

Giving will make you feel better!

M: Now, the vice-like grip around my neck brings to mind another minor consideration, a truly trifling one, as to why we’re…I’m…suggesting you start off with an e-gold account. You see if you don’t have an e-gold account then you will lack the means to make charitable donations to truly deserving causes…such as…such as…such as…

Now, we can’t impress upon you enough that giving will make you feel better, and, what’s even more important, your giving will make us feel better too—clearly a win-win situation! Mad we may be, but it’s madness with some method to it!

The Greater Good!

T: However, hands on hearts, we feel obliged to inform you that there exist charitable causes more worthy than our own, such as…

M: Since we make use of Tor, but haven’t the bandwidth to run a Tor server, we feel a little guilty—not a lot, but enough to plug Tor every now and then. You see the angelic beings who run the Tor Project have created the world’s best software for discreet, inconspicuous Internet browsing—software that is open-source and free! And assisted by hundreds of worthy souls who run this software on their web servers all around the world, the Tor Project has created the world’s most anonymous chain of proxy servers.

Got any spare Bandwidth?

M: The problem with Tor is that its hundreds of thousands of users take more bandwidth from the service than they contribute bandwidth to the service, so at times the response time of Tor makes the alacrity and dispatch of a standard 56k modem look like the “Road Runner” by way of comparison! So, if you’ve got a web server with some spare bandwidth then please contribute.

Read all about it

T: So, once you’ve set up and funded your e-gold account your first donation should go to Tor! If you want to know the details of why Tor is the best thing since “sliced bread”, or if you want to download a free copy, then go to…

E-Currency: Opening an e-gold Account

2006-05-15T11:45:00.000+01:00

How to open and fund an e-gold account—no pusillanimous puns or irritating innuendo here—just plain old fashioned information—so don’t fall asleep—if you’re a merchant and offer e-gold as a payment method, then feel free to link to this “how to” page, or, if you prefer, copy and modify it for use on your own site. ... Masochistium Clickium Hic!

Mandatory Account Items

To open an e-gold account you’ll need to enter values for the following mandatory items:

Account Name
User Name
Name
Address Details
Telephone Number
Email Address
Passphrase [main]
Alternate Passphrase

The “Account Name” is specified by you. It’s the name displayed, by way of confirmation, when someone makes a payment into your e-gold account. The “User Name” is also specified by you. It’s the name used by e-gold for accounting purposes.

The “Name”, “Address Details”, Telephone Number”, and “Email Address” items represent the standard personal details requested during most account creation processes. At present, e-gold makes no attempt to ascertain the veracity of the information entered.

Each of the two passphrases must contain at least six characters, must contain at least one letter, and must contain at least one digit.

It is advisable to create your e-gold account on a computer that is adequately protected by a firewall and that has recently been swept using an anti-virus / anti-spyware software suite.

Opening an Account

Procedure

Navigate to the e-gold home page using the following link:

On the home page, in the upper left-hand corner, you’ll find a menu item entitled “Create An Account”.

Click on it and you’ll be taken to the “User Agreement” page. If the terms and conditions are acceptable, then click on the button labelled “I AGREE”.

The “Account Creation Form” will be displayed. Confirm that you have a secure link to the e-gold site before proceeding (the “gold padlock” icon should be displayed by your browser, and the web site address that appears in your browser’s address bar should begin with “https”).

Enter the information requested on the “Account Creation Form”.

Press the button labelled “Open” to complete the account creation process.

An email containing your e-gold account number will be send to the e-mail address you specified on the “Account Creation Form”.

Notes

Only the items listed in the previous section are mandatory.

Take special care to enter the e-mail address correctly (an error made in entering any other item can be corrected later from within your e-gold account).

Using the button marked “SRK” to enter the passphrase is optional. Moreover, this button will be disabled if your browser has been correctly configured to protect your anonymity. Instead, you can type the passphrase directly into the designated fields. Ensure that the passphrase is not being covertly recorded: (1) By someone filming the keypresses you make whilst typing in the passphrase (for example, using a picture-phone with video capture functionality); or (2) By spyware present on the computer you are using.

Accessing your Account

To access your e-gold account, go to the e-gold home page (see link above). Select the menu item “Access Your Account” in the upper left-hand corner. Then enter your e-gold account number and passphrase when requested.

Funding your Account

An e-gold account is similar in terms of the way it operates to a foreign currency bank account (though it operates within a different legislative framework).

To fund your e-gold account you will need to use the services of one of the many market makers who will sell you e-gold for fiat currencies—such as dollars, euros, or pounds—in return for a commission. The same market makers will also purchase your e-gold and pay you in the fiat currency of your choice should you wish to sell your e-gold at some future date.

Many different payment methods are available: bank wires, cash, certified checks, credit cards, electronic transfers, IBAN, MoneyGram, money orders, postal orders, Swift, and Western Union.

For a list of web sites offering e-gold exchange facilities follow this link:

Privacy: A Pain in the Derrière

2006-05-12T16:10:00.000+01:00

On the size of the mountain you’re just about to climb—why you should be thankful to “A Man and his Dog”—why even if you don’t end up working on a “chain gang”, you’ll still end up working with the product of their “hard labour”—why you shouldn’t trust us! ... Masochistium Clickium Hic!

Climb every Mountain

Now, we don’t want to put you off before you even get started, and certainly if you’re a Mr. Boodie then a private life will not prove so elusive and you can stop reading at this point—before you make yourself feel quite unwell!

But if you’re a Herr Blooer or a Ms. Dent and you’re starting from scratch then expect to spend about six months getting to understand the concepts, searching for potential products and services, and then testing that your selected privacy solution works as intended, and is not just providing yet another live-feed into Big Brother’s ever-growing database.

From “A Man and his Dog”

Now wouldn’t it be nice if you could buy a computer appropriately configured with all the software you needed to maintain your privacy. Unfortunately, the software developed by large corporations—who just might package everything together for you—is usually suspect, to say the very least. Instead, the software you’ll need invariably comes from small teams and from “one man and his dog” outfits. It comes from people who do not get paid or who rely on donations. And it always comes from people who have more to do than time to do it in. The result is usually software that gets tested on a limited range of platforms—and Murphy’s Law dictates that the platform you want to use was not among them! To add to your woes, the software is likely to be accompanied by rather inscrutable documentation that is not intended to endear itself to a newcomer—especially to a newcomer who’s in a hurry.

Working with the “Chain Gang”

Invariably you’ll find that effective privacy solutions consist of a long chain of software programs, each of which was written by a different person. Nonetheless, each must receive information from its predecessor and pass it along the chain of command to its successor according to standards that may only be partly implemented. Your lack of knowledge as to what’s likely to have gone wrong together with a lack of documentation or log files telling you what actually has gone wrong can result in weeks of frustration as you try countless re-installs and different parameter combinations, with the ever-diminishing expectation than one day it will all work. And what’s even more galling is that you’ll find endless postings on the web by people who got it to work the first time around with no bother!

Why you can’t trust us!

We’ll do our best to help, but if privacy is important then you’d be unwise just to do what we tell you to do. For a start without understanding the issues and reading around the subject you won’t know whether the advice we offer is good advice or not. What if this site is a Big Brother sting set up to gain your confidence and then direct you towards compromised software that contains a backdoor? Just because a site has an anti-Big Brother flavour to it doesn’t mean that its authors have your best interests at heart: it could be a sting, it could be a scam, or it could be some business whose strengths lie in marketing rather than in software development.

There’s many a Slip…

However, the main reason why you should take the long road around and understand the issues is that it is very, very easy to set up a privacy solution that doesn’t work. You may find that the software you purchased adequately protects one aspect of your privacy while leaving you completely open on some other front—something that the vendor of the software failed to mention, or was not even aware of.

It’s very, very easy to set up software than appears to work correctly but which is actually leaking information about your activities to your ISP, and hence to Big Brother.

It’s also very, very easy for software that was once set-up correctly to get reset or disabled when you install or upgrade some other software product. So, above all else, you need to be confident that you know how to test that your privacy solution is working correctly—and you need to remember to repeat that test every time before you use it!

I Tor to Tiffany! Do You?

2006-05-01T09:25:00.000+01:00

T: What is Tor? Well, if you want to browse the Internet without every click being recorded by Big Brother and Big Business you’ll need an anonymous chain of proxy servers. And amongst anonymous chains of proxy servers Tor is the “bee’s-knees”. It’s free and open-source, and you’ll find it right here! At present the Tor network contains a few hundred servers. We’d like to see a few million, each of them running an upgraded and completely distributed version of the Tor software.

M: But to achieve this noble objective we need to sell the benefits of Tor to potential sponsors and to those “sys admins” who have server bandwidth to spare. Now, when you want to sell something you consult a marketing guru. So we consulted JG. We don’t take to marketing people in general, but JG is one of the rarest of mortal beings, a “tame” marketer—one who asks the people what they would like to buy, rather than asking Big Business what it would like to sell!

JG’s Tor Strategy

First, you’ve got to inform the world that this thing called Tor exists. And then you’ve got to persuade the world that this thing called Tor is “fun”, is “me”, is “cool”.

Forget the human rights and “nanny” state angle: your average punter doesn’t want to hear about anything unpleasant; and should circumstances finally force him to think about it, then it’ll already be “fait accompli”. Taking care of “a stitch in time” is not one of humanity’s strong points. So just ensure you make Tor “fashionable” and “fun”.

Forget about trying to gain sponsorship based on “benefit to society” arguments. You can approach the corporate sponsors who have funds and appeal to their “better natures”; but that won’t work: corporations have “bottom lines”, not “better natures”. You can approach the “concerned organizations” who have “better natures” and appeal for their funds; but that won’t work: sponsors are organizations who make profits, not organizations who have principles.

But, if a corporate sponsor can associate his business with what the world at large “approves of” then his profits will grow. So, just enthuse the people, and sponsors will materialize magically, like mushrooms on an autumn morn’.

Ah! You can tell that JG knows his apples from his onions! So, how to put these wise words into practice? Well, how about an “I-Tor-To” campaign? Whenever you send an email or post to a news group just put an “I Tor to X! Do you?” or an “I Tor to X and Y! Do you?” in the signature line, where “X” and “Y” are your favourite sites. But make “Tor”, “X”, and “Y” into hyperlinks pointing to their respective sites.

Now, if even a modest proportion of the several hundred thousand Tor users did this, the world would soon know all about Tor. And assuming that we generally correspond with people who like what we like—the Prof informs us that from a mathematical point of view the relationship “to like” is frequently associative—then soon the whole world would like Tor too—how’s that JG, do I have a future in marketing? … Ouch! … Clearly, Tiffs thinks not!

Cutting Some Code

For those of you who don’t understand all this hyperlink business, here’s how. If, for example, you like Tiffany—and who wouldn’t—then you might sign that email or newsgroup post with a:

A.N. Other
I Tor to Tiffany! Do you?

using the following code:

A.N. Other<br>
I <a href="http://tor.eff.org/">Tor</a> to <a href="http://www.nearlyperfectprivacy.blogspot.com/">Tiffany</a>! Do you?

or, if you can’t use HTML, then:

A.N. Other
I Tor (http://tor.eff.org/) to Tiffany (http://www.nearlyperfectprivacy.blogspot.com/)! Do you?

Just cut and paste the code fragment above, replacing “Tiffany” and our web address with the name and web address of your choice; or, if you’re feeling really lazy, just use it “as is”—“she” won’t mind!

So, how about it folks: I Tor to Tiffany! Do you?

Order, Order: Table of Contents

2006-04-29T09:20:00.001+01:00

Here you’ll find our blog entries arranged in a more orderly manner. First some specific topics:

Introduction

Welcome to the Future
Privacy: A Pain in the Derrière

Principles behind the Practice

Hiding Information: A Typology
Janography
Aleatography
Dual-Purpose Software

Buggarium Bigus Brutium

I Tor to Tiffany! Do You?
“No Keys” Campaign

How Tos

E-Currency: Opening an e-gold Account

Humorous (well, we think so!)

Can you trust the PGP Corporation with your Data?
“Butcher Blair” and “Bubba Brown”
Children’s Section: A Just Reward!
Geekshonary: Ageek—Billy-Boy
Job Advert: Competent Tester? Pecunix needs You!
Scams: Idle Thoughts

And then a table of contents:

Campaigns & Issues

Extraordinary Rendition

Council of Europe Report
Children’s Section: A Just Reward!

RIPA, Part 3

RIPA Part III - Again
Your Keys please: RIPA, Part 3
“Butcher Blair” and “Bubba Brown”
Crime and Punishment
Punish the Innocent
Exonerate the Guilty
“No Keys” Campaign

E-currency

E-Currency Exchange: Profitable New Horizons - Addendum
E-Currency Exchange: Profitable New Horizons
Which E-Currency Issuer?
Digital Cash: Or how to make Big Brother ...
Where E-Currency and Digital Cash Meet
Micropayments, Micropublishing, and E-Currency

Pecunix

Job Advert: Competent Tester? Pecunix needs You!
Feedback from Pecunixie Land

E-gold

Opening an e-gold Account
My first E-currency Account
Charges
Don’t verify your Client
On being economical with the Truth!

Encryption

PGP

Can you trust the PGP Corporation with your Data?

Proxies

General

Why your Browser is cheating on you

Tor

I Tor to Tiffany! Do You?

Scams

Idle Thoughts
A Known Quantity
The Scam Ratio

Contact Us: Bouquets and Brickbats!

2006-04-29T09:20:00.000+01:00

Your “Oeuvre” lovingly fondled by Maria?

No such Number, no such Zone

M: If you want to contact us—I can’t think why—then send your comments, thoughts, or philosophical speculations on the origins of life to the following address:

returntosender@addressunknown.com

but only after replacing “returntosender” by “tamjgp” and “addressunknown” by “nerdshack”.

If you’re an unintelligent robot prowling these pages in order to harvest email addresses so that your lord-and-master can send us spam, then we must advise you that your efforts will be in vain, and your spam-master’s emails will disappear down that great, big black-hole that lies at the centre of cyberspace—not that you will understand any of this, of course. If, on the other hand, you’re an intelligent robot, then, “Have a nice day!”

Maria: I’ve just met a girl called … Ouch!

M: JG has his own custom, deluxe, anti-spam filter, a stunning piece of software—one which I, unfortunately, am never allowed to get my hands on! Ouch! She’s JG’s factotum, and her name’s Maria! She trashes any incoming spam with great gusto, and discretely disposes of emails from persons even “weirder than we”—they do exist! Maria will—or at least so JG informs us—forward a sample of the “interesting” emails for our attention. So, if you have something worthwhile to say, Maria might just send your email on its way, metamorphosing as it passes through an infinite chain of “nym” remailers, being temporarily reabsorbed into the vacuum state as it jumps across innumerable quantum bridges, and being squashed to nothingness as it slithers through a quorum of worm holes that provide hyperspace links through universes unknown. Of course, by far the biggest obstacle to a successful delivery is that Maria might forget to press “Send” if she’s late for her aerobics class—you know how women are!

Feminist Fantasy

T: But don’t send us any “brickbats”. Why? Well, Maria has strict instructions from JG to file anything negative in that small, round filing cabinet in the corner of her screen—the one marked “Trash”. You see, Morpheus—like all men—has a very delicate ego, and we must shelter the poor dears from too much negativity. Of course, we women are made of sterner stuff!

M: Ha! Another feminist fantasy! Apologies, if we don’t have time to reply personally. But we’ll blog on the feedback we receive every now and then. So, if you say something very profound or very witty then you just might find yourself blogged about!

Want to be a Lab Rat?

You-Pay-Me-Mail

T: Now “paid-for” email systems are in the pipeline. These systems involve one big business charging another big business for the privilege of disabling your spam filter and allowing reams of spam into your in-box—we gather the internal AOL memo read, “Strategic Planning: How to reduce our Customer Base.”

This proposal set us thinking that if anyone should be paid for receiving spam, it should be “you”, the person who receives it. So we’ve invented our own version of “paid-for” email. We call our hypothetical system “you-pay-me-mail”, which is what you say to all those spammers out there. Now a generic “you-pay-me-mail” system would admittedly require some infrastructure. But, in special cases—for example, where you wish to post your email address on your web site or on a newsgroup that accepts HTML and not be deluged with spam—the existing e-currency micropayment systems can be used.

Unvetted by Maria!

T: We’ve constructed a prototype system below using e-gold, in which it costs 50 cents (USD) to send us a plain text email of up to about 4000 characters. For a very small amount of work, e-gold (and the other e-currency issuers) could remove the size limitation and add a facility to include attachments (with, of course, a corresponding adjustment to their commissions for lengthy emails). We’ll write a blog entry on how to code it sometime (but for those of you familiar with the e-gold payment interface it’s trivial—just one long “baggage” field to hold the message text; feel free to lift our code and modify it as you wish).

Anyway, if you want to be a “lab rat” and be part of our experiment you can try out our “Heath Robinson” version by following the instructions below. As a bonus, Maria has promised to pass on “paid-for” emails unvetted, so you can be certain we’ll get to read whatever it is you’ve written!

You-Pay-Me-Mail – Delivery Guaranteed

M: You'll need an e-gold account with the equivalent of at least 50 cents (USD) in it.

Enter your message in the text-area below. The limit is about 130 lines, but that should suffice—after all, no matter how creative you are, there are still only a limited number of ways in which you can say, “You Suck Big Time.” Then press the “Send Mail” button.

When the payment order screen appears, check that the details following “Pay” are “3038638 (Nearly Perfect Privacy)” and that the “Amount” is “0.5 US Dollars”—just in case someone has hacked into www.blogger.com and changed the account and the amount; or, even more likely, just in case Tiffy has decided she just must have that pair of silk undies! Enter your e-gold account number in the “From” field, your passphrase in the “Passphrase” field, and, enter the verification number displayed on the screen in the “Turing Number” field—assuming, that is, your neural net can extract it from the mangled image on the bottom right. Then press the “Preview” button.

When the verification screen appears check that it contains the same information as its predecessor and then—provided you’re really, really sure you can’t think of a better way to spend your 50 cents—press the “Confirm” button.

A payment confirmation screen will appear to announce that it’s now too late to change your mind. And you’ll kick yourself for not spending your money more wisely by making a donation to Tor or by contributing towards an “EFL class” for “Dear George”. But, alas, it’s no use contemplating what might have been. Just press “Continue” and you’ll be taken back to our fireside, where we’ll say something profound…such as…“A fool and his gold are easily parted!”

That pair of…hint, hint!

T: Our email filter—when we get it working—will automatically flush any emails that have forged headers or don’t have a payment for at least the correct amount into the bit bucket. Fingers crossed, it’ll mean no spam, and a reduction in emails from people with nothing worthwhile to say! Now that, you must admit, makes for a welcome change! And, of course, when my birthday next comes around there just might be enough money in the kitty for Morpheus to buy me that pair of…hint, hint!

We can guarantee that your comments will be appreciated irrespective of which route you take: after all, a “paid-for brickbat” is as welcome as a “free bouquet”. Of course, a “paid-for bouquet” would be ever so much nicer!

For the Attention of Big Brother

M: If, perchance, you’re filtering these witterings into your ever growing database, then don’t contact us, we’ll contact you: somewhere out there in the far reaches of cyberspace is an IP packet with your name on it!

T: And please remember, there are two “f”s in Tiffany!

Our PGP Public Key

Cut and paste the entire contents of the following display box into a text editor, such as “Notepad”. Save it to a file, and then import that file into your keyring using your PGP software.

-----BEGIN PGP PUBLIC KEY BLOCK----- Version: GnuPG v1.4.2.1 (MingW32) mQGiBBpVl68RBACBSLUG+Wc6WJtZsWQfTeYwU/xRsr39IA9XurmzolShYnYZjv+v kjs4gbtaL7/N6CSOTflQQ7ZzT3E4xgQGVJ/mnn1PNU/+SJOKyYKVymcW7IlXUvtY zC9bf9Xl2B47TPrOSFL+JP77pJ5PX515hM7p6dWZrdCHj2lJ1QZvibJ03wCgwPPk QehWENCfmYqyy7kHcC8EeJMD/0UFhmNuF+Tgd4Qr3TjdQBMWzr8X9cDKK6YTu39w kkNlYzuVZVJ3i3P2QikmdkYNLBjDuLAXruhNIHflMqOJrTbuVYwsJqruvorpTARH Zd7s5js7kPmeW0bQSj3U3K98i5GbKdDoSD8DdK+Y/ymL6HM/doO88j8VQlUSpS03 Bm0KA/95fk79W/S6jeqAs9tNM9g39pg3l2u+4kJi+h9P5h7V/Rz8KmP3sxBRcdKV fUl6SYdqZPIJZeITvMZsFZp+qgIzO2Rliq8hGDFyUGPEdNjvKzTkTXqFoBwKI8av WRPQfvZAr1PKhFwYrj9SxETU7H8Bp65EZnluS40UMNcutNzo1LRDVGlmZmFueSAm IE1vcnBoZXVzIChBIEJpZyBCcm90aGVyLUZyZWUgWm9uZSkgPGhhcmRsaW5lQGV4 aXQubWF0cml4PohcBBMRAgAdBQIaVZevBgsJCAcDAgQVAggDBBYCAwECHgECF4AA CgkQSGh52BKVJf9+mwCgmxKTpBBKt7RM9QKxmRB024C36wQAmMJ1zY6TWrLfs8b2 x65bvlsJZJa5Ag0EGlWXuxAIALECBhq46hrXHlIXkDW/uPJwHtNmfhelRUZNZuDj VDfhe4e8BQmUf8ygEB3Wf46Ay6y0JZsvFvDAxw1XK+MYOt0MPn/3/YPwz5f88z4i 9TL6x0NAxFbiyjCSHKU5hX4jh0ldGpH6BFZFHtzQ1moA4XBXi+G0ozYtkLR83qOv lvLmrc9WKS2OifcfCd6wJONILcZ0tOpJTNxk93PtOe6hKM5rLYuUr/uzJ4jTNIJ4 kg80o+aYsGq5CrcyWZ7SeyIc0+qKKg9EZ12AQ5b2ymqpK79gzQ2hgRk1/y6wkuyS boA18BamilKQxqKgrhUg5j3TZadB2SY5rK+i9+57MXWiHVMAAwUH/iFQ/oltiJ69 f+pkiWRs6jBpU9HwDGC0mNQJE1oDihuJ2NxRkpGJI7ZBYr/VhEFwYXeYg+yeUWZH zrQV1oA5YqXtQvLRCJaHlhDDMuUWnCxdeId6EVLl9SlhtSNdAyrfHFjnjMVbFkDd RjrsUrOwFL/eW/Jp5OjQEoPeVahAhyn1NO23NbMHJ8+CSaYaK4lHa8brx74LQLSL JB5Ou0zBwZ34NLxf41XlhP0aWwnQVddNW68o1ijfKzRS70wsqjr+jaDYvcvgMWwq X94c2DGlXiGs+GuoofcPy6YRxdsC9wR8BtH57eyNqFGeu05fpHYdrhTtoJCMfaPS wV722jqWWZmIRgQYEQIABgUCGlWXuwAKCRBIaHnYEpUl/1/jAJ9F/tRmBJeyxnyc Cw3G0NB0WWMIugCfSc9mQtJQtyTqW+e/NlypPGdsdbk= =GE04 -----END PGP PUBLIC KEY BLOCK-----

About Us: If you really must know!

2006-04-29T09:15:00.000+01:00

Time and Materials

When, on this blog, we use the word “we”, we really do mean “we”. Editorially speaking, there are two of us. Now, in keeping with this site’s raison d’être, we couldn’t possibly divulge our real names, so you’ll have to make do with our pseudonyms instead.

M: I’m Morpheus and she’s Tiffany.

T: Or, to put things in the correct order, I’m Tiffany and he’s Morpheus! In short, we’re T&M. I’m “time” and he’s “materials”. If you put the two together in the right way, then “There will be light.” At least, we hope so!

M: Thanks for that little peroration Tiffs. As you can see, I’m an old fashioned kind of gentleman, the sort who let’s the ladies go [T: and also come!] first, spoil them a little, and let them have there way—be it wicked or otherwise! As we couldn’t possibly provide photos for a profile, you’ll have to make do with some word paintings instead. So Tiffs, describe me to our honoured guest.

Morpheus: A Harbinger of Sweet Dreams

T: Well, imagine Neo (Keanu Reeves). Inject some steroids and a sense of humour. Then add a big smile. That’s our Morpheus: the kind of man to warm your heart, and not just that other part! This son of Somnus will certainly put you to sleep, but only as a consequence of first making you very, very wide awake! All in all, a harbinger of sweet dreams. Now Morpheus, how about me?

Tiffany: Iridescent and Compelling

M: Well, what can I say about Tiffany? In keeping with the fons et origo of her name, I think “favrile glass” describes her well: freely shaped, iridescent, compelling. Or, to change the metaphor, a sports car that purrs silkily most of the time, but demonstrates the amazing amount of “Oomph” that lies under the bonnet whenever she decides to “put her foot to the floor”.

Her choice of pseudonym is rather appropriate, for she looks not unlike that other T-lady, Trinity (Carrie-Anne Moss), only an improved version, the Mark II! Think back to the first time you saw The Matrix. Remember that opening scene, where Trinity—clad in a wonderfully tight, black, leather cat-suit—despatches half a dozen opponents, sprints across rooftops, jumps a yawning chasm, dives—à la Superwoman—through a window, rolls down a flight of stairs, and then elegantly uncurls, two guns at the ready. Suddenly, you realise you haven’t been breathing for the last few minutes, and you feel, rather than say, “Wow! Oh! She’s hot! Weak-kneeingly hot! Tom-cat-who-got-the-cream hot!” Well, that’s our Tiffs. ’Ot she be! And she sizzles in many delightful ways, be they little or large! [T: Ah! Flattery will get you everywhere I want you to be!]

Don’t panic!

T: If you belong to that very tiny minority who likes our irreverent, idiosyncratic, and eclectic style, then—don’t panic—we can recommend a good shrink. Or, at least we know a Man who can. For, as Big Brother continually reminds us in ponderous and solemn tones, “Not appreciating the Great and the Good is not only a symptom, but also the very definition, of mental illness.” In so-called democracies, such a diagnosis provides a useful excuse for locking up dissidents and throwing away the key. In attested tyrannies, there is, of course, no need to avoid wasting the resources of the State in such a frivolous manner; in these countries a summary execution followed by a roadside burial proves both an exemplary and a cost-effective alternative.

M: Well, did I lie, dear reader? As you can well imagine, when Tiffs gets going she’s all hot metal and sprung steel. Just be thankful she’ll never have the opportunity to wrap her thighs around a delicate part of your anatomy when her passions are running high!

Cyberspace Gypsies

M: As we have the misfortune to be a freedom-loving pair of cybernauts, we’re sure to offend Big Brothers, both East and West. So our existence may well prove to be a peripatetic one of cyberspace gypsies. But just Google our signature line to find us—assuming, that is, we’re not one of those 50,000 souls about to be sacrificed by Google on Big Brother’s high altar!

T: Psst! Psst! Have you forgotten that Blogger is now owned by Google?

M: Oh! Bug——r! You don’t mean the same crowd that sold out to Big Brother in Beijing?

</BloggerNotToBeReadByGoogle>

M: Well, as I was just saying, our existence may well prove to be a …. Down boy! Nice Google! Nice Google! Well, to be fair to Google, they do put up at least some resistance—unlike others, Billy Boy! As I recall, Google did recently make a token challenge to BB in the courts. And our Chinese friends can at least see that www.tibet.com exists and have the benefit of a short description, even if when they click on the link the contents always seems to be “lost in cyberspace”.

How the other half surfs!

By the way, whilst I’m on the topic, do you want to see how the other half lives? Or, should that be surfs? Then try exiting Tor through a Chinese node. We’ll show you how, day jobs permitting.

The Great Google!

M: So, to all you detractors of the Great Google we say, “Have a heart!” After all, once Big Brother knows who you are and where you keep your assets only a token resistance is possible. We, on the other hand, being mobile, pseudonymous entities are free to “take the piss” as, and when, we please. And now it’s time to party!

T: Oh! That’s a clever ploy! Criticism, with a complement in its tail. Saying nice things about Google means they’re sure to promote this blog.

M: Yes, brilliant isn’t it. I’m sure we’ll come up as the first hit whenever anyone searches on “privacy”. No need to create dummy links to promote this blog. All we have to do is a little unctuous crawling instead!

T: Why, it’s a ploy worthy of BB himself. You worry me at times Morpheus. Sometimes I think you’re in danger of selling out to the other side. Are you sure that navel of yours is still as Mother Nature left it?

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Big Brother’s Coffin: Nails needed!

T&M: Well, as a certain rabbit says, “That’s all folks!” Oh! And, as to “The One”? Well, we’re still looking for him. Who knows, it could be you!

Confucius, he say: “Gold very welcome!” T&M, we say: “Confucius, he very wise man!”

Every donation is a nail in Big Brother’s coffin. True, the coffin may be of Brobdingnagian proportions, and we are but two Lilliputians! But, it’s the principle that counts: even if we’re all dead men walking, we can still choose to walk that “Green Mile” with dignity.

M: A bit heavy don’t you think? T: Yes, don’t you just hate those types who’re always serious when faced with disaster? M: I can’t stand people who’re always asking for money. T: I agree! Who is this grubby little pair? M: I certainly wouldn’t give them any money. T: Especially with all that “school boy” punctuation; far too many inverted commas and exclamation marks for my liking!

About You: Do you pass our Test?

2006-04-29T09:10:00.000+01:00

No, not You!

Now pay attention! This blog is not intended for just “anyone” with an interest in privacy. After all, we have standards to maintain! So, do you qualify? Well, here’s a simple test. Whilst idly browsing some web site, a banner ad annoyingly intrudes into your field of view. You haven’t had enough coffee that morning to activate the centres of higher intelligence within your forebrain, and, shepherded by some primordial reflex response, you click on it—almost always a mistake! At the end of the link you find, amongst other disagreeable things, the “thoroughly” informative statement, “This product employs SOCKS4a to prevent DNS leakage.” If your response is “Hmm…interesting!” or “Well…of course!”, then you probably know far more about privacy issues than we do, and you’ll find it far more diverting to digest the contents of those abstruse technical white papers published by symposia on computer security than to browse the contents of our far more modest and less technically challenging pages.

Yes, you’ll do Fine!

If, on the other hand, “DNS” is just one of those horrid acronyms that pop up in menacing hordes whenever computers are under discussion; if, when you see the word “leakage”, the first thing that comes to mind is the water that, on occasion, mysteriously appears from underneath your washing machine; if “SOCKS4a” sounds like just another designer brand name for items of apparel destined to cover your lower extremities; if your eyes glaze over and you quickly push the back button on your browser, then “Welcome”, for this is the site you’ve been looking for!

What we’ll blog about is largely determined by you, the reader. Maybe you’ve already made a start, but are struggling to understand some topic or other. Or maybe you’re a know-nothing beginner. If you fall into the latter category, then just ignore anything that seems like a “techie tip” for the moment. Some day you’ll look at one and it will actually make sense. That’s when you should start to get worried, for you’ll be well on your way to becoming a “preek”—a privacy geek for those of you who aren’t one, yet that is!

Now blogging doesn’t produce a structured list of topics, arranged in an appropriate reading order. So we’ll try to provide something structured, somewhere in the sidebar. You see we understand what you really want: you look back with nostalgia to your school days, when Miss Boomer—who always had the top two buttons of her blouse undone—would lean over your desk, would smile at you in what you most sincerely hoped was a come-on manner, and would tell you what to do next!

The Susie Test

Now given the vast number of sites on the Internet that have something to say about privacy why should you “loiter with intent” around this blog. Well, we’ve a secret weapon that helps us ensure that everything we say is comprehensible. It’s called “The Susie Test”. Susie’s my niece, and she’s six, and she asks an awful, awful…awful lot of questions. So we reckon that if we can explain something to Susie, we can probably also explain it to you!

Besides, Susie, like all children, is a never ending source of profundities, such as, “Well, if Big Brother is so nasty then why don’t people just put him in prison?” Why indeed? Now we’re not suggesting you encircle the headquarters of the NSA, drag its director out by the scruff of the neck, and then do onto him as he does onto you—now, that would be just too cruel, wouldn’t it! But you could indicate to your would-be representative that he’s not going to get your vote next time around unless he decides to pension off the NSA top brass, so that they can all go and become vice-presidents of big business or engage in some other slightly less nefarious activity! Now, how about it?

The Four Privateers

You know those films where a number of strangers meet and exchange stories, and you find yourself identifying with one of them—well, try!

Mr. N. Boodie

Perhaps you’re a person of no particular importance, a nobody you might say. This is actually a very good sort of person to be. Why? Well, no one is going to target you specifically, that’s why! Now it’s true that Organized Crime, Big Business, and Big Brother will all try to profile you: the first to clean out your bank account and steal your identity, the second to pester you by trying to sell you things no sane person could possibly want to buy, and the third to persecute you should you turn out to be a “rebel with a cause”—the kind of person who doesn’t approve of Big Brother persecuting people who don’t approve of Big Brother!

Madame H.A.P. Rapet

Perhaps you’re a celebrity—well, a celebrity of sorts. Maybe you’re a Hollywood film star, or maybe you’re one of those politicians who “can’t be bought”—assuming, of course, that the existence of such politicians is more than just another urban myth! Maybe you’re an investigative journalist, or maybe you just wave a banner for some environmental pressure group who doesn’t like “Oozy Oil Inc.” despoiling whatever little wilderness still remains. No matter, but for some reason or other you’ve got your head above the parapet, with the result that Big Brother or Big Business, or even some “bottom-dwelling” member of the general public might just decide to take a pot-shot at your pate.

Well, clearly you need either a suit of armour or an invisibility cloak. If you fancy the suit, then Big Brother has just what you need. On the downside, it’s a one-size-fits-all suit; but on the upside he does offer a free fitting service—he will very carefully take your measurements, and then adjust you to fit the suit! And, as to the colour—why, you can have any colour you like, as long as it’s black. But should Madame prefer the cloak, then we just might be able to fashion a garment that meets your exact requirements!

Herr W.S. Blooer

Yes, you’re a nobody: but you’re a nobody who wants to tell everybody about a somebody, without that somebody finding out that you were the nobody who “done” the dastardly deed of exposing his inequities to the world at large. In short, you’re a whistleblower. Now you’ve a big problem. At best you risk loosing your job or your home. At worst you risk being imprisoned, tortured, or executed by way of reparation for the sin of exposing other people’s sins.

Ms. D.S. Dent

As a dissident you live in the worst of all possible worlds: your head’s above the parapet and you’d also like to be a whistleblower. But “they” know who you are. They’re already watching you. So you’ll have to be very, very careful.

Horses for Courses

Now when it comes to privacy, people have a bad habit of moving from one extreme to another: from a state of clueless pillockdom to a state of quivering paranoia.

Clueless Pillockdom

You start off your existence as a clueless pillock: you use your pet’s name as the common password to logon to every web site that needs one—amongst them your Internet bank account and www.wecollectpasswords.com; you scatter your one-and-only email address all over the web with the gay abandon of revellers showering confetti at a wedding; and in registering a domain name you enter your real name, address, and telephone number into the global whois.

But then things start to go wrong: one day you discover that your bank account has been cleaned out; you receive, in ever increasing numbers, harassing emails from weird people who didn’t appreciate the comments you posted to that newsgroup; and you discern that there’s always that same shadowy person with a pair of binoculars loitering out there in the bushes every evening when you go to close the curtains.

Quivering Paranoia

That’s when you become paranoid: now you take half-an-hour to negotiate the cascade of password screens that protect your PC from snoopers; you’ve added so many nodes to your remailer list that snail mail would get there quicker; you’ve created a proxy chain of such length and complexity that in the interval between pressing “Enter” and the web page displaying in your browser you have enough time to make a cup of coffee, to fill in your tax return, and to take the medication that has become essential to soothe those oh-so tattered nerves; and you absolutely insist on using a one-time pad whenever you want to tell the dog it’s time for walkies!

Different Strokes…

Now privacy is a question of horses for courses, or, if you prefer, of different strokes for different folks. If you’re a Mr. Boodie, as almost everybody is, then only a very modest effort is required to keep most of the web hounds at bay. If you’re a Madame Rapet, then—depending on the size of your head and the amount by which it protrudes above the parapet—it would probably be worthwhile establishing an anonymous online identity for yourself, so that you can browse and email without having your activities traced. But if you’re a Herr Blooer or a Ms. Dent? Well, that’s when the paranoia is justified. For you’ll need to be very, very well prepared: your adversary only needs to be lucky once; you, however, must hit the jackpot every time.