Cypherpunks, e-money and the technologies of disconnection - encryption technology; includes related articles; excerpt from book, 'Out of Control'

Whole Earth Review, Summer, 1993 by Kevin Kelly

IN TIM MAY'S EYES

a digital tape is a weapon as potent and subversive as a shoulder-mounted Stinger missile. May (fortyish, trim beard, exphysicist) holds up a $9.95 digital audio tape, or DAT. The cassette -- just slightly fatter than an ordinary cassette -- contains a copy of a Mozart composition equivalent in fidelity to a conventional digital compact disc. DAT can hold text as easily as music. If the data is smartly compressed, one DAT purchased at K-Mart can hold about 10,000 books in digital form.

One DAT can also completely cloak a smaller library of information interleaved within the music. Not only can the data of about 600 books (80 megabytes) be securely encrypted within a digital tape, but the library's existence on the tape would be invisible even to powerful computers. In the scheme May (and others) promote, a computer hard disk's worth of coded information could be made to disappear inside an ordinary digital tape of Michael Jackson's "Thriller."

The vanishing act works as follows. DAT records music in sixteen binary digits, but that precision is beyond perception. The difference contained in the sixteenth bit of the signal is too small to be detectable by the human ear. A long message -- a book of diagrams, a pile of data spreadsheets -- can be submitted (in encrypted form) in the positions of all the sixteenth bits of music. Anyone playing the tape would hear Michael Jackson crooning in the exact digital quality they would hear on a purchased "Thriller" tape. Anyone examining the tape with a computer would see only digital music. Only by matching an untampered-with tape with the encrypted one bit by bit on a computer could someone detect the difference. Even then, the random-looking differences would appear to be noise acquired while duping a digital tape through an analog CD player (as is normally done). Finally, this "noise" would have to be decrypted (not likely) to prove that it was something other than noise.

"What this means," says May, "is that already it is totally hopeless to stop the flow of bits across borders. Because anyone carrying a single music cassette bought in a store could carry the entire computerized files of the Stealth bomber, and it would be completely and totally imperceptible." One tape contains disco music. The other tape contains disco and the essential blueprints of a key technology.

Music isn't the only way to hide things, either. "I've done this with photos," says May. "I take a digitized photo posted on the net, download it into Adobe Photoshop, and then strip an encrypted message into the least significant bit in each pixel. When I repost the image, it is essentially indistinguishable from the original."

The other thing May is into is wholly anonymous transactions. If one takes the encryption methods developed by military agencies and transplants them into the vast terrain of electronic networks, very powerful -- and very unbreakable -- technologies of anonymous dealing become possible. Two complete strangers could solicit or supply information to each other, and consummate the exchange with money, without the least chance of being traced. That's something that cannot securely be done with phones and the post office now.

It's not just spies and organized crime who are paying attention to this technology. Efficient means of authentication and verification, such as smart cards, tamperproof networks, and micro-size encryption chips, are driving the cost of ciphers down to the consumer level.

Encryption is now affordable for everyman.

The upshot of all this, Tim believes, is the end of corporations in their current form and the beginning of more sophisticated untaxed black markets. Tim calls this movement Crypto-Anarchy. "I have to tell you I think there is a coming war between two forces," Tim May confides to me. "One force wants full disclosure, an end to secret dealings. That's the government going after pot smokers and controversial bulletin boards. The other force wants privacy and civil liberties. In this war, encryption wins. Unless the government is successful in banning encryption, which it won't be, encryption always wins."

A couple of years ago, May wrote a manifesto to alert the world to the advent of widespread encryption. In this electronic broadside, published on the net, he warned of the coming "specter of crypto anarchy.":

The State will of course try to slow or halt the spread of this technology, citing national security concerns, use of the technology by drug dealers and tax evaders, and fears of societal disintegration. Many of these concerns will be valid; crypto anarchy will allow national secrets to be traded freely and will allow illicit and stolen materials to be traded. An anonymous computerized market will even make possible abhorrent markets for assassinations and extortion. Various criminal and foreign elements will be active users of CryptoNet. But this will not halt the spread of crypto anarchy.

Just as the technology of printing altered and reduced the power of medieval guilds and the social power structure, so too will cryptologic methods fundamentally alter the nature of corporations and of government interference in economic transactions. Combined with emerging information markets, crypto anarchy will create a liquid market for any and all material which can be put into words and pictures. And just as a seemingly minor invention like barbed wire made possible the fencing-off of vast ranches and farms, thus altering forever the concepts of land and property rights in the frontier West, so too will the seemingly minor discovery out of an arcane branch of mathematics come to be the wire clippers which dismantle the barbed wire around intellectual property.