Re: Eyes on the Prize...not the Millicent Ghetto

[jamesd]

--
Richard Fiero:
> > > As the article excerpted below states, in 2001 there was 
> > > about $620 billion dollars in US currency out there 
> > > somewhere and 65% was in $100 dollar bills.

James A. Donald:
> > Presumably most of those $100 bills are changing hands in 
> > suitcases and brown paper bags, exposing the owners to 
> > considerable personal risk in each transaction.  However, in 
> > many countries, most for example Argentina, the government 
> > routinely engages in bank robbery, making the banking system 
> > pretty much unusable.
> >
> > Many of those holders of bags of $100 bills would find a quiet 
> > electronic version very handy.  . . .

Richard Fiero
> As the article points out, $1 million fits in a briefcase nicely 
> but the Euro's largest denomination is 500 which will allow $1 
> million to fit into a purse.

All the easier to be confiscated.  Having large amounts of cash 
money on you is "illegal" everywhere, in the sense that those with 
state power will take it from those without, and the official who 
catches you generally gets to keep most of the money, unless 
someone higher up catches him.  Bank money is only safe to the 
extent that the bigger sharks scare off the smaller.

> From the article: " I am not an expert in cryptography, but I 
> think it may take quite a while to devise an electronic money 
> that guarantees anonymity in the same way that cash does."

We have devised it already.  Implementation and deployment is a
little harder. 

--digsig
 James A. Donald
 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG
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Re: convenience and advantages of cash (Re: Eyes on the Prize...not the Millicent Ghetto)

[jamesd]

--
On 14 May 2002 at 21:00, Adam Back wrote:
> I've also moved more than 2,000 GBP that between bank accounts 
> and investment accounts in the past -- withdraw from current 
> account 10,000 GBP, walk across the street and pay into another 
> institutions investment account and the money is instantly 
> available to write a check, and accrues interest from that day, 
> rather than 3 days later.
>
> The bank charges 20 GBP or more to do the same day transfer 
> electronically (CHAPs), where as the "no fee" option is BACs and 
> takes 3 working days and they keep the interest on your money 
> while it's moving.

Notice that delays and charges on bank transfers are as high as if 
they were still sending instructions by pony express to be 
implemented by clerks wearing eyeshades sitting at benches.

The bank system is an extravagantly slow and inefficient means of 
transferring money.  In much of the world, it is also extremely 
insecure.  Indeed, if we were to count predictable regularly
scheduled taxes as insecurity, it is insecure everywhere. 

--digsig
 James A. Donald
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Re: Eyes on the Prize...not the Millicent Ghetto

[R. A. Hettinga]

At 10:26 AM +0200 on 5/14/02, David G.W. Birch wrote:


>> Compared, again, to, regulated,
>> monitored, bank-to-bank foreign exchange of several *trillion*
>> dollars a *day*, it's chicken feed.
>
> On Bob's list, yesterday:
>
>>> About $1.2
>>> trillion in currencies is traded daily, according to the Bank for
>>> International Settlements.

Zing. :-).

I wonder where the $3 trillion number a day number I've heard from various
people over the last 10 years came from. The first time I heard it was from
someone at Telerate in 1990 or so...

Cheers,
RAH
"The price of error, on a network of scientists, is bandwidth."

-- 
-
R. A. Hettinga 
The Internet Bearer Underwriting Corporation 
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

convenience and advantages of cash (Re: Eyes on the Prize...not the Millicent Ghetto)

[Adam Back]

You can apparently get Canadian $1,000 notes too, not that I've ever
seen one.  That would be worth almost exactly the same as 1000 swiss
francs.

If you get a bundle of 50 GBP notes from a bank in the UK they put
them in a little sealed bag containing 10 notes (500 pounds).  That
note collection is convenient for counting etc for larger items also.

Largest thing I bought cash was 2,000 GBP for a 2nd hand car some
years ago.  I did toy with trying to buy a house with paper cash to
see if it could be done, but I didn't bother in the end -- but I think
that all that would have happened is the seller's lawyer would go to
the bank and pay it in to make sure it's good.

I've also moved more than 2,000 GBP that between bank accounts and
investment accounts in the past -- withdraw from current account
10,000 GBP, walk across the street and pay into another institutions
investment account and the money is instantly available to write a
check, and accrues interest from that day, rather than 3 days later.

The bank charges 20 GBP or more to do the same day transfer
electronically (CHAPs), where as the "no fee" option is BACs and takes
3 working days and they keep the interest on your money while it's
moving.

Adam

On Tue, May 14, 2002 at 01:56:05PM -0400, Duncan Frissell wrote:
> On Tue, 14 May 2002, Richard Fiero wrote:
> 
> > As the article points out, $1 million fits in a briefcase
> > nicely but the Euro's largest denomination is 500 which will
> > allow $1 million to fit into a purse. From the article:
> > " I am not an expert in cryptography, but I think it may take
> > quite a while to devise an electronic money that guarantees
> > anonymity in the same way that cash does."
> 
> Or my favorite 1000 swiss franc notes currently worth about $618 each.
> 
> DCF

Re: Eyes on the Prize...not the Millicent Ghetto

[David G.W. Birch]

R. A. Hettinga e-said:

> Compared, again, to, regulated,
> monitored, bank-to-bank foreign exchange of several *trillion*
> dollars a *day*, it's chicken feed.

On Bob's list, yesterday:

>> About $1.2
>> trillion in currencies is traded daily, according to the Bank for
>> International Settlements.

Regards,
Dave Birch.

-- 

==  My own opinion (I think!) given solely in my capacity as an
==  interested member of the general public
==  mail(at)davebirches.org, http://www.davebirch.org/

Re: Re: Eyes on the Prize...not the Millicent Ghetto

[Daniel J. Boone]

> Or my favorite 1000 swiss franc notes currently worth about $618
each.
>
> DCF

Neat!  I need to get out more.  A thin sheaf of those would add
considerable spice to the old "slip the envelope out of the inside
breast pocket of your suit coat" transactions.

-- Daniel J. Boone

Re: Eyes on the Prize...not the Millicent Ghetto

[R. A. Hettinga]

-BEGIN PGP SIGNED MESSAGE-

At 10:34 PM -0700 on 5/13/02, Richard Fiero wrote:


> Um, that $4 trillion didn't move around in trucks speeding on
> highways. It's just a bunch of marks on hard drives and very
> little money actually changed owners. Already electronic.
> Already secure. Extremely mobile.

Correct. And it can only be transferred, in very big chunks, from one
bank to another, taking at least 24 hours to clear and settle because
of still mostly batch-processed bookeeping applications. The stuff
we're talking about is much more mobile, it clears instantly, and
considerably less expensive, so that ordinary people with an internet
connection, and eventually ordinary machines, can pay each other
increasingly smaller and smaller amounts as technology evolves.

> As the article excerpted below states, in 2001 there was about
> $620 billion dollars in US currency out there somewhere and 65%
> was in $100 dollar bills.

Sure. I've read Rogoff, and Doyle, who he cites, before. Rogoff says
nothing new there that everyone in the money business doesn't say
already -- and the Bank for International Settlement has much better
data, by the way. http://www.bis.org/cpss/cpsspubl.htm is a good
place to start. The Kansas City Fed also has a good database, called
FRED :-), containing all the various monetary aggregate figures in it
going back at least to the turn of the 20th century.


*My* point is that there hasn't been implementation of a working
bearer-settled internet transaction system yet. I would probably
claim that that when it's up and running, and proven to be cheap
enough, that the amount of cash in circulation of various national
currencies will easily double in 5 years, and go up from there. I
also expect that, if it's cheap enough, internet bearer transactions
will almost completely replace book-entry settled payment and finance
within 25 years. Or at least to the same ratio that book-entry
transactions dominate physical delivery of paper bearer instruments
today, which, as inadvertently noted above, is pocket lint.


Cheers,
RAH


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-- 
-
R. A. Hettinga 
The Internet Bearer Underwriting Corporation 
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

Re: Eyes on the Prize...not the Millicent Ghetto

[Richard Fiero]

[EMAIL PROTECTED] wrote:
> --
>On 13 May 2002 at 22:34, Richard Fiero wrote:
> > As the article excerpted below states, in 2001 there was about
> > $620 billion dollars in US currency out there somewhere and 65%
> > was in $100 dollar bills.
>
>Presumably most of those $100 bills are changing hands in
>suitcases and brown paper bags, exposing the owners to
>considerable personal risk in each transaction.  However, in many
>countries, most for example Argentina, the government routinely
>engages in bank robbery, making the banking system pretty much
>unusable.
>
>Many of those holders of bags of $100 bills would find a quiet
>electronic version very handy.  . . .

As the article points out, $1 million fits in a briefcase 
nicely but the Euro's largest denomination is 500 which will 
allow $1 million to fit into a purse. From the article:
" I am not an expert in cryptography, but I think it may take 
quite a while to devise an electronic money that guarantees 
anonymity in the same way that cash does."

Re: Eyes on the Prize...not the Millicent Ghetto

[jamesd]

--
James A. Donald:
> > Seems to me that most of our economy is arguably illegal.

R. A. Hettinga
> Fine. Document that, pease. Show me statistics.

Obviously that is a claim that cannot be directly documented,
since most people decline to register their business with the
department of census and statistics as "engaged primarily in
illegal activity"

However every business that I have been involved in, where I have
been in a position to know, has been extensively violating some
laws in some fashion -- personal anecdotes, where I cannot give
details.

There are also many sweeping decrees where it is not clear what is
intended, or what will be enforced, and one can make a plausible
argument that current practice is arguably legal -- but not a very
good argument.  For example AOL, Verant, Yahoo, and perhaps
Microsoft are arguably in violation of COPA.  Almost everyone
necessarily operates in gray areas, often fairly openly, and
wherever I have been in a position to know, most people were in
some respects operating in black areas, not at all openly.

There are so many laws, that it is impossible to operate a
business entirely legally.

> Extraordinary claims require extraordinary proof, right?

What is extraordinary about this claim:  If most individuals can
rack up multiple felony offenses while scarcely realizing it,
think what a pickle the average business must be in.

When the federal register is requires a fleet of trucks, when I
have committed several hundred years worth of felonies without
doing anything that the ordinary middle respectable middle class
male would regard as very disreputable, I do not see what is so
extraordinary about that claim.

> Illegal drugs are probably a few tens of billions of dollars a
> year. Timmy Leary quoted $50 billion in the early 80's at the
> height of the Columbian cocaine boom. I'll take triple that

Add AOL, Yahoo, Verant, and Microsoft to the crips and the bloods.
My usenet server has a sign up web page that emphasizes privacy,
anonymity, lack of logs, absence of censorship, and completeness
of newsgroups -- I get the impression that a large part of their
customer base is people downloading child pornography.

> Frankly, the amount of formerly illegal business now declared
> legal, in a gross sense, has gone up dramatically in the last
> 10-15 years

In Russia what we saw is not so much legalization, as collapse of
enforcement -- the long existing illegal market that kept Stalin's
economy going has now wholly displaced the socialist economy, a
process that in restrospect was visible under Khruschev, and was
visible to me at the time under Brezhnev.  A similar collapse
seems to be under way in America.  Here in America we are in a
situation equivalent to the early Brezhnev years.

> We're legislating "crime" out of statistical significance, just
> by making most of it legal,

Most legislation makes more things illegal, not more things legal. 

--digsig
 James A. Donald
 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG
 Nfak7kEQszUPr9gvDxWe7RF8jWE3evQwcUJgv8mR
 4QWiykow35eQRRBIC3Q3w/0KHpuUKp1Aed3l+CSIK

Re: Eyes on the Prize...not the Millicent Ghetto

[jamesd]

--
On 13 May 2002 at 22:34, Richard Fiero wrote:
> As the article excerpted below states, in 2001 there was about 
> $620 billion dollars in US currency out there somewhere and 65% 
> was in $100 dollar bills.

Presumably most of those $100 bills are changing hands in
suitcases and brown paper bags, exposing the owners to
considerable personal risk in each transaction.  However, in many
countries, most for example Argentina, the government routinely
engages in bank robbery, making the banking system pretty much
unusable.

Many of those holders of bags of $100 bills would find a quiet
electronic version very handy. 

--digsig
 James A. Donald
 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG
 k5Q0ixYnXPGv/XDu2hDgLJoUHo/6YsmFCmLRq9VM
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Re: Eyes on the Prize...not the Millicent Ghetto

[R. A. Hettinga]

-BEGIN PGP SIGNED MESSAGE-

At 9:30 PM -0700 on 5/13/02, [EMAIL PROTECTED] wrote:


> Seems to me that most of our economy is arguably illegal.

Fine. Document that, please. Show me statistics. Extraordinary claims
require extraordinary proof, right?

>> $4 trillion worth of foreign exchange alone happened today.
>
> Much of it illegal.

Fine. How much. Say it with numbers, please.

> For example some large proportion of the
> capital formed in Ireland sneaks out, and then re-enters in the
> guise of foreign capital.

No problem. How much, exactly? Even a reasonable estimate will do
nicely, if you can point to actual data.


The biggest number I've heard for money laundering worldwide for
instance, over the last 6 years ago since Black Unicorn threw it
around at DCSB in 1996, is a mostly made up number in the several
hundred billion-dollar annual range. Compared, again, to, regulated,
monitored, bank-to-bank foreign exchange of several *trillion*
dollars a *day*, it's chicken feed.

Illegal drugs are probably a few tens of billions of dollars a year.
Timmy Leary quoted $50 billion in the early 80's at the height of the
Columbian cocaine boom. I'll take triple that, now, just for fun.
Chicken feed compared to the global commercial drug market. Money
laundering and drugs are probably the largest illegal businesses. The
rest is, again, chicken-feed in comparison to even that.


Frankly, the amount of formerly illegal business now declared legal,
in a gross sense, has gone up dramatically in the last 10-15 years,
think most of Eurasia, for instance, and the number of de-regulated
businesses increases that amount exponentially every year. Wait until
various moslem dictatorships are freed, and you'll see even more.

We're legislating "crime" out of statistical significance, just by
making most of it legal, and in spite of the increase of financial
crime legislation in the G-7, even before 9/11. Legitimate Internet
commerce, boom, bust, or no, is going to be so huge that it will
completely swamp the ability of governments to control business at
all, much less their own economies and currencies, and, frankly, it
can't happen soon enough for me.

The pointy end of the stick isn't illegal business. It's anyone who
wants to sell anything over the internet, particularly if it's
anything that is *transported* over the internet, which, in a
geodesic economy, will be the only stuff that matters.


Cheers,
RAH


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-- 
-
R. A. Hettinga 
The Internet Bearer Underwriting Corporation 
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

Re: Eyes on the Prize...not the Millicent Ghetto

[Richard Fiero]

R. A. Hettinga wrote:
>. . .
>Right, though I'm sure you're wishing it wasn't. Again, crime,
>illegal markets if you will are piddly bits of pocket fluff in the
>global economy. $4 trillion worth of foreign exchange alone happened
>today. Criminal activity is in the tens of billions, max, a year.
>  . . .

Um, that $4 trillion didn't move around in trucks speeding on 
highways. It's just a bunch of marks on hard drives and very 
little money actually changed owners. Already electronic. 
Already secure. Extremely mobile.

As the article excerpted below states, in 2001 there was about 
$620 billion dollars in US currency out there somewhere and 65% 
was in $100 dollar bills.
=

" . . . Why hasn't paper and metal currency already gone the 
way of the horse and buggy? With credit and debit cards, online 
banking, and so on, why isn't the demand for currency steadily 
shrinking to zero?"

This from the IMF quarter newsletter "Finance" in the article 
"The Surprising Popularity of Paper Currency" by Kenneth S. Rogoff at
http://www.imf.org/external/pubs/ft/fandd/2002/03/rogoff.htm

which continues:
"Curiously, all prognostications about Internet money to the 
contrary, there is not a shred of evidence that the public is 
about to give up currency in the United States, Europe, or 
Japan. Indeed, evidence of the reverse is stunning.

"Let's start with the United States. At the end of 2001, 
currency per capita (held by the public) exceeded $620 billion, 
or roughly $2,200 for every man, woman, and child. I don't know 
about you, but I usually don't carry one-tenth that much 
currency in my wallet, nor does my brother Harry. Moreover, 
over 65 percent of it was held in $100 bills (the largest 
denomination), which means that the typical American family 
should be holding sixty $100 bills. Yet Federal Reserve Board 
surveys find that, on average, the typical American family does 
not hold even a single $100 bill!

"Where is the missing money? Some of it can be found in obvious 
places like supermarket cash registers, but only a very little, 
according to extensive government surveys. In fact, surveys of 
domestic households and businesses can account for only 5 
percent of the U.S. currency in circulation. Where is the rest, 
the other 95 percent? A big chunk is probably held abroad, 
though estimates vary wildly from 30 percent to 75 percent (my 
1998 Economic Policy article estimated 50 percent). Even if the 
number is at the high end, say, 75 percent, that still leaves 
$2,200, held domestically within the United States, for every 
family of four. Economists presume that most of this cash can 
be found in the 'underground economy.'"

Re: Eyes on the Prize...not the Millicent Ghetto

[jamesd]

--
On 13 May 2002 at 18:27, R. A. Hettinga wrote:
> And, thus, nobody will ever use the stuff. The market for
> criminal behavior is trivial. Puny. Nonexistent, and getting
> smaller all the time, no matter what political crises we face,
> or, paradoxically, how much our nation-states write more laws.

Seems to me that most of our economy is arguably illegal.

> $4 trillion worth of foreign exchange alone happened today.

Much of it illegal.  For example some large proportion of the
capital formed in Ireland sneaks out, and then re-enters in the
guise of foreign capital.


--digsig
 James A. Donald
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 4UADmnRZ6p/owCN0F1W7W/FupOa1Jt89TO4wpH2xz

Re: Eyes on the Prize...not the Millicent Ghetto

[jamesd]

--
On 13 May 2002 at 13:20, Morlock Elloi wrote:
> Classic cypherpunk pipe dream is a dot-com syndrome - very low
> cost software/devices - billions will use it - we'll (get rich &
> laid | save the world).
>
> The only other feature of untraceable money which may get larger 
> market attention - untaxability - is effectively preempted by 
> relatively low taxes. 40% cumulative tax rate is not enough
> reason, for most well-off, to risk trusting scrambled bits on
> the wire.

Pull the other one.


--digsig
 James A. Donald
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Re: Eyes on the Prize...not the Millicent Ghetto

[Eric Murray]

On Mon, May 13, 2002 at 01:20:35PM -0700, Morlock Elloi wrote:
> > Go after those who already _know_ they need untraceability. Go after 
> > niches where VALUE >> COST. Don't try to argue that the world needs to 
> > replace its multi-billion dollar infrastructure of 
> 
> The question is  - are there enough of these to justify development. Or maybe
> they all already have their private cryptographers.

On-line porn.

Their transaction costs are huge, because many of their customers
realize that the bills are gonna show up on the statement
that their wife reads, so they repudiate.  This pushes up the costs
to the rest of the customers.

An anonymous system would keep the customers from getting
busted by the wife.  If it were also non repudiable then
there would be an added incentive for merchants.

Alowing cheaper minipayments would also be a bonus-- lots of
porn transactions are in the $5-10 range where the cheapest fixed 
costs for a CC transaction is like $1 plus a percentage.

On-line porn people are probably more likely to spend a little time
setting up an account than Sally Sixpack is.

Didn't Tim write something about this within the last year?


The problems of course are 1) hooking it into the existing money system
and 2) keeping from getting busted for "money laundering".

Eric

Re: Eyes on the Prize...not the Millicent Ghetto

[R. A. Hettinga]

-BEGIN PGP SIGNED MESSAGE-

At 1:20 PM -0700 on 5/13/02, Morlock Elloi wrote:


>> Go after those who already _know_ they need untraceability. Go
>> after  niches where VALUE >> COST. Don't try to argue that the
>> world needs to  replace its multi-billion dollar infrastructure of
>
> The question is  - are there enough of these to justify
> development. Or maybe they all already have their private
> cryptographers.

And, thus, nobody will ever use the stuff. The market for criminal
behavior is trivial. Puny. Nonexistent, and getting smaller all the
time, no matter what political crises we face, or, paradoxically, how
much our nation-states write more laws.  If something's financially
useful then it gets used. And I think strong financial cryptography
protocols are financially useful, they reduce the risk adjusted
transaction cost of moving money on the net, and thus the
risk-adjusted transaction cost of money itself, since money's going
to be increasingly moved around on the internet instead of closed
proprietary networks that can't scale nearly as big as the net can.

> Classic cypherpunk pipe dream is a dot-com syndrome - very low cost
> software/devices - billions will use it - we'll (get rich & laid |
> save the world).

Wrong, Little Lord Morlock. The classic cypherpunk pipe dream is to
smash the state and kill cops ;-) using strong crypto to free us all.
Most of the people who ended up trying to make money on this stuff
already left to go do it, or graduated from college or grad school
and got day jobs. Except for the odd fool who keeps sticking around
out of boredom or masochism...

> The only other feature of untraceable money which may get larger
> market attention - untaxability - is effectively preempted by
> relatively low taxes. 40% cumulative tax rate is not enough reason,
> for most well-off, to risk trusting scrambled bits on the wire.

Right, though I'm sure you're wishing it wasn't. Again, crime,
illegal markets if you will are piddly bits of pocket fluff in the
global economy. $4 trillion worth of foreign exchange alone happened
today. Criminal activity is in the tens of billions, max, a year.
And, as you note, marginal tax rates are coming down everywhere, and
all the countries which controlled business as a de facto criminal
activity, except three or four totaling a non-material percentage of
the world's total population, went out of business themselves a
decade or more ago. Not counting academia, of course. ;-).


> In other words, crypto already happened, all those who need it
> already have it.

Crypto is still happening. It will be the lifeblood of the world's
commerce, and it will be *the* most important economic technology in
less than a decade, if it doesn't happen sooner than that.

I'll give you a hint, Lord Morlock: How do you expect to control
property without laws? With cryptography. Financial cryptography. And
why? Because it will be cheaper than doing it with lawyers and state
monopolies on force. As Ronald Coase said in the 1920's and Hernando
De Soto reasserts to this day, private property is the first cause of
*any* economy, and financial cryptography will enable title to all
kinds of property, any asset, information goods and services,
manufactured goods, real estate, commodities, and of course, any
financial instrument, to be traded, instantly, for ridiculously
cheaper than the way we do it now.

That's what people will call "cryptography" 50 years from now, not
secret messages in pissant power squabbles between tyrants and their
prototyrannical political opponents.

> Maybe the current proliferation of "find out what your spouse does
> online" spams will gradually create a need.

Right. The Bastille's over there, Morelock. Have fun. Don't forget to
wear your silly hat.

Cheers,
RAH

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-- 
-
R. A. Hettinga 
The Internet Bearer Underwriting Corporation 
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'