"It's Only For Special People"

One objection to the cryptosphere… to free cyberspace… is that it’s only for super-smart people, and not for average people. And that’s flatly false.
Building the cryptosphere requires technical expertise, but populating it – filling it with people and commerce and human decency – is for all who will.
And by daring to enter, you make yourself functionally smarter!

 

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Greatest Crypto Project: Supplemental

After the first part of this series ran, I was surprised to find an archive of the Dodge City Times in my inbox. I had forgotten about the DC Times. It was our third newspaper, centered on Rex’s Dodge City system. And it too was a gas.

After the first part of this series ran, I was surprised to find an archive of the Dodge City Times in my inbox. I had forgotten about the DC Times. It was our third newspaper, centered on Rex’s Dodge City system. And it too was a gas.

Here’s the review edition of The Times:

Here’s issue number 12:

And here’s an issue of the DC Slimes:

Here are some of the graphics:

(Available now on Kindle)

The end.

Paul Rosenberg
www.freemansperspective.com

The Untold Story of the Greatest Crypto Project Ever – PART 6

By the time DMT was up and running, Dodge was winding down and closing, and the project was winding down. Soon enough (and especially because of Rex’s irregular activity), an audit committee was formed, and we went through all the records.

Part 6: Winding It Down

Continuing from Part 5.

By the time DMT was up and running, Dodge was winding down and closing, and the project was winding down. Soon enough (and especially because of Rex’s irregular activity), an audit committee was formed, and we went through all the records. As it turned out, Rex, for all his playing fast and loose, had pumped a lot of his own money into the project, and it probably wouldn’t have been completed without him.

This particular version of “fast and loose,” however, involved some pretty ugly things… like embezzlement. But since the guy who oversaw the embezzlement was also the guy who pumped hundreds of times that amount into the project… well, there really wasn’t anything more to be done, and no one, to my knowledge, pursued it any farther. (You can still find the nitty-gritties here.)

There were people who complained of course, but this really wasn’t an investment in the first place, and anyone who sent money would almost have to understand that. This was a shot at a highly uncertain prize, and a long shot at that. The fact that the intended products were actually built was as good an outcome as could reasonably be expected… at least in my opinion.

The audit itself was a fun set of stories, and I very much enjoyed the others on the audit committee. I was, and am, happy with the report we turned out.

The sad part of this period was the end of DMT. After functioning well for a year or so, DMT was caught in the middle of a scam and became insolvent. Orlin and his partner should have known better, but they didn’t. I’m fully convinced that there was no ill-intention on their part, but they were interfacing with the SWIFT system and didn’t understand that wires could be reversed. The clearest of DMT’s debts were repaid, but after that there was no more they could do, and it was closed.

And in the end it was probably best that DMT did close. If it had continued running truly anonymous business through the SWIFT system, the US government would have eventually swarmed in and harassed, threatened, or done worse to lots of innocent people. As it was, that didn’t happen.

From the absence of DMT, the e-gold economy rose, and from the ashes of e-gold, Bitcoin arose. Would that all have happened if our Laissez Faire City project had never been? It’s impossible to say of course, but it’s possible that it would not have. Because the legacy of our project wasn’t the products we produced, as important as they were. What mattered was that we did things.

For all the craziness of the project – and there are many more stories to be told of it – we acted at a time when other people were withdrawing from the fight. We kept progress alive during a dark time for all things cypherpunk. As time goes on, I am more and more proud of that fact.

I will close with the conclusion from one of our last reports. I think they were well chosen words.

[I]t served as incubator for technologies and business entities that are now operating independently, competitively, and on sound business principles. It also spawned a community of individuals who have gotten to know each other in the virtual world (and in some instances, in the real world) and are now taking the dreams of the past into their next phase.

From the chaos of the past a new order emerges…

And emerge it did.

(Available now on Kindle)

To be Continued…

Paul Rosenberg
www.freemansperspective.com

The Untold Story of the Greatest Crypto Project Ever – PART 5

The big argument against decentralized systems is that there’s no one to enforce conduct… that the powerful will be able to do what they want and get away with it. Please keep that thought in mind, remembering that Rex was the richest person involved, that he owned and controlled the central means of communications, and that most of the “important” people were on his payroll.

Part 5: Battling Rex

Continuing from Part 4.

The big argument against decentralized systems is that there’s no one to enforce conduct… that the powerful will be able to do what they want and get away with it. Please keep that thought in mind, remembering that Rex was the richest person involved, that he owned and controlled the central means of communications, and that most of the “important” people were on his payroll.

By this time, I was involved with the project on a daily basis, especially related to law, the resolution of disputes in pseudonymous space, the ability to enforce justice in the absence of force, and in related areas. And so, when disputes arose between the various parties, I was the natural choice as arbitrator. And some of those disputes involved Rex.

One of my prouder moments was resolving one of these disputes with Rex (no amateur when it came to negotiations), then physically taking gold coins from Rex and hand-delivering them to the lady on the other side of the dispute.

Soon enough, Rex’s bad actions were causing enough commotion that he brought me in to go over his records and “prove” that he was behaving well. I’m not sure what he really expected me to do… or maybe he was drunk… but he misbehaved right in front of me. Here’s a section from the report I wrote and published to the community:

[Rex] has contacted me several times, demanding that I publish the original evidence that convinced me to undertake this investigation. I suggested to him that this was not an especially good idea, but he insisted. Since it is his reputation that stands in jeopardy, I will yield to his request.

None of the following would be made public if [Rex] had not insisted…

On [date], I personally witnessed [Rex] using the Trustee’s email accounts, nyms, and passwords, all without the Trustee being present. This occurred in [Rex’s] office at the Consulado in San Jose.

On [date], I (being present) demanded that the Trustee draft his own note to be posted on Dodge. [Rex] was very unhappy with me for delaying things and claimed that he had always written the Trustee’s statements.

During the time I spent in San Jose, the Trustee was always fully informed of pertinent details regarding his fiduciary duties. On other matters, [Rex] made or was involved with all decisions and all questions…

I had private conversations with the Trustee that, to one extent or another, supported the claims.

That was the beginning of the end for Rex. People began walking away from him. Before long Dodge City was a shadow of its former self. (Within a year or so, it became useless to Rex, and he closed it.)

Rex’s programmers started moving back to where they had come from.

But I should add one last note about Rex. For all his bluster, bad choices, and even occasional bad faith, he didn’t hate me after I publicly undermined him. He was angry at first, but he rather quickly shifted to respecting the fact that I had scrupulously told the truth. He continued to contact me for advice for some time after.

But this was not the end. Orlin’s team and others aligned with them had not stopped working, even if they were quiet.

As Dodge was winding down, a new community forum appeared. This one featured PGP-encrypted messaging, much better security, and a professional design. And it was designed to be distributed. It was called Distributed City (or DC for short), and here’s a statement from its About Page:

Communities are not static things. They embody dynamic, vibrant, complex social interactions. As the community changes, so too should the website to accommodate the needs of its members. This is a difficult task for website operators. Given limited resources, how do we anticipate and accommodate the needs of our disparate users?

Various strategies can be used. But so long as it is a small, select group of people making all the decisions and controlling the features and architecture of the website, then this is a form of centralized planning. Some people make the rules and others follow them. This is anathema to the creators of Distributed City, who hope to build a community of freedom-seeking individuals, not a storefront or a dictatorship.

The logo was this:

More than that, you can still find the code on Sourceforge.

Distributed City was a gas, and it operated for quite some time thereafter. Again we had the most interesting and active people, and accordingly, the best ideas. Lots of good things sprang from it.

And then…

In December of 2001, DMT, the Digital Monetary Trust, arrived. This was the product. And true to his moral obligations, Orlin and his team made it available first to the project’s donors. He even allowed people to transfer assets from the Dodge City system, which was still operable at the time.

To join DMT, you first created a Cyber-holding corporation, called an “Asset Lodging Trust Account,” or ALTA. A minimum 23-character password was mandatory.

After that, the system wasn’t terribly different from a Charles Schwab account. You had a choice of several currencies (six, as I recall, one of which was a floating basket of currencies Orlin maintained), methods of moving money in and out (including SWIFT), and more or less everything you might expect of a 2002-era banking and trading system. And it worked beautifully.

Orlin’s introduction to the Digital Monetary Trust can still be found here.

Connected to that was an exchange, called the LESE, for Laissez Faire Electronic Stock Exchange. And again, it had more or less everything that Charles Schwab had at the time… except that it was all encrypted, anonymous (again, pseudonymous, to be precise) and all interactions were made with digital bearer certificates, or DBCs.

A digital bearer certificate, if you think about it for a moment, is the same thing as a digital coin. And a lot of people conducted a lot of anonymous commerce through DMT.

I wish I had screenshots to show you the inside pages of the system, but sadly I don’t.

(Available now on Kindle)

To be Continued…

Paul Rosenberg
www.freemansperspective.com

Why Cryptoanarchy Is Not a Revolutionary Movement

This important interview just arrived and I’d like to pass it along. (I had to edit for length. The full interview can be found here.) The interviewer was Tatjana, and we’ll begin with her introduction.

This important interview just arrived and I’d like to pass it along. (I had to edit for length. The full interview can be found here.) The interviewer was Tatjana, and we’ll begin with her introduction.

The Darknet is a fascinating topic for me, ever since it started to shape my life years ago. These days it seems that it is becoming a buzzword, along with “cryptoanarchy.” For this reason I thought it would be interesting to sit down with two well-known thinkers from the scene (and more importantly, doers) and discuss these topics with them. To keep it in style, the interview was conducted on the oldest darknet IRC server, home of both Frank Braun and Smuggler.

Tatjana Adamov: Smuggler, your “Project of Cryptoanarchy” talk at HCPP18 was one of the most discussed talks that year. It sparked great interest, and you were asked to give it again at the opening of Paralelna Polis in Bratislava. What made you give that talk and what was your goal?

Smuggler: I gave the talk because I had the feeling that cryptoanarchy had become a brand, a word without meaning. That there’s too little thought about the core ideas that make cryptoanarchy so interesting, at least for me. That so many different things are all put into the cryptoanarchy label, even if they conflict with each other. I just wanted to go back to why cryptoanarchism is about cryptography and anarchism, and how the two relate.

Tatjana Adamov: You emphasized social and psychological aspects. Can you elaborate why you don’t mention technical aspects?

Smuggler: Darknet technology is an enabler for human interaction. It allows human interaction to take a different form from what we are used to from the physical world. Anonymity changes things. It changes what you learn about people, how you interact with them, and also how you look at yourself. The fascinating and challenging aspect is when communities and societies are built around anonymity. That is where things get exciting for me. You’ll meet interesting minds and characters that are unusually open, people you can connect to and enjoy interacting with. Because the fear of shame and punishment is reduced – everybody is anonymous after all. No attribution!

The width of characters in anonymous communities is thus very interesting. You can witness people going from being copycats of social models in meatspace to people experimenting with becoming themselves. They become more true, for good and worse. Of course that leads to extremes sticking out. The real beauty, however, is all those that are between the extremes, that are just as human as you are, everybody shedding social expectations that have no meaning in anonymous communities.

Tatjana Adamov: Frank, you gave two interesting talks criticizing technology. One was at HCPP17 and the other was at the opening of Paralelna Polis in Bratislava. I personally find it important that even in a technocentric society, we criticize the technology we build, so I found your two talks very important. The question is: Do you think everything produced by people claiming to be cryptoanarchists is good?

Frank Braun: Of course not everything produced by somebody claiming to follow a certain philosophy is good. I think every new technology has to be evaluated for its merits, independently of the person or entity producing it.

Does this technology bring out the best in humans, or does it make us more machine-like? Some technologies can be clearly categorized into good or bad, but for others it depends more on what you use it for. (The kitchen knife example comes to mind.)

Tatjana Adamov: Wouldn’t you say it’s ironic that cryptoanarchist ideas seem totalitarian, when at the same time their proponents claim to fight for liberty and freedom?

Frank Braun: In my view, “cryptoanarchy” was always about anarchy (“no ruler”) by means of cryptography. Very important here are anonymous communication and payment methods, because these technologies strike at the root of the repression of what in my view are fundamental human rights: freedom of speech and freedom of transaction. Cryptoanarchy is about providing more freedom for the people who want it, without interfering with the lives of others.

Devising anonymized means to kill people for a “good cause” (assassination markets) is not cryptoanarchy; it is just plain evil. Using technological tools to start a revolution is not cryptoanarchy either; it is the imposition of a new method of rulership on a ruled population.

Revolutions, with the help of technology or not, have two big problems:

The new ruling class coming into power after a revolution is usually worse than the one it replaces. It seems to be impossible to create a “better” system when you start with ethically dubious means (a revolution implies that).

And even more importantly, what if the population doesn’t want a revolution? Who gives you the right to change their system by force?

Cryptoanarchy is about creating a parallel alternative that does not destroy the surrounding power structure and tries to live in harmony with it. There are many examples of this (ethnic minorities with their own communities, legal structures, business frameworks, etc.). Cryptoanarchy simply brings this concept into the technological sphere, although it also has a physical aspect to it.

Tatjana Adamov: Why do you think people are reluctant to take the approach of parallel systems and would rather support something more radical – for example, Amir Taaki’s Academy?

Frank Braun: I think a destructive approach (revolution) is often more appealing than a constructive one. A destructive approach requires only an enemy; a constructive approach requires a vision of something “better.” And even if you have a vision, it is not clear that it is really better until you’ve implemented it. Even less clear is the question of whether it’s better for your neighbor as well.

That’s why it is better to try alternative solutions in parallel to the existing ones and find out if they really are better. This also prevents a monoculture.

Smuggler: I would add the issue of impatience. People feel oppressed and powerless in the face of the systems they live in. This leads to a wrong conclusion: that the pain will go away if the system is brought down. But that is not the case. You have to have something in its place. That something, a new way of doing things, has to be built first, with all its tedious aspects. It requires building social, cultural, and legal frameworks, none of which can be created by fiat but have to be discovered and constructed by a community of people, a society. Otherwise, after revolution, you end up with nothing at all, except for smoldering ruins.

However, the appeal for more radical approaches is clear. It gives people purpose, in a world and time where many don’t see a clear purpose for their lives. However, if that sense of purpose isn’t constructive or realistic, it can produce negative consequences. People cling to purposes they shouldn’t and become manipulatable by their leaders.

A friend of mine, Paul Rosenberg, once asked me a question that I think applies here: “What do you envision you will do after the revolution?” That is a really good question, and I think one should really consider the answer. When that answer is found, I think one has found what one should do instead of a revolution. If what keeps you from accomplishing your dreams needs to be overturned by revolutionary means, then the most radical thing you can do is start living it now. Otherwise you end up being a revolutionary for revolution’s sake, which is a dangerous delusion.

And what happens if the system you oppose doesn’t break down on its own? Will you take unethical steps to quicken its demise, without considering the cost to those on the receiving end? Impatience, wrongly assigned life purpose, and lack of vision for the “after” have led too many people to do horrific things.

Tatjana Adamov: I really hope that the discussion doesn’t end here. Do you have any final words?

Frank Braun: Keep in mind that the world is not static. People you don’t like can be very smart. For every action there is a reaction, but sometimes the reaction is delayed.

Smuggler: We’re on a path of discovery. Discovery requires venturing into the unknown, with friends on your side and a clear radar for dangers and opportunities. And in the end we always find ourselves to be part of the problem – you can get the kid out of the ghetto, but not the ghetto out of the kid.

* * * * *

The novel that helped put the crypto revolution into high gear.

Comments from readers:

“Of the twenty five or so people I worked with last fall, all of them revered A Lodging of Wayfaring Men as a bible. They referred to the house and their community effort as a Lodge. We all felt it was modeled on the Free Souls.”

“Actually, I am somewhat at a loss as to how I might explain how I feel about this book other than to say what a great mind to write such an awesome story!”

“I’m an Old guy and find that Rosenberg has captured many Real-World truths in this novel. I wish the Millennial Generation would read this novel and consider the concepts and rationale presented here.”

Get it at Amazon or on Kindle.

* * * * *

Paul Rosenberg
www.freemansperspective.com

P.S. Paul did an interview with Dr. Janda a few days ago, and it’s spreading wildly.

The Untold Story of the Greatest Crypto Project Ever – PART 4

Surprisingly quickly, Rex’s people put together a community forum called “Dodge City,” complete with a full spectrum of “early Internet”-style graphics. And give them credit: Dodge City quickly became a hub of activity. It fairly exploded with interesting people and ideas.

Part 4: Rex Forces a Break

Continuing from Part 3.

Surprisingly quickly, Rex’s people put together a community forum called “Dodge City,” complete with a full spectrum of “early Internet”-style graphics. And give them credit: Dodge City quickly became a hub of activity. It fairly exploded with interesting people and ideas.

Dodge’s success of course made Rex all the more confident that pumping things out fast was the way to go. Unfortunately, the security at Dodge City was pretty poor… or maybe barely existent. I think the programmers wanted to add security to it, but security is difficult and sometimes slow. Rex saw no payoff in it, and he was the one paying them. He’d give security some lip service when enough people complained, but not more than that, and Dodge’s security never improved very much.

And then…

Then Rex ordered his guys to build a fast, cheap financial system. In other words, he was putting together an almost fully insecure version of what Orlin was trying so hard to build right. That sent Orlin over the edge.

But in fairness to wild Rex, it must be said that his system was interesting. Not only did he make it possible to buy and sell shares of our project((I’m simplifying here. The way the project was structured was very complicated, and while “shares” gets the idea across, that term wasn’t actually used.)) and other things, but he allowed both buyers and sellers to see the live order book. That’s a very useful trading tool and one that simply isn’t seen by 99% of the people who buy stocks and bonds.

Here’s a very simple example of what one of the pages might have looked like (I have no screenshots or archives):

Security: Muni-corp.

Open orders:

Buy 2000 @ 3.00
Buy 440 @ 3.25
Buy 300 @ 3.50
Buy 210 @ 3.65
Buy 55 @ 3.90
Last Trade 4.02
Sell 21 @ 4.25
Sell 80 @ 4.95
Sell 199 @ 5.25
Sell 2040 @ 6.00
Sell 4,220 @ 8.00

Viewing the order book, you can place your buy and sell positions intelligently. It’s actually a very powerful tool, and most of us had never seen it before.

But as I say, Orlin was seriously (and understandably) angry. Making it worse was the fact that people flocked to Rex’s system. It was easy and it worked… and in many minds, all that security stuff was a downer anyway. Except that this system, if it grew to any significant size, would quickly have become a target-rich environment for money laundering “avengers” worldwide((Efforts against money laundering are actually financial surveillance operations. Government money has become one gigantic system of surveillance and control. “Money laundering” is simply a scary and mostly meaningless term that keeps people confused enough to allow mass surveillance and control. If the operators of the national money systems came out and told the truth (“We’re building a system that resembles ‘the mark of the beast’ in your Bible”), things would go far less smoothly for them.)). People would be ruined over it, but not instantly… a time lag would keep people coming in.

And so, Orlin had no real choice but to get away from Rex as quickly as possible. He was looking bad merely by association.

And so, in October 2001 or thereabout, Orlin bought his part of the project from Rex. Properly he bought it from the trust, but Rex had taken control of the trust by that point. (The trustee was his direct employee and did as he was told.) And so, in reality, Orlin bought his work back from Rex.

And again it was Bob who made this happen. He felt that it was a major victory, and I’m quite sure he was right. It was probably his finest hour.

And with that, Orlin’s Digital Monetary Trust (DMT) project was free and could complete its work separate from Rex’s mayhem.

This separation, however, was of serious concern to the people who had donated money to the project. Orlin, the driving genius, was gone, along with his work. And while he kept his mouth shut publicly, there was no escaping the fact that he had pulled out. Orlin had a personal devotion to the people who funded the project of course, but not everyone upholds such things.

And so, Rex had no real choice but to allow the project’s founders to appoint a real board of directors. The new chairman of the board was a very competent, older engineer, whom I’ll call “Sam.” I liked Sam a lot. He did his job seriously and professionally, visiting the project for a few days at a time, then flying back home.

Sam, to his credit, kept things moving forward and did his best to curb Rex. All the donors trusted Sam, and if he had come out and called Rex a thief, the fallout would have been catastrophic.

Curbing Rex, however, was a difficult job, especially when Sam wasn’t there.

In Sam’s absence (as best I recall), Rex started playing around on the Dodge City forum. He had no less than six nyms (identities) that he controlled, and he started promoting himself and his products with them. The people on the forums, however, were often highly intelligent, and they put the pieces together pretty quickly. Rex’s games weren’t criminally bad, but neither were they a show of good faith.

So, we had Rex delivering operable but full-of-holes systems, and Orlin’s group, supposedly producing the real thing, withdrawing into their shell. They fell almost totally silent.

But a situation that sounds ominous as I summarize it here certainly didn’t seem like it at the time. A new visitor to Dodge City would find the best new ideas, the smartest people, and endless action. You want to buy and sell on a digital stock exchange… even futures contracts? Well, come right aboard… here it is! You could buy, sell, and trade, and even wire dollars in and out of the system. And it all worked! I can’t blame people for jumping in with both feet.

Those of us who knew the inside advised others not to trust Dodge City for anything serious, but it was hard to do on the forum, not only because Rex would defend his systems, but because everyone was having so much fun and they didn’t want it to stop. Remember that this was going on in a completely dry environment. There was no Bitcoin, no exchanges, no Tor, and Alta Vista was our search engine. There was no BitTorrent either; this was the era of Napster.

On top of that, lots of people who knew were hesitant to say much publicly, because Rex was personally paying nearly everyone involved. Little by little, however, the truth of the situation was slipping out.

This was not a sustainable situation.

(Available now on Kindle)

To be Continued…

Paul Rosenberg
www.freemansperspective.com

The Untold Story of the Greatest Crypto Project Ever – PART 3

I am convinced that the reason Bitcoin survived isn’t that it withstood the attacks of its enemies, but because it withstood the foolishness of its friends. Our project survived long enough to reach its goals only because of people who held to their principles, defended them against foolishness, and above all, worked hard to keep things moving forward.

PART 3: The Work Gets… Complicated

Continuing from Part 2.

I am convinced that the reason Bitcoin survived isn’t that it withstood the attacks of its enemies, but because it withstood the foolishness of its friends.

Our project survived long enough to reach its goals only because of people who held to their principles, defended them against foolishness, and above all, worked hard to keep things moving forward.

Once Orlin’s team was established in the rear wing of the consulado, they worked quietly. But the guy who was continually pumping his money into the project, “Rex,” was in a hurry for results. That’s generally understandable of course, but Rex was also an inveterate huckster with a tendency to over-promise and then demand product from the developers… NOW!

Writing crypto applications from scratch, however, is neither simple nor fast. And so heads butted… and kept butting for a long time.

Rather heroically at times, a man I’ll call “Bob” stood between the two groups (Rex and his coterie, Orlin and his developers) and kept them apart. I think we all owe a lot to Bob. Rex complained and Orlin (no shrinking violet, he) treated Rex like a buffoon. Bob kept everyone separated. Piece by piece things proceeded.

And of course there was much, much more to this. Years ago I ran across a memorable line((I thought it was from Alvin Toffler’s The Third Wave, but apparently it isn’t.)) that went something like this: Once beyond the borders of the accepted, all sorts of strange flora and fauna pop up. How true that proved to be.

All sorts of strange characters found their way to this thing. Some were plainly brilliant and some were brilliant but with a pet doctrine they expected the project to adopt. We had some who were still trying to make “special economic zones” work. There were people overly interested in drugs, the aforementioned spies (who always tend to make things a little crazy), people who were a bit paranoid, and so on at considerable length.

One of the first people I met was an Olympic pentathlon champion, there to provide security. A couple of the spies – a Russian and an American – got into a fight at the consulado one time. (They were both pretty old and ended up rolling around on the floor until they could be separated… or so I was told.)

My personal nemesis was a writer who pushed endlessly to place the project beneath a constitution and turn it into a state, even if it was “cyber” state. He wrote at great length on law, harping on the old line that one “could not be judge of his own cause.” It took a lot of time and effort to convince all the participants that this was a very bad idea, but it was done well enough to stop the threat. And ultimately the guy shot himself in the foot by advocating some very strange ideas about women… almost that they should be excluded from justice and had to be represented by their husbands.

My fights with the constitution guy (and many others) took place on our messaging system, and in our newspapers((Technically there were two, one succeeding the other. Both were run by Orlin, but an ownership dispute made a name change necessary.)), a partial archive of which remains here.

The big problem, however, was that Rex wanted fast results that he could use to generate more donations. (Founderships, they were called.) After a while, he could no longer be restrained and started hiring his own programmers, who were ordered to get things done fast.

Rex’s programmers were decent guys; I think I liked them all. But they faced an impossible task((Which was almost impossible to refuse for an unemployed or underemployed programmer. Fly to the tropics, bring your family if you have one, live cheaply and well, and work on interesting projects for decent pay. Besides, most programmers in those days were fairly strong libertarians, and so they were pulled in for that reason as well.)). You simply can’t turn out fast products and keep them cryptographically secure. That’s barely doable these days, and it was a heck of a lot harder in 2000. And so, compromises were made.

The first of our products was called “Mailvault,” which became available before Rex started hiring his own programmers. It was a webmail system that incorporated PGP encryption. It was, in other words, PGP webmail, something that Hushmail replicated, at least after a fashion.

Here’s how it looked in 2001:

And here’s some explanatory dialog from the site:

Mailvault was our first success and it was used fairly widely in those days. We were proud of it, and justifiably, I think.

(Available now on Kindle)

To be Continued…

Paul Rosenberg
www.freemansperspective.com

The Untold Story of the Greatest Crypto Project Ever – PART 2

For someone who wanted to build a new world functioning privately and honestly, protected by cryptography, our base in San Jose, Costa Rica, was almost a dream… and more than any of us dreamed, probably. The investment tour was in early 1996, by my best guess. And it was a couple of years before the base was really set up; physical infrastructure …

PART 2: Cryptoheaven, Almost

Continuing from Part 1.

For someone who wanted to build a new world functioning privately and honestly, protected by cryptography, our base in San Jose, Costa Rica, was almost a dream… and more than any of us dreamed, probably.

The investment tour was in early 1996, by my best guess. And it was a couple of years before the base was really set up; physical infrastructure takes time, after all.

My involvement began in late 1997, when I found myself stranded for a day and a half at an airport hotel in San Francisco. I was conducting seminars for the National Electrical Contractors Association in those days, and a slip-up in the scheduling left me there.

After considering my options (it was winter and flight schedules were a mess), I decided to stay put and make use of the time. Fortuitously, I had with me a recently released book called The Sovereign Individual.

My time at the hotel was well spent. I had been thinking about encrypted commerce for a couple of years, but reading Sovereign Individual stimulated my thoughts and helped me make some important connections. By the time I finished the book, I had pages of notes, particularly on how to resolve disputes in anonymous (actually, pseudonymous) cyberspace. I knew what I had was important, but I couldn’t see anything to do with it.

A year and a half later, however, I ran into Orlin and a member of the inner circle (plus another of the former spooks) at the wonderful Eris Society meetings in Aspen. I quickly cleaned up a few pages of notes and emailed them to the group. They were building the system we all wanted, and I had a necessary piece they hadn’t yet considered.

Shortly thereafter, I flew to San Jose and walked into what I can only call “cryptoheaven.”

Armed with a set of directions in Spanish, I made my way to a rather high-end neighborhood of San Jose and then to what my cab driver told me had been the “Canadian school.” I rang the bell and met “Alex,” a defrocked CIA agent. Alex and I got along nicely and he showed me around. He and his wife (a very pleasant woman) lived there, as did a cast of characters, mostly slightly paranoid programmers… all of them sci-fi fans as well.

There were full time housekeepers who also cooked and two large Rottweilers named Charlie and Parker. There was a garage area and lots of garden space.

There were many rooms in the place, including a small gym. After I was shown to my bedroom and had settled in, I was taken to a back room in which I could work. It was a large, clean room, with desks running the length of two walls. Upon the desks were perhaps half a dozen new Mac desktops, all connected to a network and then to the Internet. The other two walls were nearly all window from about three feet up, making the room bright, functional, and all but ideal for my work. And I was often alone in the room for days at a time, interrupted only by Alex’s wife offering me plates of food and encouraging me to eat something.

And it didn’t stop there. Directly across the street from what we called the “programmer house” (instead of the “Canadian school”) was an excellent restaurant called City Club. It was there that I met Orlin and had dinner with him a time or two. City Club served other customers, but it was more or less “our restaurant,” complete with Ethernet ports every four or five feet across the front of the bar. (This was 1999; there wasn’t a lot of Wi-Fi in those days.) And it was a fair bet that one of the people working on their laptop at the bar was someone who wrote something you’d read and appreciated.

Can you see why “cryptoheaven” wasn’t a bad description of this place? And don’t forget that San Jose is a very pleasant place to live: naturally beautiful with modern conveniences. And it definitely fit the programmer lifestyle, as there were not only decent pizza joints to order from, but even McDonald’s delivered. And for those who were interested, there were bars, a casino, and everything that went along with a casino.

About a mile down the road from the programmer house was the “consulado”… the consulate. This place was an authentic embassy. It was a large house surrounded by a high wall, with a large metal gate in front, complete with full time guards. You couldn’t see the house from the street.

What it was, really, was the Nicaraguan embassy. But the Nicaraguans were having hard times through those years and couldn’t afford to maintain the place (nor, especially, I think, an ambassador), and so our guys rented it from them. That gave us a physically protected space. For US government agents to raid the consulado, they’d be committing an act of war against the sovereign state of Nicaragua!

The fear in those days was that the US would send thugs to shut us down. And it wasn’t a crazy fear. Phil Zimmerman had barely avoided prison for releasing PGP just a few years prior, and we were building some fairly advanced cryptographic applications. Crypto advocates were on edge about such things then, and so all the servers that mattered were kept in the consulado. All the most crucial work was done there as well.

(Available now on Kindle)

To be Continued…

The Untold Story of the Greatest Crypto Project Ever – PART 1

While what we did wasn’t entirely hidden, it was only partly public. And for reasons that will become clear as we go, no one on the inside has wanted to talk about it until now. While these people didn’t do much that was actually illegal (at least so far as I know), none of them wanted any “special attention” from the powers that be.

PART 1: Why You Never Heard About It

Continuing from the Introduction.

While what we did wasn’t entirely hidden, it was only partly public. And for reasons that will become clear as we go, no one on the inside has wanted to talk about it until now. While these people didn’t do much that was actually illegal (at least so far as I know), none of them wanted any “special attention” from the powers that be.

Nonetheless, I think it’s time to tell the story. A new generation of crypto advocates should be able to learn from what came before them.

The greatest crypto project, oddly enough, didn’t begin as a crypto project. Rather, it began the way that hyper-serious freedom projects generally did before the year 2000: as a new-nation project.

New-nation projects and calling upon Ayn Rand may not make sense to crypto advocates in the 21st century, but please believe me, if you were desperate for freedom in 1970 or 1980 or even 1990, these things were almost all you had. If you wanted to do something that might actually change the world, there wasn’t much else available.

And so, being children of the 20th century, quite a lot of people ponied up five or six thousand dollars apiece to get on board.

Remember, this is well before Bitcoin. It was also when the Internet was in its infancy. Newly formed telecom ventures were scrambling to lay enough trans-oceanic cables to make this new computer thing work, and the trusted voices of the early 1990s – The New York Times leading the parade – were continuously slamming the Internet as a threat to civilization. (Funny how all of that fell down the Memory Hole.)

And so, at some point in about 1994, a group of investors and hustlers put together a new project. This one was poised to actually work, because they had a close connection to the president of a major South American country. For a nice, quiet, seven-figure bribe, he was going to lease them 100 square miles of his country for 50 years. It would be a new Hong Kong… a laissez-faire paradise.

After several meetings with the corrupt president in which assurances were received (I wasn’t involved at that time; I’m repeating what I was told by people who were), the group took out full page ads in the Economist and, as I recall, Newsweek. Here’s a copy of the ad:

This was when the first round of fundraising began. And quite a significant number of people jumped in. At this point the core group quickly recruited contacts, including a strange cast of characters from both sides of the Cold War, which had recently ended. They formed their own trust, registered with no state, and appointed Mikhail Gorbachev’s translator – a pleasant, well-mannered man – as the trustee. (I’m not sure how they knew Gorbachev’s translator, but it was probably through one of the spies.)

All that said – and I doubt this is any surprise – El Presidente soon enough backed out of the deal (they always back out of the deal), leaving a moderately collusive group of new-nation advocates in a fix. They had taken in a lot of money, and they had no way to deliver what they had promised. My impression is that some of these men were scrupulously honest and others less so (there were no women I know of), but they all wanted an unruled space more than they wanted the money.

As you might imagine, frenzied discussions took place at this point. It also happened to be a moment when many of them were scheduled to go on an investment tour of South America. And it was on that tour that everything changed.

The key figure in this crucial turn was a man named Orlin Grabbe (GRAY-bee). Orlin was one of the financial wizards of his generation. He had grown up on a farm in Texas, spent some years with the Worldwide Church of God, and then leaped from one advanced degree and one elite university to another.

Orlin was exceptionally bright and soon enough ended up teaching at Wharton, an elite business school. He more or less invented modern arbitrage trading, as well as making basic contributions to financial derivatives. His book International Financial Markets became the standard text on the subject.

What happened next can’t be found on Wikipedia, but I learned it directly from Orlin and his friends. He was recruited to work for the US “intelligence community” and got a good look behind the curtain… then went running from what he saw, directly into cryptography. (Which was also, in those days, called “cryptology.”)

The beginning of Orlin’s series, “The End of Ordinary Money” (written at various points between 1987 and 1995), read this way:

Late one night while sharing a pharmacological product with a spook I met in the northeastern part of the United States, I mentioned I was studying cryptology.

“Cryptology is the future,” he responded emphatically. “It’s what’s going to protect us from Big Brother.”

Since he worked for the National Security Agency (NSA), the thought did occur to me that many would have taken the position that he and his colleagues were Big Brother. But I had learned years ago not to demonize people on the basis of an accidental profession… I additionally believed that one of our best defenses against the national security state was the perennial proclivity of clandestine organizations to piss off their own employees.

At any rate, the spook spoke the truth: cryptology represents the future of privacy, and more. By implication cryptology also represents the future of money, and the future of banking and finance.

As the investment tour proceeded, Orlin convinced the group that cryptography was the future and that it would give them most of what a new nation could provide, permanently and with mathematical certainty. This is not to say that he particularly trusted these men. I think he did some, and I know he didn’t others. But they committed real money to it, meaning that he’d be able to recruit the best people he could find and build the crypto systems he wanted to build.

Soon enough the deal was agreed upon, and a base of operations was being set up in Costa Rica, which was then the haven of choice for well-behaved ex-spies and assorted interesting characters.

And so a group of old-style libertarians, objectivists, and hustlers financed the biggest crypto project ever. It was a turning of generations. Minimally four million and perhaps seven million dollars went into it.

To be Continued…

The Two Crypto Economies

Bitcoin has always been hard to understand. Even Satoshi, its author, complained about that. The problem isn’t so much its complexity, but its newness – there’s really almost nothing to compare it to.

Having nothing to compare to is also a problem related to the prices of Bitcoin and the other cryptos. We’ve never seen currencies start from nothing and grow into serious players. We’ve always had silver and gold, at least in the background, but more or less all other currencies (certainly in our time) have been imposed by force.

Bitcoin, unless I’m forgetting something, is the first independent, world-recognized currency to pop up in a long, long time. And because of that, understanding its price is complicated.

The Two Economies

The key to understanding the price of cryptos is realizing that there are two separate crypto economies: the speculative and the commercial. These two economies are currently bumping into each other and occasionally running over each other… sometimes synergistically and sometimes antagonistically.

The speculative economy is the one that shows up on the news. It’s the home of both serious speculators and hucksters promising Lamborghinis. The speculative economy tends to be philosophically shallow, focusing on price and more or less nothing else((Which is not to say that all speculators care about nothing but price.)). This is the economy of CNBC, the futures markets, and get-rich-quick schemes.

The commercial economy is the one that doesn’t show up on the news. It’s the economy of actual commerce and hardworking developers. The commercial crypto economy tends to be philosophically deep. The people who are struggling to build and spread this technology are doing it because they believe in the better future it can bring into the world. This is the economy of Bitcoin taxis in Africa, international settlement transactions, and millions of smallish transactions between friends and business associates.

What we had in late 2017 was the speculative economy running to excess and overflowing the commercial economy.

What we had in late 2018 was the speculative economy flowing back out and draining liquidity from the commercial economy.

This has been inconvenient for many of us, but it’s something we’ll have to put up with. Evidently this is the way new currencies form.

The Primacy of the Commercial Side

While it appears mundane to the outer world, it’s the commercial crypto economy that really matters.

If there were no utility to Bitcoin and the others, they would have no value at all, save as a curiosity. And without underlying value, speculation would be ridiculous. And so it is the commercial economy that underlies everything. And for those of us who are serious about cryptocurrency, this is the economy we need to stay busy with, building and promoting.

And there is so much to be done.

Consider first that there are some two billion humans with no access to fast and simple financial transfers. That is, they have neither a bank account nor the associated services. These people are perfectly situated to become crypto users. They have the inherent need of trade and they generally have cell phones. And with crypto, that’s enough. Early crypto developers are working in these areas already, but there will be huge needs in this sector for a long time.

Consider also that nearly every cryptocurrency is immune to capital controls. Sadly, we can probably expect more of these in the years ahead, and cryptocurrency is, as we say, censorship-resistant. You can send money to anyone with a connection, anytime and in any amount.

Cryptocurrencies are also immune to monetary inflation… perfectly, mathematically immune. There are a fixed number of currency units in Bitcoin and its children, unlike the units of government currencies, which are created billions at a time by the actions of elites rather than by market participants. The value of the US dollar has fallen 90% over my lifetime because of such actions.

So, which is a better place to put the fruit of one’s labors? Government currencies are all but guaranteed to lose value consistently. Cryptocurrency is all but guaranteed (aside from speculative waves) to retain value.

Finally and probably most importantly, crypto is a path around a dangerous and tyrannical set of government currencies. I’ll leave off the details for today, but central banks and their associated systems have become networks of surveillance, control, and dominance. For the sake of our species, they need to be made obsolete.

So, in the long run, cryptocurrency is terribly attractive, first of all for its direct benefits, and secondarily as a speculation.

Until Then…

Until all these things play out, we’ll have to put up with speculative waves rolling back and forth over the commercial crypto economy.

More than that, we need to get even more serious about building the commercial side. Not only does the world need this, but the larger the commercial side, the less damage waves of speculation can cause.

* * * * *

The novel that helped put the crypto revolution into high gear.

Comments from readers:

“Of the twenty five or so people I worked with last fall, all of them revered A Lodging of Wayfaring Men as a bible. They referred to the house and their community effort as a Lodge. We all felt it was modeled on the Free Souls.”

“Actually, I am somewhat at a loss as to how I might explain how I feel about this book other than to say what a great mind to write such an awesome story!”

“I’m an Old guy and find that Rosenberg has captured many Real-World truths in this novel. I wish the Millennial Generation would read this novel and consider the concepts and rationale presented here.”

Get it at Amazon or on Kindle.

* * * * *

Paul Rosenberg
www.freemansperspective.com