Express [Bay Area Weekly], March 14, 1997, Cover Story

SECRET AGENTS

[Photo] Eric Hughes

   "The cypherpunks credo is 'privacy through technology,
   not legislation.' The law of the land can be changed by
   the next administration. The Laws of mathematics are more
   rigid."

   What if there were to come a time when all our electronic
   and financial transactions could be conducted entirely in
   secret in a code that no one, including the government
   and its law enforcement agencies, could crack? What if
   that day is already here?

By Dashka Slater

Photographs by Phyllis Christopher

[Photo] Sameer Parekh & Douglas Barnes

The cypherpunks are being watched. They are sitting at a
long table in the courtyard behind the Thai Buddhist Temple
in Berkeley, eating crispy noodles and curried eggplant and
plotting how they can use secret codes to circumvent prying
governments and snooping market researchers and build an
anarchist future on the electronic frontier. Four men in
dark sunglasses are stationed nearby, listening. They are
carrying cameras and while they are trying to be
unobtrusive, they aren't succeeding.

"We'd like you to talk among yourselves," one of them says
at last. "Forget we're here."

"It's kind of hard when you keep putting a boom mike in my
face," scowls cypherpunk Douglas Barnes. "I feel like I'm at
a press conference."

The four men are a Japanese TV crew, and they are making a
documentary about US export regulations, which, until
recently, equated cryptographic computer software with
ground-to-air missiles, and cryptographers with arms
dealers. The cypherpunks hardly look the part. Most of them
are young men with long hair and billy-goat beards, and they
are passing around photos of themselves at a recent costume
party and making jokes about Trailer Trash Barbie.

"Some say the time for cypherpunks is over," prompts the
television interviewer, looking for words of defiance. The
cypherpunks exchange glances.

"The time for cypherpunks is over, the time for
cipher-business people is starting!" declares Barnes, who,
as sales and marketing vice president at C2Net, an
Oakland-based computer cipher-business, is well-positioned
to make such a pronouncement.

"The time for talk is over," agrees 21-year-old C2Net
founder and CEO Sameer Parekh. "The time for deployment of
strong cryptography is here."

It's a wrap. The TV crew packs up its equipment and the
cypherpunks begin taking their paper plates to the trash and
planning what to do with the rest of their Sunday.

"Are you going to go shoot guns now?" someone asks.

Jude Milhon, a onetime senior editor at Mondo 2000 and the
woman who originally christened the cypherpunks, gives a
derisive snort. "It's so boring!"

"I like shooting guns," replies Barnes. "I like to go every
couple of months so I know if need be, I'll be able to hit
what I'm pointing at."

"He wants to bc pre-pared!" hoots Milhon. "He's got a
basement full of canned beans."

"I just think it's a good skill to have, okay?" Barnes says.
He seems ready to change the subject, but Parekh breaks in
to announce that C2Net orders its ammunition in bulk and has
it delivered to the office.

"We split it-up between people -- it's not like we have huge
stockpiles of this stuff. It's just cheaper that way,"
Barnes interjects. And then he chuckles, charmed by the very
image he's trying to dispel. "Armed cypherpunks," he says.
"Yeah."

                         -----

C2Net sales rep Sandy Sandfort recently sent out a party
invitation that featured a picture of himself dressed in the
hastily devised uniform of a fictional cypherpunk militia --
a black and red get-up emblazoned with a rose to symbolize
privacy. The invitation was a joke, but the militia analogue
is almost irresistible. Cypherpunk ideology leans to the
left rather than the right, but it shares with the militia
groups a conviction that one of the chief dangers facing
society is the curtailment of personal liberties by the
state. But where militia groups advocate using guns to
defend against unwelcome government intervention,
cypherpunks use math. Their defense is a series of
algorithms that have created a nearly unbreakable code which
can be attached to virtually any computer transaction.

"The spread of cryptography is a lot like the arming of the
populace through the second amendment," says cypherpunk
cofounder Eric Hughes. "This is a technology that people
have wanted for personal defense against the rest of
society. The strict formal parallel, which is absolutely
true, is that people want cryptography now for the same
reason they wanted guns then."

Ever since the first whisper was overheard and the first
private letter intercepted, people have used codes and
ciphers to control access to information. But every secret
sender has faced one central difficulty -- how to safely
communicate the key to the cipher to the person receiving
the coded message. If you send the key through normal
channels, it may be intercepted. If you encrypt it, the
interceptor won't be able to read it, but neither will the
intended receiver.

The problem was solved in 1975 by a young computer
programmer and privacy advocate named Whitfield Diffie.
Diffie was a cryptography enthusiast who had traveled the
country looking for information on cryptographic systems --
no easy task since nearly everything that had been written
on the subject was classified as a military secret. Diffie
came up with a scheme called "public-key cryptography," in
which an encrypted message has two keys, a public one and a
private one. If you encrypt with one key, you can decrypt
with the other.

The mathematics behind the system is fairly complex, but the
application is straightforward. Anyone who might send you a
message can have our public key, but no one, not even your
mother, knows your private key. If I want to tell you where
the treasure is hidden, or when the battalion will make its
attack, or what I really think about Pat Boone's new heavy
metal album, I encrypt it using your public key and send it
to you. The only person who can then decrypt it is you,
using your private key. If you want to make sure that the
person professing such enthusiasm for Boone's version of 
"Smoke on the Water" is really me, and not some member of
the Pat Boone fan club masquerading as me, you could verify
the encrypted signature at the end of the letter. If you can
decrypt it using my public key, you know for certain that
the signature was encrypted using my private key and is thus
most certainly from me.

Diffie's concept was carried out in a set of algorithms
called RSA, which were then licensed to a private concern
called RSA Data Security, which set about marketing them to
the public. Up until this point, American cryptography had
been the province of the spooks at the National Security
Agency, whose mission was so secret that for much of its
history no one would even admit that it existed. But now
anyone who wanted it had access to military-strength
cryptography. Predictably, the NSA was not pleased. By 1979,
NSA director Bobby Inman was fretting that "non-governmental
cryptological activity and publication ... poses clear risks
to the national security."

The reason for the government's displeasure was simple. The
"keys" to computer ciphers are actually extremely large
numbers, which in their computerized form are represented as
bits, a one or a zero. Every additional bit doubles the
number of possible combinations which would have to be tried
in order to break the code. A forty-bit key, which is the
largest key size the US government currently allows to be
exported, has two to the power of forty, or about a trillion
possible numerical combinations. The number of possible
solutions to an eighty-bit key is one trillion squared or
two to the eightieth power. (By way of comparison, the
estimated life of the universe itself, in seconds, is two to
the sixty-first power.) Programs like C2Net's Stronghold use
128-bit keys, which are, from a practical point of view,
impossible to crack. It would take so much computing time to
try all the possible keys that the cost would far exceed the
potential value of the information found.

We are so accustomed to computer technology making the
impossible possible that most people assume that as
computers grow faster, even very large keys will be able to
be broken. But cryptographers disagree. "Remember, if you
add one bit, you double the number of possible keys,"
explains cypherpunk Ian Goldberg.

"Numbers that double get big really, really quickly. And
there are some physical limits, since you can't have more
computers working on the problem there are atoms on planet
earth. Those are the kinds of limits you could easily reach
by doing cryptography when you're using 128- or 256-bit
keys. [Cryptography expert] Bruce Schneier says that 256-bit
cryptography will not be breakable by brute force until
computers are made of something other than matter and occupy
something other than space."

If spies and law enforcement agents viewed this new state of
affairs as a disaster, civil libertarians were overjoyed.
Every previous attempt at repelling government prying, had
required that judges, cops, and politicians be persuaded to
do the right thing. Now persuasion was no longer necessary.
"The cypherpunk credo is 'Privacy through technology, not
legislation,"' Goldberg says. "The law of the land can be
changed by the next administration. The laws of mathematics
are more rigid."

                         -----

Jude Milhon recently came up with a definition for the word
"hacker" that extends beyond the popular image of someone
who uses a computer to steal someone else's data. "Hacking
is the clever circumvention of imposed limits," she told me.
"The limits might be imposed by people who impose rules for
you, but they might also be ideas of what can and can't be
done. So the chief characteristic of hackers is wily
intelligence. A hacker sees the world as a series of
potential acts -- endless challengers for changing the way
things are. Obviously hacking does take in the bored
teenager with a computer and a telephone, but it also takes
in those who want to change the whole planetary paradigm."

An example of this latter kind of hacker, she said, was
cypherpunk cofounder Eric Hughes, who once told her, "I
don't think I want to live any longer than I can pull off a
successful hack."

Hughes came to Berkeley from Virginia eleven years ago to
study mathematics. A few years after graduation, he ran
across the program schedule for a conference on computers,
freedom, and privacy that was being held in South San
Francisco and decided that the topics sounded interesting.
At the conference he attended a presentation by a Berkeley-
trained cryptographer named David Chaum, who was using
cryptographic techniques to develop a system of digital
money. Hughes was intrigued by the political implications of
the technology and began investigating.

A year later, after a brief stint working for Chaum in
Amsterdam, he spent a few days with his friend Tim May in
Santa Cruz. May was a former physicist at Intel, who had
retired at age 34 on a generous cushion of stock options.
May was also a fan of Chaum's work, and he shared Hughes'
conviction that the information gathering potential of
computer technology posed an unprecedented risk to
individual privacy. Together, the two hatched the idea of
forming an association of hackers that would promote
cryptography as a weapon against the threat of global
observation.

"Jeremy Bentham has this essay about the ultimate prison,
the Panopticon, where the prisoners would never know whether
they were being watched or not -- they would be under
constant possibility of being observed, even though at any
given time they were probably not," Hughes says. "We
understood that the fight was against the motion of the
Panopticon as a way of running society at large."

The guards in Hughes' Panopticon analogy are law enforcement
forces -- the National Security Agency, the FBI, the CIA.
The inmates are political dissidents, be they militia groups
or Earth First!ers. And the method of observation is
electronic eavesdropping -- either through telephone taps or
interception of Internet communication. "Wiretaps are, in
the exact panoptic sense, a way of leveraging law
enforcement," Hughes says. "I am completely and utterly
cynical about the government's claim that they don't do
domestic wiretapping without a court order. I think that's
false."

In September 1992, Hughes and May invited thirty or so
like-minded individuals to a meeting at Hughes' house in
Montclair. About a dozen showed up. Together they played a
game that used handwritten messages on file cards to show
how anonymous e-mail systems could work. Other cards
represented digital money, issued by the Bank of Bob in
denominations of ones, threes, and tens. "We gave everybody
something they had to buy and something they had to sell,
and they had to do commerce," Hughes recalls. "It was all
illegal commerce. And some people were playing the cops who
were trying to find out what was going on."

Tim May read the group an essay he had written, which he
titled "The Crypto Anarchist Manifesto." It began like this:
"A specter is haunting the modern world, the specter of
crypto anarchy." Most of the world was probably too ignorant
about cryptography to be haunted by it, but it was in fact a
period of cryptographic convergence, One of the people who
had come to the meeting was John Gilmore, a retired Sun
Microsystems employee who had helped found a civil liberties
group called the Electronic Frontier Foundation. Gilmore was
engaged in a battle with the NSA over his attempts to
distribute cryptographic research documents that the NSA
preferred to keep secret, particularly two manuals from the
1950s. Not in attendance, but known to the fledgling
cypherpunks, was a guy named Phil Zimmermann who had
recently released a program called Pretty Good Privacy that
could be used to encrypt both documents and e-mail. The
notion that public key cryptography was a potentially
subversive technology seemed to have crossed a number of
people's minds at once.

"Computer technology is on the verge of providing the
ability for individuals and groups to communicate and
interact with each other in a totally anonymous manner," May
wrote in his manifesto. "These developments will alter
completely the nature of government regulation, the ability
to tax and control economic interactions, the ability to
keep information secret, and will even alter the nature  of
trust and reputation. There were risks to these changes, to
be sure, he admitted. "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."

But none of these dangers dampened the enthusiasm May,
Hughes, Gilmore, and others felt about cryptography. Before
the meeting broke up, they decided to form an electronic
mailing list that would allow them to stay in touch with
each other. It was then that Jude Milhon -- better known in
hacker circles as St. Jude -- came up with the term
"cypherpunks." The name seemed to embody everything that the
crypto-anarchists wanted to say about themselves -- that
they planned to spread strong cryptographic systems to the
ends of the earth and that they didn't care whether or not
anyone else thought it was a good idea. "Cypherpunks write
code," Hughes wrote in the "Cypherpunk Manifesto" a few
months later. "We know that someone has to write software to
defend privacy, and since we can't get privacy unless we all
do, we're going to write it... We don't much care if you
don't approve of the software we write. We know that
software can't be destroyed and that a widely dispersed
system can't be shut down."

An amateur social theorist whose conversation is peppered
with references to Sterner, Foucault, and Nietzsche, Hughes
has long, ginger-colored hair, a fringed goatee, square
spectacles, and a keen appreciation for the pleasures of
intellectual debate. While May's manifesto mainly stated
what cryptography could do to protect privacy, Hughes'
manifesto laid down the argument of why privacy is
important.

"Privacy is the power to selectively reveal oneself to the
world," he wrote. "...We cannot expect governments,
corporations, or other large, faceless organizations to
grant us privacy out of their beneficence. It is to their
advantage to speak of us, and we should expect that they
will speak...information does not just want to be free, it
longs to be free. Information expands to fill the available
storage space. Information is Rumor's younger, stronger
cousin; Information is fleeter of foot, has more eyes, knows
more, and understands less than Rumor."

Both manifestos are now posted all over the Internet. The
cypherpunk mailing list -- commonly referred to simply as
The List--has grown to 1400 names and is now so unwieldy and
argumentative that its founders are considering shutting it
down and starting a new one. Cypherpunks still hold physical
meetings once a month, as well as gathering informally every
Sunday for Thai brunch, but their ideology is now so widely
dispersed that the word "cypherpunks" has become a generic.
"I see it in press coverage as a generic term for people who
believe cryptography is good for society," Hughes observes.
"Utterly without reference to its origin. I detect no
consciousness that there was a group that had that name.
That's a kind of communications success you can't plan for."

We are sitting in the living room of his South Berkeley
apartment, decorated in High University style with a shabby
rummage-sale sofa, a bookcase filled with textbooks, and a
table occupied by a redolent hunk of cheese, a partially
eaten package of crackers, and back issues of "American
Mathematical Monthly," the "Humanist," "Covert Action
Quarterly," and "Social Anarchist."

"This organization seems to have been one of the things that
defined the overall political consciousness of the Net,"
Hughes observes. Cypherpunks were online long before the
Internet was part of the popular consciousness, and in a
classic case of function following form, their libertarian
gospel meshed well with the Internet's anarchic
underpinnings. "The system was not designed around
centralized control -- purely for technical reasons," Hughes
explains. "And one of the things that cypherpunks hacked
into was the latent political consciousness imbedded in the
way the network was structured."

A realm with no bosses, where anything could be said to
anyone, and any leaning, bent, or interest could form into
its own social constellation could hardly help but develop a
certain animosity toward any curtailment of its insistent
self-creation. Like the Wild West of old, the electronic
frontier was colonized by social dissidents, misfits,
charlatans, and lovers of wide open spaces, whose
instinctive distrust of government defined the culture of
cyberspace as surely as it defined the hands-off mentality
of Oregon, Nevada, Montana, and Idaho.

But the sense of anonymity which allowed the frontier to
develop with so few inhibitions was also an illusion. Even
if no one can see your face, even if you don't identify
yourself, or only identify yourself by your online moniker,
any visitor to cyberspace leaves behind a trail of
electronic footprints. The Internet is a realm where
everything every "Hi-Mom" e-mail message, every visit to the
coffee pot Web page, every post to the foot fetishist
newsgroup -- can be recorded.

Web sites can automatically record the location of your
network account, the kind of computer system you have, what
Web site you visited last, which screens you read, even your
e-mail address. Sites that you have to register with in
order to use have even more identifying information.

Most of the data coursing across the Net is utterly mundane,
but mixed in with the flame wars and trivia archives are
things like stock trade records, lab test results, and
business plans. Assuming you know where to look, it's
technically possible to sort through the chatter and pick
out the seditious plot, financial tidbit, or juicy personal
detail.

"How do you think the messages get from point A to point B?"
says cypherpunk Ian Goldberg. "They go through computers
that look where the message is supposed to go and send it to
the appropriate place. So what's to stop them from keeping a
copy for themselves if it's interesting? If you don't use
cryptography, it's pretty easy. Write a program that says,
'Save all messages going to the bank,' for instance. That's
pretty interesting."

It's not difficult for cypherpunks to come up with this kind
of scenario. Corporations might search for news about their
competitors' new products. Tabloids could look for
celebrities' medical information. Petty thieves could look
for credit card numbers and bank transactions. Marketers,
insurance companies, and the IRS could compile a database of
information on people's spending and lifestyle habits.

So far, the discussion about the large-scale dangers of
intercepted information tends to take place in the
conditional tense. It's possible to do, it might be being
done already, but there is little evidence of widespread
theft of private information. Still, the concern about
electronic invasions of privacy has become as integral a
part of Internet culture as the use of asterisks to denote
italics and combining colons and parentheses to signify
grins.

Recently word circulated the Internet via e-mail that
Lexis-Nexis was compiling a database called P-Trak that
could include the names, addresses, maiden names, birth
dates, and phone numbers of every individual in the country.
Within days Lexis-Nexis was nearly incapacitated by the
volume of e-mails and phone calls that came in from people
who wanted to be taken out of the database, a testimony both
to the Net's power to circulate information, and to the
profound uneasiness that same free flow of information
engenders.

Eric Hughes believes that much of the uneasiness has been
stirred up by cypherpunks, whose fears of a panoptic society
has become part of Internet culture. Why, for instance, do
people hesitate to send credit card numbers over the
Internet, when they don't hesitate to give them to the
minimum-wage clerk answering the phone at J. Crew? "I'm
fairly certain that the current anxiety about giving credit
card numbers out over the Net can be traced to cypherpunks,"
Hughes says. "I can almost trace it back to something I
wrote on the List."

Ever since George Orwell wrote 1984, the popular image of
the political future has been of a totalitarian monoculture
that uses technology to control a submissive populace. The
plot of science fiction novels and movies is almost always
the same -- the individual struggling against the hegemony
of the technological state. Online discussions of privacy
issues tend to veer into this science fiction realm fairly
easily, and it is not unusual to read statements along the
lines of "they are already monitoring everything we do."

It doesn't help that law enforcement officials and
politicians keep acting as if they were authored by Orwell.
In 1990, the Secret Service indulged in a series of raids
that would turn out to be a defining moment in the political
culture of cyberspace. Following the trail of a document
that a hacker had lifted from a BellSouth computer and then
published in a hacker magazine called "Phrack," the Secret
Service raided the home of a number of computer users and
seized anything that seemed at all electronic -- computers,
cables, telephones, answering machines, floppy disks, and so
on. That one of the places raided was Steve Jackson Games, a
publisher of Dungeons-and-Dragons-style simulation games,
did not help the perception that the government ~as chiefly
interested in stomping out cyberculture particularly since
one of the items seized was the manuscript of a forthcoming
cyberpunk game. Later that year, a second series of raids,
code-named "Operation Sundevil," hit hacker homes in twelve
cities, and once again the raids led to far more seizure of
equipment than actual arrests. Bruce Sterling, in his book
"The Hacker Crackdown," argues that the mission of Operation
Sundevil was in part political -- it was meant to send a
message to the digital underground that law enforcement was
"actively patrolling the beat in cyberspace" -- in other
words, that they were being watched.

Operation Sundevil inspired the founding of the Electronic
Frontier Foundation, the crusading Internet civil liberties
organization bankrolled in part by millionaire cypherpunk
John Gilmore. Lately the EFF has focused much of its
attention on fighting US export restrictions on
cryptography.  Until December, "strong cryptography"
(generally considered to be cryptography with key lengths
greater than 40 bits) was listed as a munition under the
International Traffic and Arms Regulations, a Cold-War-era
law designed to keep American military technology from
getting into foreign hands. Anyone who wanted to export
cryptographic code had to register as an arms dealer and
obtain a license from the State Department. And the
definition of "export'' is extremely broad: posting
cryptographic software on the Internet is considered export,
as is talking about it to someone who isn't a US citizen.

One person to run afoul of the export restrictions was a
mathematics professor and former UC Berkeley grad student
named Daniel Bernstein. To test the constitutionality of the
ITAR restrictions, Bernstein wrote a cryptography program
called "Snuffle" that he wanted to post on the Internet for
his cryptography students at the University of
Illinois-Chicago to peruse. The State Department ruled that
the program could not be exported without a license and in
1995 Bernstein sued, arguing that the licensing requirement
was a violation of his right to free speech.
The Electronic Frontier Foundation helped pulled together a
legal team for Bernstein that included San Mateo attorney
Cindy Cohn, the First Amendment Project, and John Gilmore's
own attorney Lee Tien. Tien describes Bernstein as the
perfect plaintiff for this kind of case -- an academic whose
freedom to publish is being curtailed by the law. "I don't
want to say he's not a hacker, because I think he'd be
offended and he certainly has the skills and the knowledge,"
Tien says. "But he really is a mathematician at heart,
interested in precision and completeness and elegance and
making programs and algorithms work."

Tien is a First Amendment lawyer who is also getting a PhD
in jurisprudence and social policy at UC Berkeley. A
thoughtful man with a dry wit, Tien represented Gilmore in
his 1992 battle with the NSA over the classified
cryptography manuals, and has been doing legal research on
free speech and privacy issues for him ever since. He argues
that even though cryptography is designed to protect against
unwanted snooping, the Bernstein case is more about the
First Amendment protections of the Constitution than the
Fourth. "Most people think of it as a crypto case, and
there's always a bit of mental adjustment when you tell them
it's a First Amendment case," he says.

Bernstein's lawyers made four First Amendment arguments. The
first argument evoked the principle of academic freedom --
Bernstein is a professor trying to advance his profession by
publishing, just as academics have done for hundreds of
years. Secondly, the team argued, the case was about the
Internet itself. If the source code were printed in a book,
it would not he covered by the export regulations. But if it
were published on the Internet, the export regulations
applied. "This is a huge First Amendment issue," Tien
argues. "Call it medium discrimination. The idea that the
"New York Times" could print Dan's code on its front page,
and have it delivered overseas, but it can't put the same
code on its Web page without a license is ludicrous. But
that's what the government is saying."

The third argument was that software and source code are
themselves entitled to First Amendment protection. And the
fourth argument was what Tien calls the "tools of speech
issue." "We have always argued that cryptography is like an
envelope because it shields the contents of the message from
prying eyes," he says. "We think it's obvious that if the
government were to require that people write on postcards,
that would affect what people say." Just as the printing
press and the newspaper rack enjoy certain protections
because they are integral to the dissemination of free
speech, Bernstein's lawyers argued, so should cryptography
be protected from overweening government regulation.

On December 18, US District Court Judge Marilyn Patel decided
the case in Bernstein's favor, ruling source code was indeed
protected by the First Amendment and that the ITAR licensing
requirement was thus an unconstitutional prior restraint on
free speech. Two weeks after the ruling, the Clinton
Administration transferred federal jurisdiction over
cryptography export from the State Department to the
Commerce Department, but left the strict prohibitions
against crypto export nearly intact. The change meant that
Bernstein's lawyers had to file a supplemental complaint
attacking the Commerce Department regulations, which Patel
has yet to rule on. In the meantime, two other crypto cases
are also making their way through the federal courts.

The State Department has always argued that it is not trying
to restrict the use of strong cryptography by American
citizens on American soil; it is merely concerned about the
use of cryptography by foreign enemies. It is true that you
can currently purchase 128-bit encryption programs at your
local software store and scramble your data to your heart's
content. But for privacy protection to become widespread,
many argue, it will have to be part of a computer's
operating system. Few computer manufacturers are going to be
willing to build two versions of their hardware, one for
domestic use and one for export.

"If Windows 95 had a crypto tool kit built into it, so that
any program had the power to do encryption, that would be
easy to do, that would be transparent to the user," Tien
says. "My personal feeling is that that's what the
government doesn't really want to see -- the imbedding of
encryption technology into the equipment infrastructure. I
think export controls are a very good way to do that."

Cypherpunks argue that the government's real agenda has
always been to curtail the spread of strong cryptography, as
evidenced by its various attempts to persuade the
electronics industry to voluntarily subscribe to an
encryption standard that law enforcement agencies would be
able to crack. The latest incarnation of this concept is
called "key escrow" by law enforcement types, and
"government access to keys" by cypherpunks. In November,
President Clinton issued an executive order which offered
companies that wanted to export 56-bit cryptography a
limited number of exemptions from the export controls if
they agreed to develop a scheme by which users' private keys
are automatically escrowed in a government database that can
be accessed with a court order.

In arguing for this access, government officials tend to
evoke what Tim May has satirically described as "the four
horsemen of the infocalypse" -- nuclear arms smugglers, drug
dealers, child pornographers, and organized crime -- all of
whom could potentially use cryptography to evade detection.
And there is no doubt that the availability of strong
encryption will make law enforcement's job more difficult.
Not only can cryptography be used over the Net, it can also
be used to create untappable telephones. Wiretaps are only a
small part of law enforcement, but they are undoubtedly
useful in tracking down large, geographically diverse crime
syndicates. And there is something intrinsically frightening
about any all-powerful technology, whether it's a nuclear
bomb or an unbreakable code. It's easy to construct a
nightmare scenario where all that stands between humankind
and imminent doom is information hidden behind crackproof
encryption.

Cypherpunks argue that cheap technologies like the gun and
the car have done more to contribute to the spread of crime
than cryptography ever could, and that the same technology
that protects the privacy of terrorists, mobsters, and
militia groups also protects a far greater number of
ordinary citizens. "If a police officer comes to your door
with a search warrant and demands access to your filing
cabinet, you're gonna do it," says Ian Goldberg. "Same here.
If you have an encrypted file and they have a search
warrant, you're going to give them the key. But what we
don't do is give them the key to our house in advance. The
government doesn't have a warehouse full of all the keys to
all of our houses and filing cabinets, just in case they
need some information from them. But that's what they're
asking for now. They're asking for a way to intercept all of
our messages and read the information hidden inside without
notifying us. Now they *promise* they'll only do this if
they get a search warrant. *J. Edgar Hoover*."

Moreover, cypherpunks argue, there's no guarantee that the
database where the keys are stored would be secure. "The
junior system administrator where the keys are stored, who
can be bribed for who-knows-how-much, can read your
information with no work," Goldberg says. "This is bad.
Especially because 56-bit encryption isn't that strong
anyway."

Goldberg is in a good position to ta]k about the strength or
weakness of encryption. In January he cracked a 40-bit
cipher that was posted on the Internet by RSA Data Security
as a challenge, winning $1000 in the process. It took him 3
1/2 hours to crack the code and read the message encrypted
therein. It said, "This is why you should use a stronger
key."

Goldberg's crack was what's known as a "brute force attack."
He didn't try to suss out the structure of the cipher or
find any hidden weaknesses, he just tried every key.
Operating at the rate of ten billion keys an hour, it would
have taken him ten hours to try all trillion possible keys.
"I was a little lucky,'' Goldberg says.

Goldberg has a heart-shaped face, a strong Canadian accent,
a ready smile, and the ponytail and Fu Manchu goatee that
seems to be a cypherpunk trademark. We meet in the student
lounge at Cal's Soda Hall, the swank, new green-tiled
computer science building on the northeast edge of campus.
Here, Goldberg and two others have formed the Internet
Security Research Group, which studies ways to use
cryptography to secure personal privacy and financial
transactions.

At 23, Goldberg is part of a generation that grew up in
cyberspace. He started using computers when he was seven,
and he was nine when the movie "War Games" came out,
enchanting a legion of youngsters with its Hardy Boys-hacker
protagonist. He joined the cypherpunks mailing list when he
was in college, and when he came to Berkeley for grad school
in the fall of 1995, he began attending meetings.

He quickly became a kind of crypto-celebrity through the
discovery of a series of security holes that earned him
three "New York Times" mentions that fall alone. The first
of these was when he and officemate Dave Wagner found a
major weakness in the implementation of Netscape
cryptography that allowed them to break the code in 25
seconds. Netscape promptly fixed the problem, but Goldberg
and Wagner found another problem a short time later,
demonstrating that when a user downloaded a program like
Netscape from the company's Web site, an outsider could
substitute a less-secure version of the program en route.

The point that Goldberg is trying to make with these stunts,
is simply that product designers need to spend more time
thinking about security. "The main problem is that we're
just starting into the electronic commerce world now, and
being first is more important than being good," he says. "So
a lot of companies are rushing to be first, and they have
bad technology. And it's going to bite them later."

These days the mechanics of getting safe and secure
technology into the hands of consumers has overtaken the
specter of crypto anarchy as a topic of cypherpunk
conversation. As C2Net founder and CEO Sameer Parekh says,
"Our immediate concern is with selling products and making
sure we can pay our employees. The end goal is making strong
cryptography ubiquitous."

Parekh is a slight man in mauve wire-rimmed spectacles who
seems even younger than his 22 years. He founded C2Net when
he was eighteen, under the name Community ConneXion, and ran
it out of his Berkeley apartment until last year, when he
hired fellow cypherpunk Douglas Barnes to handle sales and
marketing, and moved it into its present offices in downtown
Oakland. The company, which develops and sells various kinds
of strong encryption applications, now has fourteen
employees, two of whom operate out of an overseas office to
avoid running into problems with American export
regulations. "We're probably one of the smallest
multinationals out there," Parekh muses.

As a high school student in Illinois, Parekh was just
starting to play around with the Internet when he heard
about Operation Sundevil and the raid on Steve Jackson
Games. The news made a big impression in him. "I decided
that all the redeeming factors in the government were not
really redeeming factors anymore," he recalls. "So I started
doing research and read a book about underground
publications." He started a libertarian/left-wing newspaper
at his high school that he called the "Free Journal," and
filled it with material he downloaded from the Net. When he
told other Internet users what he was doing, they hooked him
up with cypherpunks. "I learned that cryptography would be a
good mechanism for protecting against government abuses," he
says.

When Parekh joined the computer science program at Berkeley
he immediately began trying to put that theory into
practice. "I thought we needed some sort of strong
infrastructure for Internet privacy with an actual business
plan," he says now. He started Community ConneXion as an
Internet Service Provider that offered anonymous remailing
services and anonymous accounts.

Meanwhile Barnes was going to school in Austin, Texas, where
he worked with some of the people who had been raided by the
Secret Service in 1990, including Steve Jackson. When a
friend who had visited the Bay Area for a cypherpunks
meeting came back to Austin raving about the political
implications of public key cryptography, Barnes got on the
cypherpunk mailing list, and eventually started up an Austin
cypherpunk group. He and Parekh kept running into each other
through cypherpunk channels, and when Barnes moved out here
he began advising Parekh on his various projects "There's a
lot of talk on the List," Barnes explains as we sit around a
long table in C2Net's barebones conference room. "One of the
ways that Sameer has consistently distinguished himself is
that he'll say. 'Okay, enough of this talk, let's go do
something.' "

By the beginning of 1996 Parekh had begun working on ways to
bring privacy to the World Wide Web. The problem, as he saw
it, was this: anyone who travels the Web does so using a
browsing program like Netscape. The browser then interacts
with a Web server which provides it with the Web site
information. But as the browser and server talk to each
other, anyone on the Net can see the information going back
and forth. So Parekh began developing a secure version of
the Apache Web server that used strong cryptography. That
program, called "Stronghold," was followed by a program
called "SafePassage" that provides strong encryption to
existing browsers. A new service called "the anonymizer"
(www.anonymizer.com), allows users to surf the Web
anonymously.

To avoid violating US export restrictions, C2Net has had its
cryptography products developed overseas, going so far as to
throw away the original work Parekh did on Stronghold and
having outside developers start fresh. Communicating across
national boundaries has made life fairly complicated for the
young company, and Parekh and Barnes have plenty to say
about the idiocy of the restrictions.

"Right now, the same government that's ranting and railing
against strong cryptography is also pissing and moaning
about the fact that there are all these hackers out there
doing all this evil stuff -- breaking into accounts,
sniffing passwords, sniffing credit card numbers." says
Barnes. "But the fact is that strong cryptography is the
only way you're really going to be able to deal with the
hacker problem. And from all estimates I can see, the hacker
problem is an order of magnitude larger than what might
happen as the downside of having strong cryptography."

"You've got terrorists blowing up a building," Parekh adds.
"Compare that to terrorists bringing down the worldwide
financial system. Which is more of a danger?"

Bombs are probably going to generate more popular anxiety
than system crashes for the foreseeable future, but C2Net
seems to have found a market for its product, with clients
that include Nintendo and Gallup. Do they see any irony in
anarchists defending the privacy of Fortune 500 companies?

"Fortune 500 companies deserve privacy too," Barnes says. "I
wish more of them were buying our products. The money has to
come from somewhere, and we think the best way to provide
strong privacy to people is to be a strong, viable
business."

Even if their daily concerns have more to do with meeting
payroll and shipping product, both men say that they haven't
forgotten about the overarching goals that brought them to
cryptography in the first place.

"Yes, we are much more pragmatic," Barnes says. "But a
natural consequence of strong cryptography is that certain
areas of people's lives will become increasingly off limits
to the government, and I think that's a good thing. People
investing in the stock market, loaning money to each other,
currency exchanges, things like that. Anything that can be
delivered over the Internet -- advice, entertainment,
programming, database services, any job that can be
performed by telecommuting -- I think you'll see drifting
into a parallel economy that will largely be free from
government interference. I think the income tax is going to
be in big trouble. Taxes will probably become more
regressive, which I personally don't think is a good thing.

"Those are sort of the toned-down, pragmatic goals. The
people who wrote the manifestos talk about the government
withering away, vanishing. That's probably not going to
happen."

Online discussions about the social implications of
cryptography tend to read like a cross between a William
Gibson novel and the Federalist Papers. In some versions of
the crypto-future, no one will have to reveal their true
name at any time, not to a cop, not to a convenience store
clerk, not to a cyber-buddy. It seems unlikely that the same
culture that created the talk show confessional will ever
fully embrace this vision of the future. Most people are
willing to trade privacy for convenience, or just for
attention. But that doesn't mean that the political power of
encryption technology is an illusion.

"Cryptography puts a limit on what you can think about doing
-- it doesn't *determine* anything," Eric Hughes argues. "If
you can publish something and no one can tell who published
it or where it was published or who's reading it, then
you're not going to be able to legislate that people can't
talk to each other. You're not going to be able to do what
Franco did in Spain -- suppress Catalan culture or language.
That will all escape into cyberspace. You won't be able to
suppress Islamicism or Christian Fundamentalism; you won't
be able to repress radical environmentalism. People will be
able to have opinions and they'll be able to create networks
of social communication that will foster them. You're going
to have to deal with them -- that's probably the most potent
result of all of this."

For those who are interested in what Hughes calls "high
theory," the critical issue is how to cultivate anonymity
and community at the same tune. Social relationships tend to
be what make people behave well instead of badly, and anyone
who has stumbled across an Internet flamewar has gotten hip
to the perils of anonymity. It's far easier to call people
who disagree with you pigfuckers if you don't have to say it
to their faces. Cypherpunks say that you can deal with this
problem by creating permanent online identities that can be
banished from cyberspace communities if they act up, but the
fact remains that the creation of online culture is more
complicated than any of the utopianist manifesto writers
first thought.

Whatever the perils or advantages of cryptography are, it is
clear that the genie is out of the bottle. For all the talk
about controlling export, limiting key lengths, or escrowing
keys, the fact of the matter is that the technology is
already too widely dispersed, and the methods for getting
around any legislation are too simple. Moreover, a
constituency more powerful than cypherpunks has emerged to
lobby for a liberalization of cryptography regulations.
Multinational corporations want strong cryptography to
safeguard their financial transactions and guard against
economic espionage, and the high-tech industry is aggrieved
at being handicapped in the international marketplace. Three
cryptography liberalization bills were introduced in the
last legislative session, and they are expected to be
resurrected in the current one.

"We've won most of the essential points we wanted to make,"
Hughes says with satisfaction. "That this is good; we want
more of it. The government has complete]y lost the battle."

[End]







