Big Head Press

L. Neil Smith's
Number 532, August 16, 2009

"Their real object is to control you and deny you joy."

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Virtual Privacy in the Information Age
by Jim Davidson

Special to The Libertarian Enterprise

The government spies on you. That's true no matter where you live or what "the government" means in your case. The odds that no government is spying on you are much less than the odds that more than one government is spying on you at the same time.

Since 1994, federal law has required that phone companies help the spy agencies in the USA government build in eavesdropping ability. If your Internet service provider is told to provide the government copies of everything you are doing, and have been doing, they comply—and they can't even let you know they are doing so. Since 2001, essentially all domestic communications are monitored, according to NSA sources. And why not? The government has been at war with the American people for decades. So if you want any privacy, you have to work at it. Happily, there are service providers who are happy to help you.

That isn't as easy as it sounds. Many software systems have been built to provide privacy to users, or to circumvent government information checkpoints. China has built "the great firewall" and companies have developed paths around it. But many of the systems are themselves sources of vulnerability, some of the companies in the industry are selling their users' data in aggregate or in detail, and everywhere you look there are single points of vulnerability being exploited by governments.

In the last five years, technology has been developed to allow economic transactions between individuals to take place in a manner that is completely undetectable and untraceable to outsiders. How? Using systems like eCache, Loom, Trubanc, and newer variations, with secure Internet relay chat, Gnu Privacy Guard encryption, and other secure communications techniques, two or more persons can transfer value representations (data) without leaving any record, without any other party knowing a transaction has taken place. That's important, since economic events that cannot be detected also cannot be prohibited, regulated, taxed, or governed.

None of it really matters, though, if everything you do on the web can be watched and tracked. And that's where a virtual privacy network comes in.

Why bother with a virtual privacy network? After all, there is the onion router (TOR). Unfortunately, there are limited providers of onion routing. And it is quite easy for an onion routing server to be used as a monitoring station. Even with only a few servers out of a thousand or more, experimenters have been able to purloin private information sent in the clear over the onion router. This defect in the system is well known, and published by TOR (the onion router) developers. They recommend end to end encryption on top of onion routing to provide an actually secure connection.

A virtual privacy network works differently. Your computer connects to your Internet service provider (ISP) in the normal way, but before you connect to any remote servers you first connect to the virtual privacy network's servers. All your ISP can see is that you are connected to a server on another network. They cannot see beyond your connection to the actual web sites you are browsing. Like a proxy server, the virtual privacy network safeguards your browsing (and e-mail access, and all other access). Best of all, it does so seamlessly and transparently—you hardly notice the difference.

My computer boots directly into a secure connection with the virtual privacy network of my choice. But, I work with clients all over the world, doing financial accounting and management consulting. In order to work with their data, most clients require not only an agreement protecting the privacy of their data, but also that I use advanced encryption systems to send, receive, and store their data. That means Gnu Privacy Guard—the open source verion of Pretty Good Privacy. It means dual key cryptography, and root-encrypted computers. When my computer boots without its external boot key in the USB port, it comes up in Windows. I use that operating system entirely for online gaming and communications with family—never for business.

With the external boot key, my system comes up in Linux, the open source operating system. I like the Ubuntu graphical user interface. And it automatically connects first to my preferred virtual privacy network.

So who are these guys? The company is called Cryptohippie. You can find them at the eponymous web site. And why do I prefer them?

Well, for one thing, they don't sell their customer's data. Even in the aggregate, they aren't telling anyone else what their users are doing. They have location agnostic servers in Germany, the Netherlands, Panama, and Switzerland which provide plenty of privacy to users. Best of all, they have a minimum presence in the United States, one of the ugliest jurisdictions for computer privacy. As well, they are dedicated to civil liberties, so if you are a freedom activist, you can get a discount.

Three types of threat to your privacy relate to content, context, and trust. Content is hidden by keeping the things you connect to private from everyone else—by tunneling to their servers first, all your ISP knows is that you are connecting to Cryptohippie. Context is hidden by keeping other people from analysing your web traffic—to whom you connect and when, as well as who else is connecting at the same time. Traffic analysis can be used to learn a great deal about your interests, habits, preferences, and even activities involving other people.

But the most important part is trust, and here is where I especially like Cryptohippie. Their network is built so that no third party gains any knowledge about the content or context of your communications—not even Cryptohippie. The various parts of their network are insulated from each other and operated by different companies in different jurisdictions. None of the operators can collect the required data to learn about the context and content of your communications.

Now, there are a whole lot of technical reasons to like Cryptohippie, too. And I could inundate you with technical terms like jurisdictional routing, Open VPN, standards-based military cryptography, AES256, RSA2048, DH2048, SHA1/SHA256, temporary internal IP space, random assignment of outgoing IP address, and on and on. If that stuff means anything to you, then you should definitely hook up with their technical people and exchange geek signals without any intermediary. If not, it might be of service to know that many private European banks have used the Cryptohippie technical team members to develop their networks. Laws in some of these countries are incredibly strict about banks providing actual, meaningful financial privacy. In contrast, the USA banking laws would better be called "banking invasion of privacy acts."

Freedom activists all over the world are involved in developing new technologies all the time. There are many networks where we meet and discuss issues of the day, new projects, or personal stuff. I've spent many years getting to know some of the personalities in financial privacy, cryptography, and technology development because of my own ambitions. I say personalities, because not all of these people are identifiable—they are anonymous and prefer to stay that way.

What are my ambitions? I want to leave Earth. I'd like to build hotels on the Moon and go dancing there every night. Since 1977, I've been active in space enthusiast networks, private space business development, and entrepreneurship. I'm thoroughly acquainted with the technical limitations of rocketry, guidance systems, and satellite technologies. There are no meaningful technical barriers to space achievement. Since we got to the Moon with 1968 technology, we can certainly get back with 2009 technology.

The limits to my ambition are imposed by governments. I learned that lesson in a very shattering way in February 1991 when I was falsely accused of felony gambling promotion of a lottery. A few months later, the charges were dropped and the state acknowledged that I had been involved in a lawful sweepstakes activity—we were offering a trip to the Soviet space station Mir.

My subsequent interest in new countries, in free ports, and in financial cryptography has been motivated entirely by my inability to do what I really want—go into space. I believe an important aspect of any conflict is securing one's lines of communications, which is why I'm committed to e-mail encryption and virtual privacy networks.

Eventually, the centralisation and command economy aspects of the modern super states will cause them to collapse. The first to fail was the Soviet Union, and the next to fail would likely be European socialist states like the UK or Sweden.

Meanwhile, pirate software, films, books, and other digital products are being traded for free using bitTorrent networks. A piracy group in Sweden was convicted recently of making copyrighted information available on their network, and fined millions. But their network hasn't been shut down—they don't control it. Nobody does. The network isn't dependent on particular servers or particular individuals. It is totally out of control.

You can object to the changing conditions. You can say that it is unfair that copyright information can be freely shared by billions of people without the permission of the copyright holder. But you can't change reality by complaining.

And you shouldn't complain. Free stuff motivates sales. The open source revolution proves that. When the guys behind Monty Python put all their episodes on Youtube for free, their sales increased by 28,000 percent.

So it is not only possible, but easy, to have a business plan to make money in the real world—in the midst of the reality of bitTorrent, virtual privacy networks, the onion router, encryption, data security, government spy operations, digital gold bearer instruments, and all the rest. I know it can be done, because I write business plans for a living.

The world is change. It is not merely that the world is changing, but that the nature of reality itself is change. The parallel universes of books like "The Probability Broach" are very real, and more numerous than you probably imagine. The police state apparatus, the snitches, the finks, the pigs, the screws, the torture chambers, the wars, the indefinite detentions—all these are very real. They are all very disturbing.

But that world is receding into the past. The future is extremely bright and pleasant. In the future, people will be able to connect to web sites and e-mail servers privately. People will engage in trade and commerce which is undetectable by anyone else. There will be all kinds of ways to share information. And people will find ways to make money doing all these things. How do I know? Because all those things are already happening.

Jim is a Houston entrepreneur and author. His tome Being Sovereign is due out any day now. His latest projects involve free market money, including publicity related to the Liberty Dollar trial; making films including a feature film based on the book Alongside Night and a documentary Destination Resorts in Orbit. He is also forming a network of independent spirits at—the agorism cadre. His newest and most favorite project is—ending war by divesting from death merchants.


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