Paranoia was correct, e-gold raided by Gov.

A good bit of commentary at FinancialCryptography
interesting to give some general backgrounding to it all. But if your like me you will want to know two things, why did they take the entire customer history, and what prompted it.

Of course there are two quasi answers that are really just one.

1. Money laundering terrorists, drug dealers and child pornographers.
2. They wanted it so they invented 1. (My theory, read on...)

Now while there seem many possabilities for a court order to suspend, or obtain records for an account, grabbing the whole shebang seems outside of the normal court warrants. So what was soo bad that this should happen?

A pretend terrorist organisation funnelling funds to obtain secret intelligence and targeting information against the U.S.A. I say pretend because, well if it were real it wouldn't have ended with this sort of raid.

So then where do you get such secret data in exchange for money? Well you could do it by setting up a company that gets military contracts and just walks out with it. Hmm wait been done, no one cared (much, do some searches on theChinese)
It also does not get the whole terrorist feel right, so make some sizeable payment to a place that shows declassified and freedom of information stuff along with plenty of pictures and open criticisim of Government secrecy. Make the payment in gold, hype everything up a bit and you get two results.

1. A good excuse to spy on all of e-gold's transactions.
2. A good excuse to make life miserable for websites that don't like to be censored.

1. has happened, I'm betting 2 will follow.

Which site? I think it is Cryptome , Sept 12 (Hmm, interesting date) 2005 cryptome recieved $11,800 out of the blue from a nice fresh high numbered account, much bigger than normal donations, naturaly he was suspicious.

From reading the general slant he has taken, I don't think he realises yet just how big a knock on the door he may receive. In fact my paranioa seems woefully inadeqaute even in anticipating a knock on *my* door, given some of the places I have sent money, all I can say is I am thankful I am not inside the U.S. I don't for a minute think it will save me from being grilled and hassled.

How many people will get caught up in a dragnet of following associations. We all know of the six degrees of seperation. Apply that to your money. bank/gold anything traceable.

I don't know Ossama's e-dinar account number, but does someone I paid? I am betting its less than six payments from anyone.

Rule of law

First off, E-gold is back online, what was and is disturbing still is that both e-gold and omnipay (who does actual movements of bulk gold in and out, although it might be technically possible without omnipay/g&sr, as far as I am aware all market makers use omnipay) both were off the net all weekend. Generally there is a large amount of trust in e-gold (otherwise there would not be such a big bunch of bars sitting there), they are however still legally required to honour court orders. This is where I get to the whole rule of law bit that I hinted to in my earlier post. Click the link up top and have a read, then come back and ponder.

It is possible that e-gold had been forced to co-operate in a large way, possibly even without court orders. The has been some heavy pressure examples among smaller market makers. If e-gold wants to continue to operate it may even have to keep its mouth very shut about the whole deal. Maybe it happened and maybe it didn't. But it could!

Just who can be trusted? Imagine you have a really great financial cryptosystem in place. Is it tank proof? Iran is due to open its euro denominated oil burse on March the 20th 2006. Iran is due to be waged war on towards the end of March because of its nuclear ambitions. Again, ignore my paranoia but think of the lesson implied.

Governments are not going to obey the law if they see something as a threat, financial cryptography that is people empowering is a threat to governments.

Is it even possible to have a payment system that is not physically vulnerable. Imagine you are a government, even a smallish one and you discover a payment system that is used by terrorists, or worse say a Jim Bell special ;) What is to stop you from destroying it? All I can think of is to have governments as customers.

Are the only options to infiltrate the world bank or to mint physical coins?

I eagerly request any other options with the best getting a 1 gram gold digital certificate

Financial Cryptography in Trouble -updated

For anyone who has had a serious interest in setting up a finacial cryptographic system, I am thinking here of payment systems, there has always been an issue of trust and security. Trust that the financial instrument is really there and security that it is not going to be removed.

Something has happened that will shake the future of financial payment systems.

E-gold went offline.

Update: It seems that there is a non-paranoid explanation, but all the concerns of trust still exist. E-gold claim that due to a mixup over paying some bills they have been de-registered in Nevis. Why they are off the net so long still seems odd. Do pretend not to notice my paranoid delusions. Do however put some thought as to how fragile financial security can become. Sooner or later payment systems will be heavily targeted, a way needs to be found that keeps them running under the most adverse conditions imaginable.

Not earthshaking? Just some maintanence? Could be, hopefully has a nice explanation, but it feels different. If I had to guess I'd say some Govt. paper pusher is looking through my transaction history right now. Personally I trust e-gold to act properly, but what happens when Government steps in. How do you maintain security if a government can confiscate or simply as I suspect, halt all transactions until they catch what they want. If you operate outside of government the where is accountability? If the operators take whats yours and make it theirs, you have no legal re-course.

Even keeping items in a safe at home seems to be begging for it to be labeled as proceeds of crime and confiscated (hope that does not disclose where I live :)

Perhaps the only solution is to have someone who has a very high personal reputation to venture beyond the reach of governments. Of course dealing with someone like that could get you a very strong label. What is needed is a government one can trust.

Please let me know if you find one, I'd like to keep my gold there.

PS: e-dinar seems to be still up

Dribble update - beware invisible photon

A bit of an update, especially where quantum crypto is concerned.

Three interesting papers, first off a method for eavsedropping on optical quantum photon communication, don't worry, it also covers how to make protocols more secure.

Secondly a (small) advance on quantum entanglement, not yet to a useable scale for secure communications but interesting none the less.

Thirldy Alice and Bob talk safe keys even when not properly entagled. NB. A bit heavy n maths in this one.

Lastly, out of Hilbert space and into Dilbert space it is good to see good old Kevin D. Mitnick meeting lots of people worried about security and getting him to look under their companies bonnets ;)

Crypto news

This is supposed to be a gushing edge blog. But the bleeding edge in financial crypto seems to be only a trickle so I'll just refer you to a couple of dribbles.

The world's first quantum encryption computer network has been expanded to include a wireless link that uses quantum communications codes.

Australian Defense Signals Directorate to use Java Blackberry by Research In Motion (RIM)

This is a hand held device doing java 3DES and AES, not really new but interesting that a defense app is doing this.

A Patent has been granted for eliptic curve cryptography (ECC) and has been assigned to the NSA.

The NIST has been making some recomendations about message authenticity code (MAC) algorithms, in the meantime NIST has been playing with Berrylium Qbits and UV lasers as well as churning out 88% efficient single photon detctors

The NIST sensors could be used as receivers for quantum communications systems, calibration tools for single photon sources, and evaluation tools for testing system security. They also could be used to study the performance of ultralow light optical systems and to test the principles of quantum physics. The work is supported by the Director of Central Intelligence postdoctoral program and the Advanced Research and Development Activity.

In summing up, not much happening.... unless NIST cares to tell whats going to happen next?

Quantum Cryptography shares entangled Million Euro

Would have been better news if the prize was paid over this quantum link ;)

A collaboration that involves physicists from six European countries and the US has been awarded part of the European Union's Descartes prize for research for their work on quantum cryptography. They share the €1m prize with life scientists studying mitochondrial DNA.

The IST-QuComm collaboration is made up of research groups in Sweden, Germany, France, Switzerland, Austria and the UK, plus a team at the Los Alamos National Laboratory in the US. Quantum cryptography allows two parties to share a secret "key" that could make communications between them much more secure than existing cryptographic techniques by encoding the key with single photons. Any attempts by a third party to eavesdrop on the communications can be readily detected. Quantum cryptography could have applications in electronic communications, e-banking and e-voting.

Progress in quantum cryptography and related areas - such as entanglement and teleportation - has been rapid in recent years. Last year, for instance, physicists at the University of Vienna succeeded in sending entangled photons 600 metres across the river Danube, while a group at the University of Geneva recently demonstrated quantum teleportation at telecom wavelengths through a 4-kilometre optical fibre cable. The IST-QuComm consortium also performed the first ever quantum cryptographic bank transfer over a 6-kilometre fibre link in Vienna this summer.

The prizes were awarded in Prague today by Janez Potocnik, EU commissioner for science and research.

Wireless smartcards rolling out in Australia

In a AUD$30 Million + roll out smart cards are soon to be in everyones pocket for public transport.

This large scale adoption of contactless smartcards may see a change in transaction habits looming. Australia was an early adopter of the magnetic swipe EFTPOS system.

The Wayfarer smart card system has been adapted to accommodate this procedure and over 5,000 Wayfarer smart card readers will be fitted to buses, ferries and train station fare gates.

Also see

Planning and Infrastructure Ministers comments

"By the end of 2004, people using Transperth bus, train and ferry services will be able
to pay their fare by simply passing their wallet or bag over a sensor," Ms MacTiernan
said.

And from Sept 2003 ITS news Australia

Ministers have endorsed a memorandum of
understanding on the issues, which includes
a commitment to ensure the smartcards used
for transport are compatible with services in
other sectors such as banking, retail and
telecom-munications.

This memorandum of understanding is probably the most significant as it may indicate the goverments thinking on future technology adoption. Contactless transactions have often been bandied about in the press as the next big thing to happen, yet very little has been seen. Goverment funding and adoption for public transport is one way to kick start and force* the involvement of the populace.

Stay tuned, more to follow on this.





* = cash tickets are still available, only force is the pressure of waiting queue behind you.