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"Liberty Impact, September 7, 2001" 1st
http://www.topica.com/lists/LibertyReserveNews
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CONTENTS
[1] Welcome!
[2] Careful, Big Brother is Watching
[3] Offshore News
[4] What does your state think about internet sales?
[5] Carnivore
[6] Digital Cash : set for an explosion
[7] Unknown Hero
[8] Quote of the Week
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[1] Welcome!
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Welcome to the FIRST EDITION of Liberty Impact. Major topics will include
privacy, liberty, e-currency, offshore banking, tax avoidance, and
discussions about how to stop governments from tearing down individual
liberties. Please feel free to forward this newsletter to your friends who
may want to join this fast-growing community so they too can be updated
with news and information and learn how anonymity can be a potent tool of
the common man against collectivism.
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[2] Careful, Big Brother is Watching
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New advances in surveillance technology threaten your privacy
by Michael S. Hyatt
In 1787 Jeremy Bentham, a British philosopher, made a proposal for prison
architecture called "panopticon" (literally, "the all-seeing thing"). The
idea behind the panopticon was that a prison would be most secure when the
jailors watched the prisoners at all times. Since that was not possible,
the next best solution was a structure where guards could watch the
prisoners at all times and where the prisoners never knew if they were
being watched. That way, according to Bentham's theory, the prisoners
would always behave appropriately.
Little did Bentham know that his proposal would become the model, not just
for prison systems, but for society at large. Today, new high-tech systems
are making the business of constant surveillance a reality.
Video surveillance cameras have been used for four decades to monitor
high-risk public places. In the past few years, however, the technology
has been steadily improving. For one, the images are much better. The
newer systems no longer produce the blurry, recorded images like those
still installed in convenience stores. The latest technology features live
streaming video of sharp, color images, with 500-line resolution. Compare
this with the older, black and white systems employing 160-line
resolution.
Using an IBC (International Business Corporation) as a shield
These newer systems allow police or dispatchers to remotely control the
cameras from miles away. Operators can pan, tilt, or zoom the cameras via
the Internet or a dedicated computer software program. In addition, a
single monitor can simultaneously display images from up to 16 cameras,
reducing the need — and expense — for multiple monitors. And, because
these cameras record their images digitally, they can be searched almost
instantaneously, using sophisticated computer programs and massive
databases.
But that's just the beginning of the brave new world of video
surveillance. Scientists in Singapore have developed an even more
sophisticated video system — one that uses artificial intelligence. The
software developed by researchers at Nanyang Technological University can
tell the difference between "normal behavior" (people walking, visiting,
or shopping) and "suspicious behavior" (people fighting, fleeing, or
collapsing). Images fed to the system via a video camera are analyzed
almost instantly and with 96 percent accuracy.
Still photography has its place in the surveillance arsenal as well.
Visionics of Jersey City, NJ, has developed a product called FaceIt. This
high-tech system uses cameras linked to computers to scan faces in real
time and then compare them to an immense database of digital photographs.
This system made its public debut at Super Bowl XXXV this past January.
Without their knowledge or permission, almost 100,000 fans had their
pictures taken as they passed through the stadium turnstiles. In
milliseconds, each facial image was digitized and electronically checked
against a database of some 30,000 known criminals and missing persons. The
Tampa police were so impressed with the system that they installed FaceIt
and 36 cameras in their entertainment district, despite public protest.
Not surprisingly, Visionics has received millions of dollars in federal
funding.
Surveillance cameras are being used in other ways, too. At least 50 U.S.
cities are now using Red Light Cameras to snap photos of vehicles driving
through red lights. Pictures of the plates are compared with the state's
database of vehicle registrations. Tickets are then mailed to the owners.
The state of Texas used similar technology to track people leaving the
state. Vehicle owners were then sent a questionnaire asking if they were
leaving the state for religious reasons, shopping, or work.
The National Institute of Standards and Technology is developing another
kind of camera technology. Using a special form of radar, this system
allows law enforcement personnel to spot a concealed weapon on a person
without even having to be in the same room. "The system uses a form of
radar that relies on extremely high-frequency radio waves that can
penetrate light solids — such as clothing — but reflect off of "harder"
solids — such as the metal used in a gun or a knife." A computer program
transforms the radar signals into an image and displays them on a
computer. Eventually, the device could be made small enough for a police
officer to hold in his hand.
On the surface, the benefits of these systems to society are obvious:
stopping crimes before they happen, catching criminals, providing
evidence, and even finding missing persons or children. However, there is
a dark side to this technology that is often overlooked.
1. They threaten liberties guaranteed by the Constitution. The Fourth
Amendment to the U.S. Constitution states that "The right of the people to
be secure in their persons, houses, papers, and effects, against
unreasonable searches and seizures, shall not be violated, and no Warrants
shall issue, but upon probable cause, supported by Oath or affirmation,
and particularly describing the place to be searched, and the persons or
things to be seized." Notice: lawful searches must conform to four
criteria. They must be (a) reasonable, (b) based on a probable cause, (c)
supported by an oath-based warrant, and (d) limited in scope. The
indiscriminate use of modern surveillance technologies violate all of
these conditions. In essence, contrary to American legal tradition, they
assume that all persons are guilty until proven innocent.
2. They can be abused by the people operating them. Most everyone is
opposed to criminal invasions of privacy (except, of course, the
criminals). Identity theft, stalking, credit card fraud, and computer
hacking have all risen to alarming levels. Many people are also fed up
with commercial invasions of privacy. They are simply weary of all the
junk mail cramming their mailbox, telemarketing calls at their home, and
Internet "spam" clogging their inbox. But, surprisingly, these same people
offer few complaints when it comes to government officials invading their
privacy. For some reason they naively assume these operators are sinless
or beyond temptation. Hardly.
According to a recent story in the Detroit Free Press, more than 90
Michigan police officers, dispatchers, federal agents, and security guards
used information in the state's law enforcement database "to stalk women,
threaten motorists, and settle scores." I'm certain that the vast majority
of these officials are upright and honorable. However, as long as
government agencies have to recruit from the human race, there will always
be abuse. It is simply too intoxicating for mere mortals to have this kind
of power at their disposal and not use it for their own nefarious ends.
3. They can be directed at anyone, not just criminals. It's one thing to
target bona fide criminals. But what happens when a certain behavior is
criminalized just because it's not politically correct? For example, the
Echelon system — a massive, government funded satellite spy system — has
reportedly been used for domestic political purposes, including the
following:
-In order to convince Richard Nixon to fire Secretary of State William P.
Rogers, Henry Kissinger had the National Security Agency (NSA) intercept
his messages.
-Margaret Newsham, a former Lockheed software manager, who was responsible
for some of the computer systems in ECHELON, reported that she overheard a
real-time phone call interception of Senator Strom Thurmond.
-Under Ronald Reagan's administration's orders, Maryland Congressman
Michael Barnes's phone messages were intercepted.
-In 1992 it was revealed that the NSA had been monitoring Amnesty
International, Greenpeace, and Christian Aid, a ministry that works in
foreign countries with native pastors.
These are only a few of the abuses that the NSA has perpetrated. Patrick
Poole, an expert on Echelon activities, neatly summed up the situation:
It should hardly be surprising that ECHELON ends up being used by elected
and bureaucratic officials to their political advantage or by the
intelligence agencies themselves for the purpose of sustaining their
privileged surveillance powers and bloated budgets. The availability of
such invasive technology practically begs for abuse, although it does not
justify its use to those ends. But what is most frightening is the
targeting of such "subversives" as those who expose corrupt government
activity, protect human rights from government encroachments, challenge
corporate polluters, or promote the gospel of Christ. That the vast
intelligence powers of the United States should be arrayed against
legitimate and peaceful organizations is demonstrative not of the desire
to monitor, but of the desire to control.
4. They simply aren't accurate. Two years ago, police in the London
Borough of Newham installed 300 cameras linked to FaceIt. However, recent
tests with this system show that results are erratic at best. "This
technology is too immature for these types of applications," said James
Wayman, a research director at San Jose State University and an expert in
face recognition technology. "There's no evidence from government tests
that a system like the one in Ybor City would work as anything but a
deterrent." For some, this is enough. For me, its evidence that the power
elite is willing to use any means necessary — even if it's flawed — to
engage in mass surveillance.
In summary, we are quickly coming to the point of no return. Panopticon is
more than a vision of the future; it will soon be a reality. Is this the
kind of world we want to live in?
(c) 2001, The Prospectives Group. All rights reserved.
Used by permission.
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Michael S. Hyatt is Author of "Invasion of Privacy:
How to Protect Yourself in the Digital Age"
(Regnery Publishing, 2001)
Visit his Web site at: www.moreprivacy.com
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[3] Offshore News
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BAHAMAS:
If you do business or own an IBC (International Business Company) in the
Bahamas, beware! The Bahamas government bowed to the will of the
Organization for Economic Cooperation and Development (OECD), and
eliminated bank secrecy and corporate privacy. In the future, Liberty
Impact will be discussing various tax havens that still cater to the
privacy conscious.
LINK: http://www.lowtax.net/lowtax/html/jbaspec.html
CYPRUS:
This once attractive offshore tax haven admits defeat and
ended that status by appeasing EU and OECD demands.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=5131
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[4] What does your state think about internet sales?
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Your state government doesn’t like the fact that you can avoid paying
state sales taxes on goods that you purchase over the internet. That is
why 40 U.S. states are petitioning the United States congress not to
extend the no-tax moratorium on internet shopping.
It will be interesting to see how Congress responds.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=4949
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[5] Carnivore
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by Ragnar Danneskjold, JD
Editor
Ever heard of Carnivore? It is a wiretapping tool that the FBI uses to
spy, wholesale, on a given ISP’s e-mail traffic (and soon to be installed
in cell-phone networks to spy on wireless messaging). More and more people
around the world are using e-mail as a primary tool for communication. Of
course, criminals such as terrorists and organized crime are using e-mail
as well. But the Carnivore system that the FBI is implementing goes too
far to combat criminals on the web.
First, any criminal with at least average intelligence will use encryption
such as PGP that is virtually impenetrable to attack by government.
Second, ISP’s (Internet Service Providers such as AOL) have done a good
job in the past of cooperating with law enforcement to weed out criminals.
The Carnivore system really targets the common man. It sifts through all
e-mail traffic looking for key words that could imply criminality, thus
putting the Fourth Amendment (which is built on the premise that law
enforcement cannot without a warrant search people’s private papers and
effects) into the garbage. According to the FBI, Carnivore is “attached to
an Internet Service Provider's network and searches through all of its
customers' electronic messages (including email, web addresses and instant
messages) looking for the messages of a person suspected of a crime.”
However, the FBI has no oversight when using Carnivore and it can (and
does) easily search through everything (that is not encrypted) on a
particular ISP’s network.
Such mass invasions of privacy perpetrated by the FBI must be stopped. In
the least, people should be made aware of this abuse of the Fourth
Amendment and use at least simple encryption when sending sensitive
correspondence or documents through e-mail.
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[6] Digital Cash : set for an explosion
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by Chris Ogden
What do these names mean: Checkfree, eCash, eGold, GoldMoney, Gmoney,
PayPal, Paydirect, Nochex, Movilapgo, Paybox, eBucks, and PayCash?
If you have heard of any of them then you are probably among the few that
have. Over the coming years we are all likely to become very familiar with
one or two of them.
These names are some of the new initiatives aimed at helping ordinary
people and businesses pay for goods bought over the Internet. Although the
credit card is still the most common way of paying for goods bought
on-line, its days may be numbered. Across the world, from Russia to the
US, in Europe, Africa, and Asia, new schemes are being launched every day
to challenge the dominance of the credit and debit card, the cheque, and
the direct debit instruction.
So what’s significant about these schemes, why are they important, and
what does this say about how we might be paying for things in five or ten
years’ time?
The driving force behind all of these developments comes from three main
sources.
First, like much of the Internet, creating the digital equivalent of the
stuff we carry around in our pockets is, to use Valley-speak, a very “cool
idea” indeed, and one that some of the best Internet brains have decided
is worthy of their intellectual attention. It combines interesting
business challenges with deep technology issues to do with cryptography,
security and mathematics.
Second, new, upstart companies have recognised that there is a huge
business opportunity for the winners. With the Internet continuing to grow
exponentially, and with computing power still doubling every eighteen
months, the use of the Internet for acquiring and paying for goods and
services, whilst not quite a mass-market phenomenon, is commonplace among
the on-line community. From books to groceries, from flowers to sofas,
from TVs to movies, the Internet is fast supplanting at least a portion of
retail sales. And in this “new space” that is the Internet, the
inconvenience and security concerns associated with entering a 16-digit
credit card number are a turn-off. It’s amazing how difficult it is to
find your wallet with its credit card when you are at home. Consumers are
therefore ready to accept new ideas for how payment is made.
Third, there is a new category of products and services for which the
traditional credit card is just plain wrong: small value payments, or even
micro payments – fractions of a penny or a cent. It’s wrong, principally,
because merchants can’t make money selling a piece of software or a page
of a manual for $2.00 when they must pay the card issuer, such as VISA or
MasterCard, as much as $4.50 per transaction. And don’t ask a consumer to
type in a credit card number for that size of purchase. The problem gets
worse if you want to pay 3 pence for a few seconds of a movie, or
stock-market price updates in real-time. This class of goods - “streaming
commodities” – can also include utilities such as electricity and gas, and
seems ideally suited to such real-time micro-payment.
Pricing of software upgrades is another example. Real Player may cost you
nothing to download the basic player, but who is going to pay $29.95 for
the upgraded version? Pitching this at 50 cents would garner a whole new
market of willing customers. Inappropriate pricing models, held-back by
out-of-date payments technologies, are shackling development of these new
markets.
The problem for businesses wishing to accept these alternative forms of
payment comes with trying to choose between the many fledgling systems on
offer. There are too many to choose from; it’s not clear how secure they
might be for the business or its customers; and there is still the problem
of getting any payment made in this Internet “currency” back into real
pounds or dollars. But, despite these market hurdles, innovative companies
are succeeding in breaking new ground and in gaining a significant market
share from traditional payments methods.
Take PayPal. This upstart US based company hit on the bright idea of using
email as a means of enabling purchasers to send “I have paid you $x”
messages to a payee. Purchasers transfer funds to a PayPal account from
either a bank or credit card. Once there, these “funds” are easily
transferred, simply by moving a software pointer that locates the funds to
the new owner. PayPal realised that individuals selling surplus goods
through the giant US eBay on-line auctions site would find the system an
ideal way to get paid. When it set the cost to these sellers at about
$2.00 per transaction – far below a credit card charge – their success was
almost guaranteed. Now, with some 8M customers and rising, PayPal has
tuned its attention to small merchants, deliberately attacking the
established VISA and MasterCard customer base.
Even without the rise of Internet-based payments schemes, the dominance of
the credit card as the preferred method of consumer payment may have been
under serious threat. First, the debit card has, in recent years, begun to
erode the love affair with the credit card. Now, pre-pay cards for mobile
phones and utility payment are accelerating this trend. A new generation
of customers who manage financial obligations on the basis of the cash in
their pocket or purse is driving change.
Although PayPal is a rising star in the e-payments firmament, other
concepts and approaches are also on the horizon. An expanding range of
payments options is becoming available, each with its particular
characteristics and features. Although the global appeal, understanding
and acceptance of the credit card will take a long time to dislodge, these
new Internet payment vehicles promise a significant challenge to the
status quo. But, in doing so, they will add yet another layer of options
for the consumer to understand. They will therefore only succeed if they
are simple to use and offer clear advantages over existing methods.
One specific trend of interest to merchants and businesses in this
fragmenting environment is the possibility of moving more closely towards
bearer-based methods of payment. These methods are the digital equivalent
of cash: when digital “coins” are used in payment for goods, value is
transferred instantly, and the normal delays and costs associated with
clearing and settlement of a credit-based payment - such as a cheque or a
credit card - are eliminated. Merchants receive value “now”, and the
complexities of book-entry and checking - needed to ensure that due
payment is received - can be reduced or eliminated.
In theory there can be considerable costs savings in such a scheme
compared to credit methods. But these costs are largely embedded in the
existing banking and financial infrastructure. Moving to such a world
would not be easy, given the income that these institutions receive from
operating today’s payment schemes. Nor, in their defence is this cost
without benefit. Credit-based payments provide the consumer with a form of
insurance: against the charge that payment was not received (repudiation),
or that the goods were not received or were below quality. But, for
serious growth in new global on-line markets – especially for streaming
commodities - reducing the cost of clearing and settlement, through
mechanisms such as bearer-based payment systems is a key enabler.
With the continued rise of the Internet, the forces for innovation seem
set to drive upheavals of truly tectonic proportions in the payments
arena. Many of these novel ideas seek to undermine six hundred years of
payments and accounting history, and this legacy will not be undone
overnight. Unfortunately, as with many historical shifts, the incumbents –
in this case Banks, Credit Card companies and other payments operators -
are ill positioned either to seize these changes or to benefit from them.
Major advances in the use of alternative forms of payment are likely to
emerge in niche markets such as streaming commodities or other low-value
product areas. As always, the secret of success will be in divining the
new habits of the consumer and doing so ways that can make money for the
challengers.
© BusinessNext Ltd 2001 All Rights Reserved
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Chris Ogden runs BusinessNext Ltd in the U.K. He specialises in
Assisting organisations to embrace e-business and exploit digital money
opportunities. BusinessNext provides strategy, executive education and
change consulting services.
Copyright 2001 Chris Ogden, All Reproduction rights are retained by the
author and duplication in whole or in part is expressly prohibited
without written permission of the author.
Web: www.business-next.com
Email: chris@business-next.com
Voice: +44 20 7428 0502
Mobile: +44 7836 317 419
Fax/voicemail: +44 870 137 3866
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[7] Unknown Hero
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I would like to dedicate the first edition of the Liberty Impact Privacy
Newsletter to a man who is considered a hero by many privacy advocates.
Here is a brief history of this champion of privacy: Phil Zimmerman.
LINK: http://jeffersonreview.com/articles/2001/082001/hero.htm
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[8] Quote of the Week
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"Let us render the tyrant no aid; let us not hold the light by which he
can trace the footprints of our flying brother."
-- Frederick Douglass, Narrative of the Life of Frederick Douglass, an
American Slave, Written by Himself [1845] (Toronto: New American Library,
1968), p. 106
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See you next week! Please help spread the message of liberty and forward
this newsletter to your friends and associates! If you have comments or
suggestions or would like to submit an article or essay, please reply to
this e-mail. Thank you for reading Liberty Impact.
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