26 March 1998


Date: Thu, 26 Mar 1998 08:02:34 -0500
To: cypherpunks@cyberpass.net
From: Robert Hettinga <rah@shipwright.com>
Subject: Re: Blind Signatures Digital Cash in Russia?

--- begin forwarded text

From: "Maksim Otstavnov" <maksim@volga.net>
To: Robert Hettinga <rah@shipwright.com>
Date: Thu, 26 Mar 1998 07:16:49 +0400
Subject: Re: Blind Signatures Digital Cash in Russia?

    (In fact, I'm not on the list the original msg CC:'ed to, but I think my
    comments on Bob's msg can be useful enough to forgive my netiquette
    violation. Anybody interested is welcome to answer personally.)

> So, I'm talking to somebody from Russia about the wonders of digital bearer
> settlement recently :-), and this morning he comes back to me saying he's
> starting to hear of several people there who are planning on issuing
> Chaumian blind signature digital cash, with payee anonymity, even.

The first prototype (PayCash by Tavrichesky Bank) is live at

   http://195.5.138.171 

and those who read Russian are welcome. I hope the English version of the 
site contents and software will be available soon.

> I don't know if they're denominating things in dollars, or rubles, or what,
> and I certainly don't know if this is really true, which is why I'm here
> asking you guys here about it.

Their current denomination is "petty rubles", "petty yens", "petty dollars"
and "petty liras". With petty banking and exchange, of course.

> I always thought (though I now don't know why I think so) that the blind
> signature patent holds in Russia, but, as the world's only um,
> anarchocapitalist, society ;-), Russians may honor patents in the breach
> more often than not.

Algorithms are not patentable in Russia. Programs, chips topologies and
databases are protected as copyrighted stuff.

> I'm not saying that Russia's a cakewalk these days, but it *is* interesting
> to note the current Russian state (or lack thereof) is about as old as the
> commercial internet, that not many people use Moscow city phone system
> because there are 22 voraciously competing cellphone companies,

MGTS (formerely Moscow state phone monopoly) still has some 90% of Moscow
market. Introducing of per-time charges on local calls this year may change
this.

> In the interest of brevity, we'll ignore their, um, geodesic market for
> armed personal force for the time being, but maybe things have calmed down
> now that their mafia has figured out they can do all the "hostile" bank
> takeovers they want, but ownership doesn't a bank make...

Armed personal force is distributed rather in feudal centralized model than
geodesically... in Russia as well as anywhere else, alas...

> Anyway, I haven't heard of a Russian ecash licensee, certainly.

I heard of several banks and financial companies who tried to apply for
ecash(tm) license but negotiations failed. (I have no first-hand evidence
though). I humbly think there is something wrong with DigiCash's terms. With
all respect for DigiCash technological excellence and Dr. Chaum's
distinguished role in "privacy marketing", their PR... aren't the best PR I
have seen ;)

One more comment: we actully don't need the full interoperability. If
Tavrichesky or anybody else issue "real" currency, it would be enough to have
a market of secondary services of exchanges, e.g. Tavrichesky's erubles to
MTB's edollars, or MTB's edollars to Tavrichesky edollars etc. The exchanges
might be located in some friendly jurisdiction - Anguilla, to say, or Grand
Cayman.

Another comment: current Russian banking rules do not allow fully anonymous
banking. But there is at least one ex-Soviet jurisdiction allowing and
encouraging it, Ukraine. (I'm not sure of Baltic states, Latvia being the
most probable candidate).

> If done in dollars, all that seignorage, and there would be bunches just in
> Russia alone, would be a boon for the Russian balance of payments account,
> certainly.

Really? Anybody can audit _national_ payment balance concerning anonymous
ecash? ;)

But if there are any realistic arguments (on how to improve national
payments balance by encouraging anonymous DBSs) I will discuss them with
Central Bank officials. One opportunity is to have Russian Central Bank to
back private banks' e-currency (according to Lysyanskaya/Ramzan recently
proposed architecture, or anything alike).

Though, ceteris paribus, I would prefer experimenting with fully private
currencies ;) Just much more fun.

> In addition to Russians not having to haul those pictures of Ben around,
> Americans, and the rest of the world, for that matter, could start to
> safely keep and spend their cash on the net, while, of course, earning some
> Russian entrepreneur both purchase premia and seignorage.

An interesting question: who have seinorage on eurodollars? Might "an
enterpreneur" in question be the Gov (either federal, or, to say, Moscow)?

> Irony, thy name might be Russia?

You're virtually welcome...

Thank you Bob for initiating this topic!

Cheers,

-- Maksim Otstavnov <maksim@volga.net> http://www.ice.ru/otstavnov/
--   - chief, Labs of Civil & Financial Crypto
--   - editor, "CompuNomika" monthly
--   - maintainer of The Russian PGP HomePage

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-----------------
Robert Hettinga (rah@shipwright.com), Philodox
e$, 44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
The e$ Home Page: http://www.shipwright.com/