Will Cyber Criminals Run The World?

Picture this scene from the near future: organized crime gets hold of encryption technology so powerful even IRS supercomputers can’t crack it. An underground electronic economy emerges, invisible to U.S. tax code. The Federal Government, unable to replenish its coffers, let alone fund a standing army, shrinks until it wields about as much power as a local zoning board. Militias and gangs take over, setting up checkpoints at state borders and demanding tribute of all who pass.

This scenario, in which crypto-wielding cybercriminals take over the world, has become a standard plot device in turn-of-the-century science fiction. I’ve even used it once or twice. But there is good news on this front. Running the world turns out to be surprisingly challenging. It isn’t something an evil mastermind can do just by hitting return on his keyboard.

Encryption algorithms–the mathematical rules by which secret codes are made and broken–have been at the center of a simmering spy-vs.-nerd war since the early 1990s. The anti-encryption forces, which control the technology through laws originally passed to regulate munitions, are led by a handful of spooky U.S. government agencies (such as the FBI and the National Security Agency) with support from the White House that rises and falls from one election cycle to the next–more on that faction later.

The pro-encryption forces are the nerds; with a nod to the cyberpunk school of science-fiction writers, they call themselves “cypherpunks.” Though their numbers have always been small, cypherpunks are brave, bold and highly motivated. And they have some programming talent.

Being nerds, however, they are rather unworldly. They are similar in dress, zip code, outlook and philosophy to the Berkeley free-speech activists of the early 1960s, except that the cypherpunks have a bigger megaphone: the Internet. They can encrypt free speech and software as well, so various uptight authority figures cannot stop their heroic data.

The cypherpunks, like the hippies, love to tilt against windmills. Their most glamorous imaginary weapon is not free speech or free software or even free music. It is free money, anonymous electronic cash and untraceable digital funds, free of all government oversight and laundered over the Internet. Dotcom stocks have turned out to be surprisingly close to this utopian vision. They are rather destabilizing.

Luckily for taxmen worldwide, however, money isn’t “money” just because some hacker says it is. We don’t secretly print our own personal currency on pink paper at Kinko’s–not because it’s impossible but because nobody would want it. If Alan Greenspan were a masked Kleagle in a big white crypto hood, nobody would use dollars either.

Offshore “data havens” are another piece of classic cypherpunk vaporware. Here’s the pitch: just subvert one little Internet-hooked island country, say Tuvalu (.tv) or Tonga (.to), let it pass a bunch of pirate-friendly laws, and you can store anything there that American computer cops disapprove of. This might yet become a real business opportunity if the Internet gets better policed.

But piracy only looks like the free-and-easy island life. It’s actually hard work, because it lacks efficient economies of scale. Once you start seriously churning out the product, you quickly become very visible: warehouses, trucks, employee payrolls–it all adds up. The sweet charm of piracy is free, daring little “us” vs. big nasty “them.” But any “us” that gets large enough is automatically a “them.” Bill Gates was once a hippie programmer, a college dropout from Seattle. But a hippie with a billion dollars is no longer a hippie; he’s a billionaire. A hippie with $50 billion is considered a trust.

It’s not that a cybercriminal world of conspiratorial smugglers, scofflaws, crooked banks and tax evaders is impossible. Such countries already exist. It’s just that they’re not anyone’s idea of high-tech paradise. They are places like Bulgaria.

It’s amazing how clunky and unproductive an economy becomes once its people despise and subvert all its big institutions. Members of the Russian mafia don’t shoot people because they like to. They shoot them because in Russia these days a bullet is the quickest way to get things accomplished. In such places, industrial consumerism just curls up and vanishes. Black markets take its place; there are no more fast-food chains, so everybody eats lunch out of the trunk of a car.

If everything on the Net was encrypted and belonged to small groups of with-it hipsters, you would never find a bargain there. You would never find much of anything. You’d have to wait till some hacker in the know was willing to give you the power handshake and turn you on to the cool stuff. That might not cost very much, but it doesn’t feel very free.

It has taken some anxious years of real-world experience for people to figure out that crypto turned loose in cyberspace will not make the world blow up. Crypto’s more or less around and available now, and no, it’s not an explosive munition. The threats were overblown, much like Y2K. The rhetoric of all sides has been crazily provocative.

One expects that of fringe people in Berkeley. The U.S. government, on the other hand, should have been fairer and more honest. The crypto issue, which is still smoldering and poisoning the atmosphere, could have been settled sensibly long ago. We would have found out that some small forms of crypto were useful and practical and that most of the visionary stuff was utter hogwash. It would have shaken out in a welter of disillusionment, just as Flower Power did. But we never got to that point, thanks mostly to the obstreperous attitudes of the anti-crypto forces, who are basically spies.

The FBI does most of the upfront p.r. in the anti-crypto effort. The FBI doesn’t like the prospect of losing some wiretaps. That’s just the FBI; it would say the same thing about telepathy if it had it. The true secret mavens of crypto are at the NSA. Spy-code breakers such as Alan Turing invented electronic computers in the first place, so the NSA has a long-held hegemony here. The NSA sets the U.S. government’s agenda on crypto, and it will not fairly or openly debate this subject, ever.

The NSA would rather die than come in from the cold. Frankly, for the NSA, coming clean probably means a swift death. Heaven only knows what vast, embarrassing skulduggery the agency is up to under Fort Meade with its 40,000 mathematicians, but whatever it is, the NSA certainly doesn’t want to stop just because computers belong to everybody now. So the U.S. government has never been honest about crypto and what it means to people in real life. The whole issue is densely shrouded in billowing dry ice and grotesque X-Files hooey. And that’s why crypto is still very scary.

Bruce Sterling is a leading writer in the cyberpunk school of science fiction. His latest book is A Good Old-Fashioned Future