On Bitcoin

There have been quite a few mentions of bitcoin recently in the press, especially on slashdot. This virtual currency phenomenon is quite fascinating. Based purely on mathematics, the virtual bitcoins are created by searching through vast quantities of numbers looking for those with just the right properties. Each bitcoin (or portion of a bitcoin) is assigned to one and only one ECDSA public key, and only the user that knows the corresponding private key has the ability to give the bitcoin to someone else. Transactions are tracked by a loose collection of peer-to-peer servers, each of which takes in a block of transactions and attempts to compute a nonce value that gives rise to a hash with a certain number of leading zeroes. Once one of the servers finds such a nonce, it distributes the resulting block to the other servers and the process of looking for a new block including later transactions begins. The servers are motivated by the collection of transaction fees that are indicated by the spender in each transaction; essentially, this fee acts as a “bounty” for including the transaction in a record block. There is also currently a fixed amount of bitcoin awarded for each new block, although this will eventually go away. At that point, there will be only a fixed number (21 million) bitcoins in circulation and the transaction servers will run solely on the transaction fees.

I say the phenomenon is fascinating because, although bitcoins are just numbers with no intrinsic value outside the fact that they are mathematically interesting, there are people out there that will buy your bitcoins for real money. As of this writing, each bitcoin is worth approximately $18.40. Why is this happening?

Much has been made of the recent speculative bubble in bitcoin and the inevitable comparison to a Ponzi scheme has been made many times. Some have argued that the instability might make bitcoin unsuitable as a currency because it is not a reliable store of value.  (Btw, that last link is a hidden service on Tor. You won’t be able to view it unless you have Tor installed). The Keynesian argument is trotted out that deflation in a currency leads to hoarding and a slowdown in economic activity which leads to a further increase in the value of the currency. A tax on money holdings is one proposal designed to encourage spending and get the economy moving again.

The decentralized nature of bitcoin leads to a somewhat-anonymous system. While it is true that every transaction is tracked in the block chain history, there is no completely reliable way to tie individual users to individual transactions. It’s as if the whole table of everyone’s bank accounts and transfers between bank accounts were exposed to the world; however, every user can potentially have an infinite number of bank account numbers and there is no cumbersome know-your-customer regulations required when opening a new account. This privacy feature has led to the use of bitcoins to buy and sell illegal drugs, for example. (Sorry, another Tor hidden service.)

Lack of a central authority also means that there is no enforcement mechanism for debts. This is a key difference from fiat currencies which are all about debt. It is really the debt that weighs down an economy during times of deflation, as the payments become more and more difficult to make. It is the use of government force, including the power of taxation, that gives fiat currency its value.

This is where the arguments against bitcoin on the basis that it is inherently deflationary break down. Bitcoin is outside the control of any government and there is no way to force anyone to give their bitcoins to someone else. Based purely on the mathematical rules laid out by the bitcoin founder and followed by the vast majority of transaction servers, each fraction of a bitcoin is owned purely by the public key on record in the block chain. If the owner is careful to hide his real identity there is no way to force him to give up his bitcoin. It is a purely cash-on-the-barrelhead economy. Neither a borrower nor a lender can you be.

So from where exactly does bitcoin derive its value? We once used gold for money, and its value currently far exceeds any industrial demand for it as a pure commodity. Bitcoins seem to satisfy all the major requirements of money: they are scarce, standardized, easily divisible, and unforgeable. The only thing missing is any kind of tangible value outside of their use as a medium of exchange. But then, we currently use paper and electronic fiat currency about which the same observations can be made. Is bitcoin subject to speculative fluctuations? Yes, but then, so are many other commodities. Maybe that’s the price of freedom. Whether a virtual currency free of violence will have any value years from now is hard to tell. It may go the way of wampum and seashells that were once used for exchange. Then again, the phenomenon might just be here to stay.

PGP Key

In case you need to contact me privately, I have created a PGP key for mccap AT freeovernetfoundation.org.  You should be able to retrieve this key over the https link above and gain some assurance that it is authentic.  The key fingerprint is:

5FC7 4E45 8AF6 9B5E 519A  D553 5EC3 D358 30D5 7BDB

If you want to learn more about Pretty Good Privacy, please check out the Wikipedia page.

Although some might say it weakens my security to disclose the steps I’ve taken to protect the private key, I think it’s an interesting topic and I’d like to post a bit about it.  I’ve set up the private key to live inside an encrypted home directory on my netbook, which stays with me most of the time, protected also by a strong passphrase.  There is a backup of the private key on a USB flash memory stick partition encrypted with LUKS.  This stick is kept off-site in an undisclosed location.

I read and compose encrypted mail using Mutt locally on my netbook, downloading messages from GMail over their IMAP service interface.  Mutt can natively transmit the mail back to GMail over TLS-protected SMTP.  Mutt integrates nicely with Gnu Privacy Guard (GPG) which comes as a Debian package.

I’ve also uploaded the key to the major PGP keyservers.  Please note there is an older revoked key floating around too which shouldn’t be used.  I had an accident while re-installing Linux and lost that private key.  Always have a backup!

Load up the key, and please give it a try!

Networks and States

I recently finished reading Networks and States: the Global Politics of Internet Governance by Milton Mueller.  I highly recommend this book to anyone interested in the new governance institutions that are springing up around us.  Mueller admits forthrightly in the introduction that his book takes a normative stance on many of the issues surrounding Internet governance; however, this is fine with me, as I agree with most if not all of his normative assumptions.  While admitting that many of the early cyber-libertarians who thought that the very technical underpinnings of modern networking would lead to certain political outcomes were somewhat naive, the book has a decidedly libertarian slant that holds out hope that the new institutions spawned by the Internet will at least in some ways be independent of the old regimes based on nation-states.

Mueller describes three case studies (the 2004 Indymedia takedown, the 2007 distributed denial-of-service attacks in Estonia, and the 2008 censorship of a Wikipedia entry on the Scorpion’s Virgin Killer album art by the UK-based Internet Watch Foundation) that illustrate how informal, multi-lateral networks of various state and non-state actors can take actions that have wide-ranging impact (often with unintended consequences) in a way that evades the accountability mechanisms (such as judicial review) usually built in to more traditional governance mechanisms based on the laws of a nation-state.  He then describes the attempts of the United-Nations centered institutions such as the ITU to come to grips with the problem of network governance, including the World Summit on the Information Society that has ultimately evolved into the Internet Governance Forum.  In a nod to a more quantitative form of analysis, Mueller presents some graphs of relationships among the participants drawn from interviews.  Together with the anecdotes, it is a history lesson that we should all take to heart; the most interesting part of the process is how civil society, a loosely affiliated collection of non-state interest groups, has risen to claim a place in the governance process.  Perhaps the most successful of these groups have been the Organically Developed Internet Institutions (ODii for short) based around ICANN, the RIRs, and the IETF.  Mueller laments the lack of inclusion of other civil society participants in the initial Multistakeholder Advisory Group (MAG) of the IGF, but at the same time his history of the ICANN’s Non-Commercial Users Constituency (NCUC) and the civil society organs of the WSIS are telling of the difficult challenges in instituting representation for stakeholders that have themselves a fuzzy and changing institutional structure.  While it is easy to imagine civil society as a homogeneous group of high-minded individuals banding together to fight for human rights against the big bad UN club of dictatorial powers, it is all too easy for bad actors (such as those aligned with a repressive regime like Tunisia) to stuff the ballot box with puppet organizations and claim legitimacy on an equal footing with the likes of the EFF.

The final chapters of the book cover the main issues that are currently driving discussions on Internet governance, including the protection of intellectual property, security of infrastructure and other national interests, censorship of pornography, and the allocation of names and numbers from the global DNS and IP address registries. The final chapter of the book is an attempt to synthesize a possible future from the conflicting forces described earlier; Mueller argues that we should be prepared for a world in which both governments and networks of non-state actors play a role in handling the conflicts that arise in a future network environment.

Many of the issues raised in the final chapters are intertwined; for example, allocation of DNS names involves the collection of personally identifying information for the WHOIS database which provides the lawyers the information they need to begin serving process on those that post copyrighted material.  Similarly, this identifying information can be used to hunt down and silence pornographers and dissident human rights voices.

While Mueller examines some of the issues around the DNS blacklists that help in the fight against spam today, he does not fully appreciate the importance that whitelist reputation services will have in the future online environment.  The manner in which personally identifying information is collected, vetted, and disclosed by these reputation services will have a profound effect on all aspects of Internet governance.  Rather than compromise with the nation states, I would hope that we can build an institution that can stand up to them when necessary, protecting the identity of human rights advocates and others from the use of violence against them.  My proposal for Distributed Identity Escrow is one potential solution that provides the necessary accountability to deter spammers and other abusive users while protecting the privacy of good people.  By carefully creating a distributed network of identity repositories, disclosure of a linkage between an online pseudonym and a real-world identity would require collective action; however, the publication of a whitelist at a well-known location provides a center of hierarchical control that would lend itself to a powerful network effect and concentration of power (Mueller would seem to argue that such concentrations of power should rightfully be constrained by the state).  The technology described in my whitepaper is fairly simple and straightforward in terms of the capabilities of modern cryptography and I believe it is inevitable that someone will organize a network like this someday.  However, unlike the historical determinism espoused by the crypto-libertarians, I am under no illusion that this will be an easy task.  Powerful interests including nation states will demand their access to WHOIS-style information for all online identities.  It will require a network of dedicated human rights volunteers willing to brave the perils of imprisonment or worse to protect the identities with which they have been entrusted.

Mueller’s audacity to question the pre-eminence of the human institution known as the nation state is an admirable start.  Just how far are you willing to go to build something better?

Crypto-Arbitration

The institutions that mediate trust on the Internet are still in their infancy.  The modern Certification Authority is a curious beast.  Usually run as a for-profit corporation, the CA issues “certificates” that serve to bind a public key with an identity.  The person or organization to whom the certificate is issued (the “subject”) has to prove to the CA that they are the legal owner of the presented identity (which could be a domain name or the actual legal name of a real person) and that they control the private key that corresponds to the given public key.  Then, the CA creates a certificate containing the public key, the identity string, and a digital signature made with the CA’s own private key.  The subject can then hand out the certificate to others with whom he interacts (“relying parties”) who can independently validate the CA’s signature on the certificate (the public keys of the CAs are presumed to be widely distributed and well-known) and, through a cryptographic key exchange protocol, can verify that the entity with which they are interacting does control the private key corresponding to the public key in the certificate.  The relying party can then rest assured that they are dealing with the entity named in the certificate, and can trust the results of any transaction.  Right?

Wrong.  Verification that the subject is the legal owner of a particular string of characters in no way implies that the subject should be trusted.  The ICANN-administered DNS regime does a pretty good job ensuring that domain names are uniquely assigned and resolving trademark disputes, but all sorts of miscreants can and do register domain names and use them to commit fraud.  The services of a CA, especially one that merely verifies the ability of a subject to receive e-mail at a specified address, are similarly value-free.

Real trust depends not only on verifying the identity of the contact, but also making a value judgment about the person(s) behind the name string.  A history of prior interactions can guide this judgment, but what if such a history doesn’t exist?  What if you need to make a decision about whether to read an e-mail sent to you from someone you do not know and have never heard from before?  It is here that you need to query a source that you trust about whether the new contact should be trusted—you need to check his reputation.

Online reputation systems based on Internet Protocol address have been around for some time.  These are usually lists of IP addresses with a negative reputation, known for generating spam or other unwanted traffic.  A recent IETF standard called Vouch-by-Reference would allow for the publication of reputation based on a domain name.  A reputation service could use VBR to publish a list of well-behaved domains using whatever criteria it saw fit.  Obviously, if the service is to be relied upon in any way by a community of users, it should have policies in place to vet potential listings and ensure that bad-guys aren’t allowed in.

The kinds of value judgments required of such a service are exactly the ones that organizations such as ICANN (which strives to maintain its legitimacy as a global governance organization) and for-profit CAs shy away from.  Any definition of abusive behavior that would get a name removed from the good-reputation database is likely to be contentious and highly political.  While we’re in the business of making value judgments, we might as well go whole-hog.  Here’s a partial list of offenses that would get you kicked off my list, if I were in charge:

  1. Committing fraud, in any of its various incarnations.
  2. Sending unwanted messages.
  3. Disclosing private information of another user to an unauthorized party.
  4. Advocating violence of any form, except in very limited cases of self-defense.
  5. Expressing racist or homophobic opinions.
  6. Questioning my right to kick you off my list.

As you can tell, these rules could get pretty arbitrary.  The only important quality is that the rules represent a set of values that is held and respected by the community using the reputation service, and that their application is accepted as just by the community.  As they evolve, I expect that reputation services will emerge as venues for settling disputes of all kinds among the members listed there.  As an Internet organization with global scope, a reputation service could provide an arbitration forum that crosses national boundaries and that serves as a conscience to the world.  By committing himself to arbitration of disputes when joining, a member could even be legally bound by decisions rendered in those nations that have arbitration laws on the books.  Even in the absence of such laws, there is one sanction that is certainly always within the power of a reputation service: removal from the list and banishment of any future enrollment.  If the service becomes a ubiquitous part of daily life (such as in the conduct of e-commerce transactions of all sorts) banishment could be quite an effective deterrent to bad behavior.  A system of justice based on these principles could be the very embodiment of a more libertarian court system similar to the ones espoused by Murray Rothbard.

Arbitration clauses are typical in the subscriber agreements and relying party agreements of most major CAs; however, in the main they are designed to resolve disputes about whether the CA did the job it claims to do: verifying legal ownership of a particular string of characters by the entity controlling the private key corresponding to the public key in the certificate.  An interesting exception is the dispute resolution policy of CAcert, a not-for-profit CA based in Australia.  It would appear that they bind their subscribers to arbitration of all disputes, not just those involving malpractice by the CA itself.  They currently include a liability limit of €1000, but revocation of an issued cert and exclusion from the community would be a more common sanction.  CAcert will also issue anonymous certificates that are traceable to the user under the direction of an arbitrator.  This is similar in some ways to my Distributed Identity Escrow proposal, although I think more security is provided by distributing the identity linking information instead of centralizing it.

The future is going to be an interesting one.  I don’t expect that nation states will react kindly to the emergence of dispute resolution services that offer greater privacy to their users while undercutting the more traditional forms of justice based on the use of force.  Time will tell whether the new global institutions will be allowed to take root and bear fruit, or whether the old guard will be successful in suppressing them.

Distributed Identity Escrow

I’ve managed to jump through all the publication clearance hoops at my day job to finally get out my paper, “Distributed Identity Escrow: Toward a Scalable, Privacy-Preserving Reputation System.”

The paper describes what I hope to be a central activity of the Foundation in the future: enrolling members in a distributed reputation system that will provide both privacy and accountability for their electronic communications.  Administration of the pseudonym database would be centralized and under the control of the Chair (these would simply be DNS TXT records of the form yourdomain.com._vouch.fofnd.org), but enrollment of users would be a distributed operation with a network of “proxy registrars” recording identifying information and storing it locally to be retrieved in case of abuse by the user.  If a member sends an abusive message (such as spam or advocating violence) then, at the discretion of the Chair, the user’s identity would be retrieved and all of his pseudonyms would be removed from the reputation database.  (At this point, he would also be expelled as a member beneficiary of the Trust.)  His photograph would be placed on a blacklist and distributed to all proxy registrars so that he couldn’t register any more pseudonyms.  The scheme also supports a “remote registration” which allows you to get a new pseudonym without showing up in person at a proxy registrar, provided you already have at least one existing pseudonym in the system.  I also outline in the paper how payments for pseudonym registration and other message processing could be handled in a privacy-preserving way.

Please read the paper, and if you have any questions send me an e-mail or post comments here on the blog.  We can also use fof-discuss to hash out any issues you may have.  The paper includes an extensive survey of related work that might not make much sense to some readers, so feel free to skip to the section on the registration protocol.  Be sure to check out the section entitled “Resource Allocation,” which describes a settlement and payment system.

Comments welcome!

Draft Trust Declaration

After some research, I’ve decided that the Free Overnet Foundation should take the legal form of a charitable trust.  This provides the greatest degree of flexibility in terms of specifying the administrative policies that I have in mind, while minimizing interference in the form of government oversight.  A trust isn’t required to file annual reports such as a non-profit corporation would be.

A draft of the trust document is available on Google Docs.  I think Docs provides a pretty good collaboration framework for this kind of work; if anyone wants to make changes directly to the document let me know and I can invite you as a collaborator.  Once we have final agreement on the text (and the complete set of initial trustees) I will print it out and visit a notary public to execute it, and put a scanned copy (PDF) on the website.  I’ve put a lot of thought into creating an organization that will be resistant to capture by big business interests.  In many ways, the governance model is an explicit codification of an arrangement that often arises informally in open source software projects: people who contribute to the organization, and who share in its philosophy, will be rewarded with shares that allow them to have greater say in the operations of the organization.

I’ve also set up a mailing list for discussion of all aspects of the foundation; you can join the list on the fof-discuss information page.  I envision that this will remain as an informal discussion list for the life of the Foundation, and I will create a more formal fof-business list once the trust is up and running for making motions and collecting votes.  That way you can look at the trust document and the complete archive of fof-business to understand all of the policies and procedures that are currently in force.

Any lawyers out there (I am not one), I would be highly interested in your feedback on the document.

On Money and Banking

As everyone is aware, the world’s economy is in trouble right now.  For your own economic survival, it is imperative that you educate yourself so that you can understand what is going on and how to protect yourself.  Unfortunately, most of the information and advice that you see in the mainstream media and that you get from the financial industry is self-serving drivel designed to separate you from your savings.

It’s impossible to get a good understanding of where we are without a good grasp of history.  I strongly recommend that you read Murray Rothbard’s important work, A History of Money and Banking in the United States: The Colonial Era to World War II.  For an overview of monetary events since World War II, Wikipedia (at the time of this writing) has a decent article.  Suffice it to say that the history of money is essentially a long chain of broken promises.

If left to their own devices, people for centuries have gravitated toward the use of gold and silver as money.  Then some enterprising individual gets the idea that the precious metals can be stored more securely and conveniently in a central location, and he issues paper receipts that can more easily be carried and transferred from person to person in commerce.  It is also straightforward at this time to invent the demand deposit account, which is a promise by the warehouse to issue precious metals in specie (usually coin) form on demand whenever the customer should need them.

From there it is a short leap to fractional reserve banking, where the repository has outstanding more notes and deposits than it has actual specie with which to back them.  This situation would result from either loaning out some of the deposited specie or by creating new notes and deposits that are then lent out at interest.  Either way, at this point, banking becomes a confidence game.  It should be obvious that if all note and deposit holders were to attempt redemption at once, the scheme would collapse forthwith.  Indeed, history is replete with runs on banks that have been too profligate with note and deposit creation.  Such crises of confidence seem to occur in waves, alternating with periods of euphoric expansion in which bankers exploit the public trust in their institutions by expanding the supply of notes and deposits on an ever-smaller proportion of reserves.

When the inevitable crash takes place, the bankers invariably appeal to government to release them from their contractual obligations to redeem notes and deposits.  Governments usually oblige, allowing the banks to remain open when they should be liquidated in bankruptcy.  In 1933, Franklin Roosevelt declared a bank holiday and suspended payments nationwide in an effort to stop the bank runs of the Great Depression.  The general population was attempting (rightly so) to check out of the banking system made fragile by the over-expansion of credit in the 1920s.  When he confiscated all privately held gold bullion, he eliminated a vital escape route that people could have used to protect their wealth from the storm.  Instead, the people were stuck with irredeemable Federal Reserve Notes and dollar-denominated bank deposits that were then devalued by FDR from $20 to an ounce of gold to $35 an ounce (of course, this exchange rate was only available to foreign governments for settlement of trade imbalances).  Big government programs throughout the history of the United States have depended on the monetization of the fiscal deficit, whether it be the printing of Continentals during the revolution, the Greenbacks of the Civil War, or the easy-money policies of the Federal Reserve since 1913 that funded two world wars in addition to numerous other more minor skirmishes, along with an ever-growing welfare state.

Some argue that fractional reserve banking is itself a fraudulent activity and should be prohibited.  To the extent that some depositors believe their accounts are backed 100% by actual specie, this view has some validity.  However, rather than outlaw the fractional reserve bank, I would rather educate the public.  When you open a deposit account at a bank, you are making a loan.  There is always some risk that the loan will be defaulted.  Customers should research the condition of prospective banks and make educated decisions about where to place their funds.  For example, individuals might consult a source such as Institutional Risk Analytics to help them in this process.

Of course, people today don’t do this because of ubiquitous federal deposit insurance.  The average consumer has far less than the FDIC insured limits, and so feels comfortable banking anywhere the FDIC logo is displayed.  This guarantee has led to complacency not only on the part of the depositor but also of his bank.  Until very recently, banks were usually fully loaned up to the maximum legal limit, keeping only the bare minimum of reserves against outstanding deposits (officially 10% of transaction accounts in the US, but nota bene).  The government sponsored enterprises (Fannie Mae and Freddie Mac) were buying up mortgages with the implied backstop of the federal government, and the Federal Reserve was adding money to the system through its open market operations.  The banks assumed that this expansion of credit could go on indefinitely, and under that assumption, they made loans that today look, well, pretty stupid.  If you were to mark these loans to their current real value, most banks would be insolvent.  That is, the total value of their liabilities (deposits) would greatly exceed the total value of their assets (loans plus reserves).  The current environment is like a dry forest full of tinder waiting for a spark that will set off a wildfire of bank runs.  The banks and the Fed know this.  In an attempt to head off a crisis of confidence, the Fed has been dramatically increasing its balance sheet by purchasing assets with newly created money.  The banks have been accumulating most of this money as excess reserves, and the Fed is paying interest on these balances as part of its scheme to keep the extra money from being multiplied by the reserve ratio into hyperinflationary proportions.

So what happens next?  What we have witnessed so far could be described as a trip down the inverted money pyramid.  The crisis of confidence has spread from the wide top of exotic financial assets such as derivatives and securitized sub-prime mortgages, to all of the housing market, to investment banks, to commercial banks.  The Fed and the US Treasury have been there every step of the way with bailout after bailout to essentially turn the bad money into good.  Will they ultimately be willing to redeem all those excess reserves into Federal Reserve Notes should the public demand it?  On this point, be sure to study carefully footnote 7 of that Fed paper.

Clearly, there are more bank failures in our future, and the FDIC insurance fund has already run dry.  I have no doubt that the Fed will print all the money necessary so the FDIC can pay depositors.  But, ask yourself, what will the money be worth when that day comes?  What will happen if our foreign creditors stop buying Treasury bonds?  In the third quarter of 2009, the Fed essentially bought about half of all the issued Treasury paper.  What happens when the Fed is the only taker, and we have reached the point where the government operates by outright monetization of its debt?  There is no political will to bring our deficit under control; it would require dramatic reductions in spending or oppressive tax increases to bring it about.  The United States is on a path to default on its obligations.  The default will either be outright, through missed interest payments on the debt, or it will take a more insidious form through massive depreciation of the currency and hyperinflation.

So what can you do to protect yourself and your loved ones from the coming storm?  Thankfully, the right to own gold was restored to the people of the US in 1975.  Action in the price of gold should clue you in to the oncoming financial trainwreck.  You should consider checking out of the teetering banking system and obtaining some.  Learn how to set up a wire transfer from your bank account, and then look up one of these fine folks:  California Numismatic Investments, Tulving, or APMEX.  There is no substitute for having real gold coins in your physical possession.  Be prepared to defend your hoard from jack-booted thugs and other criminals, using whatever means you deem appropriate.

Longer term, keep watching this space.  I have the inklings of a plan for how to transform our monetary system into one that will serve us better.  More to come.

On Telecommunications Policy

S. Derek Turner over at FreePress.net has compiled an interesting history of telecommunications policy in the United States, and makes an argument that we should re-regulate to promote greater competition in both the last-mile and middle-mile markets.  I agree with the sentiment that operators who have relied on public easements, public rights-of-way, and spectrum licenses to install facilities owe a duty to the public to perform as common carriers.  The corporate owners of copper, cable, and fiber plant do indeed show every sign of ignoring this obligation, in particular by discriminating against certain types of traffic (especially those that might compete with their own video offerings, or their own voice-over-IP solutions) and by threatening to extract tolls from popular websites such as Google.

However, I am not convinced that heavy-handed government regulation is the answer to this problem.  It is interesting to note that discrimination and toll-collecting can also run in the opposite direction, where content owners can refuse to serve customers of certain Internet Service Providers (ISPs) that don’t pony up a fee.  Customers are sure to complain when they can’t reach all the content they want, with the quality they want, and will put pressure on ISPs to open up.  There are sometimes good reasons to discriminate in favor of certain traffic—I definitely want my emergency call to 911 to take precedence over my neighbor’s pr0n.  And a police officer responding to a disaster should possibly get even higher priority.

Absent the declaration of an emergency, I’d prefer to see congestion pricing when resources are scarce.  An auction for bandwidth is a fair way to allocate scarce resources.  However, I wouldn’t want the ISPs to run these auctions: it would create perverse incentives for them to hold back capacity to drive up prices, ala Enron.  Also, I would want to put in place a mechanism that would ensure the collected revenues get used to increase capacity on those congested links instead of going to line the pockets of shareholders.  I think it’s possible for users to band together and create a kind of bandwidth consumers union that can make impartial decisions about who gets access to bandwidth during periods of congestion and that can disburse revenues to ISPs under terms that require expansion of capacity where it is needed.  I hope the Free Overnet Foundation can play a role here.  More details to follow in future posts.

First Post

Welcome to the Free Overnet Foundation blog.  This will be an occasional series of notes on network governance, the economy, and politics in general.  The Foundation is an attempt to bring together a group of like-minded individuals for promoting freedom and individual human rights on the network, and this blog will serve as a focal point.  Eventually, we will open up the Foundation but for now membership is via invitation only.  Only members may post comments here.  Until the spammers figure it out, anyone is free to send e-mail to username@freeovernetfoundation.org, where “username” is the handle used in the blog.  Mine is “mccap”.

About me: my name is Peter J. McCann.  I am currently serving as the Chair of the Foundation.  I’ve been active in network protocol standardization for more than ten years, and I’ve come to hold some strong opinions on how the network should be run.  My politics are basically libertarian, although moreso: I think with the right civil society institutions in place, the private sector is capable of taking on many of the tasks we now entrust to governments, including the enforcement of private contracts and safeguarding the public against fraud.  Charity is important, but it should be voluntary instead of compulsory.  We all have a moral obligation to end violence in the world, including that perpetrated by governments on our behalf.

Please read our mission statement to get a better understanding of our goals.  More to come.