The Code Book

In the University of Texas library stacks, looking for the early history of word processors, I was in the Zs and discovered that my book on codes and ciphers was actually checked out.  It took three editions to get it right.  The first 3000 years were easy enough to understand. I wrote programs in Basic that transposed and substituted right up through the Playfair and Vigenere ciphers.  RSA was a tough nut to crack; and I finally just cut-and-pasted one of their own graphics and quoted their own abstract. 

 As the IBM-PC finally overtook the TRS-80, other amateur cryptographers published more complete books of programs for personal computers.  By 1993 or so, with Phil Zimmermann's PGP becoming common in sig lines and footers, applied personal cryptography sped light years past high school algebra in Basic. PGP is now part of the Symantec suite. 

This week, news about more of Edward Snowden's leaks revealed that RSA (now an EMC label) took $10 million from the NSA and installed weaknesses to allow backdoors to its encryption.

Codes and ciphers are about more than sending secret messages, though there is that.  When the first public key cryptosystems were being publicized in the 1970s, authentication was a suggested application.  How do you validate a digital signature?  If you have the answer to the public key question, then you must hold the authenticating string. Although the first Diffie-Hellman knapsack system was later exposed for weaknesses, the problem itself and the algorithms for instantiating it remain as possible platforms. Others have been invented since.

Whether or not you rely on cryptography, and independent of which (if any) system(s) you choose, codes and ciphers are in and of your daily world. They make credit card transactions and cellphone handshaking possible.  They allow the efficient compression of messages. In fact, the common zip command on your computer is one way to encipher any message. It is easy to break, but the message is no longer in plaintext. Many other simple systems are available.  No better or worse than the Yale or Schlage lock on your front door, they do stop all honest people and many who are not.

Of all the secret messages from World War II, many remain unbroken because the need is gone. Those ciphers have kept their secrets. 

Of all the "unbreakable" codes, the one-time pad and the dictionary code remain easy and effective.

ALSO ON NECESSARY FACTS
Basic: Turing's Truth
Patterns in Pi
Open Secrets
BSides Austin 2013
Visualizing Complex Data

Coins Without Realms

Hayek suggested an end to monopoly banking and an open market in monetary media.  The national governments of the world did not take his advice - at least not directly.  However, innovation continues, of course. Bitcoin is well-known today as the latest in line of development perhaps originating with cryptographer David Chaum, as public-key cryptosystems such as RSA and PGP made it possible to validate anonymous transactions.

Americans have an uneasy love affair with money.  Benjamin Franklin's Way to Weatlh (available here) was quoted at length by Max Weber in The Protestant Ethic and the Spirit of Capitalism.  If we had kept to the capitalism of Benjamin Franklin and Adam Smith, Ayn Rand could not have written Atlas Shrugged. 

When polled on the paper dollar versus dollar coins, Americans overwhelmingly decline the coin and demand paper.  This is nothing new.  For an entire generation, men's wallets have lacked coin purses.  That is why this item from Gizmodo about a portable safety razor, the "Carzor" startled me.  Perhaps a European, this man's wallet is bulging with coins. 

The Carzor fits into your wallet 
but coins may not ... or need not...

Today, even though Americans demand paper, the US Mint strikes dollar coins, currently, the Presidents series. Congress directs the Mint.  The result is in your wallet (or maybe not). 

This past April, the Royal Canadian Mint asked developers to submit proposals for "MintChip" a digital currency.  Responses were thick and the Monnaie Royale Canadienne quickly closed its request.  Forbes commentator Jon Matonis cogently noted: "The point of digital currency, and especially free-market digital currency, is to broaden the avenues for issuance and adoption of alternative nonpolitical monetary units. Most electronic cash systems already expand and revolve around the State-issued currencies although they don’t have to." (Article here.)  
Be that as it may, the winners of the Mint Chip Challenge (Le Défi Cybermonnaie) will be announced September 12, 2012. (Link in English here au en francaise ici.) 

The Royal Canadian Mint has been pushing the limits of its products and markets for over 20 years.  They launched a commemorative 25-cent coin program which the US Mint copied.  The MCR offers coins in 5-Nines gold, .99999 pure, which the US Mint does not copy.   So, their testing the markets for digital currency perhaps indicates the maturity of this medium.  

Cryptographer David Chaum suggested digital currency in the early 1990s, as an application of public key cryptosytems.  Despite - or perhaps because of - interest by IBM and other large entities, nothing came of that.  However, less formally, over the past 20 years e-gold and flooz also appeared and then collapsed, both, in fact, as a result of law enforcement investigations.  While e-gold was ad hoc, flooz actually seemed like a dot.com possibility.  I sold essays on numismatics to a libertarian website.  They paid me in e-gold which I used to buy a facsimile of Noah Webster's 1828 Dictionary of the American Language from a Christian bookseller.  Before my next transaction, the markets were closed.  

One form does seem to have be working.  People do use their iPods to transfer money.  I have seen people buy coffee at Starbucks.  When I mentioned this to a co-worker majoring in physics at the University of Texas, he said that his bank let him transfer money to a friend's credit card when they were out to dinner.  

My interest in numismatics only came late in life and as a direct consequence of my having read Atlas Shrugged long ago.  I have been a member of the Michigan Token and Medal Society (Mich-TAMS); and I have exhibited both coal mine tokens and Bay Bucks community currency at conventions of the Michigan State Numismatic Society.  Hayek only called on governments to recognize that competitive markets in monetary media always have existed and only will continue to evolve. That said, I factor in a memorandum of caution.  Chatting in a coin store, a Mich-TAMS officer reminded me that one foot outside the doorway of a video game parlor, my video game tokens would be deeply discounted.  In other words, theories are nice, but reality is more conservative.   So, with digital cash, we must wait and watch.

Also on Necessary Facts

Mere Gold is Not Enough: Hayek's "Denationalisation"

Numismatics Informs Economics

Debt: the Seed of Civilization

Numismatics: the Standard of Proof in Economics

Objectivism and the Gold Standard

Money as a Crusoe Concept