Achieving Economic Privacy One Data Haven At A Time

I recently had the pleasure of attending an offshore Internet conference on the island of Nevis, in the Eastern Caribbean, called "Lex Cybernetoria II: Voluntary Rule of Law in a Transnational Medium."

The conference attracted a fascinating mix of radical scholars and propeller-head geeks -- including a famous supply-side economist from the Reagan administration; a bevy of world-class financial cryptologists; the director of offshore gaming from Antigua; a Slovenian Web entrepreneur; a member of Iceland's Parliament; the chairman of the Internet Bearer Underwriting Corp.; and the founders of what amounts to the first central bank of cyberspace, who, when they are not busy organizing conferences in exotic places, are quietly issuing gold-backed digital currency.

What made this group different from the think-tank ideologues I've met over the years was not their philosophical defense of free enterprise or their conviction that the Internet will inevitably halt the pervasive invasion of privacy that makes systematic government economic intrusion possible. What distinguished them was the fact that they were actually doing something about it with their day jobs.

While there was little agreement over which technical approach might best hasten the day when individuals and corporations could securely transact business with neither support nor interference from national sovereigns, their belief that the market would provide solutions through Darwinian trial and error was unanimous.

The privacy market took an extraordinary jump with the official launch of HavenCo this month (www.havenco.com), the first carrier-class, Internet data haven. Founded on an abandoned World War II anti-aircraft platform six miles off the British coast, this self-proclaimed independent territory will soon be hosting anonymous data storage and transaction services on tamper-resistant and cryptographically secured servers a mere 3 milliseconds away from London. Using satellite, microwave and fiber route diversity, blending their traffic with other commercial users to raise the political cost of interdiction, HavenCo will be the closest place on earth to a completely free, unregulated and untaxed data market.

For added protection from tort lawyers and machine-gun-toting bureaucrats, HavenCo will not have clear-text access to the encrypted contents of its customer's traffic, whose prepaid accounts do not have to be linked to real-world identities. This means that even when the black helicopters one day arrive to confiscate HavenCo's equipment on some anti-money laundering/terrorist/pornography pretext, customer information will not be compromised.

It sounds wacky. But it's another step along a technology road map that will inevitably enable the separation of economy and state, much like the American Revolution achieved the separation of church and state. HavenCo will temporarily rely on jurisdictional diversity, with additional data havens planned for small countries hospitable to unfettered capitalism, allowing the company to stay in business even if one of its havens goes dark.

But true political independence can only be achieved when operations such as HavenCo can be hosted across the street from the White House. For a suitable architecture, one needs to delve into the quirky realm of the Cypherpunks. While only a design concept today, technology will someday allow the organic growth of a completely distributed system wherein encrypted data is striped across multiple hosting centers, similar to a RAID disk farm, such that no one facility stores enough information to reconstruct anything of value and multiple facilities can be simultaneously compromised without loss of data.

Imagine a sea of servers connected by broadband Internet connections across the globe with terabytes of storage and gigaflops of processing power in aggregate, each server operated as in independent for-profit business, some by multinational corporations and some by teenagers in their basement. How will these server operators get paid, since they won't know who their customers are? That's where Internet bearer settlements come in, using nonaccount-based, anonymous stored value and transaction instruments denominated in units from a hundredth of a penny to a million dollars. Piggyback a digital micropayment stream on top of the data bits, squirt this at the sea of servers, all bidding against each other for a piece of the action, and you're in business, everywhere and nowhere at the same time.

Science fiction? So were submarines, rockets to the moon and pocket computers -- until motivated geeks made them real.