The birth of a new crypto threat to the government

If the spread of social media to the Middle East sparked the Arab Spring, imagine what will happen when people get their hands on crypto tools that allow them to send money, form groups and enter into financial contracts – all with more secrecy than Bitcoin provides.

That’s the startling pitch from Amir Taaki, an early Bitcoin developer now working with an international group of anarchist coders on next-generation software designed to figure it out. The coders believe their system will pose a greater threat to governments than any other internet advancement in the last 20 years.

The group is preparing to launch a test network, a critical early milestone on the road to releasing a finished product, as soon as Thursday afternoon, according to several members and the text of a draft announcement first shared with POLITICO.

Fourteen years after the release of Bitcoin, law enforcement and cybersecurity officials continue to grapple with the fallout from the first generation of cryptocurrency-related technology—from money laundering, to unregistered securities offerings, to ransom attacks. But even as regulators and law enforcement figure out how to deal with the first wave of blockchain networks, developers around the world are racing to deploy more advanced variants of the original concept.

While many of these next-generation tools are being designed to ensure greater legal compliance than their predecessors—or even for use by governments themselves, as crypto’s underlying technology grows in legitimacy and institutional heft—the planned launch shows that radical anti-government ideas remain a driving force in the development of many crypto networks.

The anarchist project is called DarkFi, a reference both to “DeFi” — the nickname for crypto-based decentralized finance — and a 2014 speech by former FBI Director James Comey on the “Going Dark” problem that widespread encryption presented to law enforcement agencies hoping to monitor digital activity.

Representatives of the group say that the members are spread over parts of Europe and the Middle East. Although they frame the software as a tool to shield users from government-sponsored violence, law enforcement officials say the spread of improved encryption makes it harder to catch drug dealers, terrorists and human traffickers.

All of this bothers Bill Callahan, a former Drug Enforcement Administration agent who oversaw money laundering investigations during a two-decade tenure at the agency. He said the potential for advanced encryption to hide crime is worrisome — and that for the sake of public safety, new encryption tools must strike a balance between personal freedom and government oversight.

“We have a reasonable expectation of privacy,” said Callahan, who now works at the Blockchain Intelligence Group, which conducts forensic investigations of crypto activity. “We do not have an absolute expectation of privacy.”

Like many of the newer crypto tools Developed for use by governments and legally compliant businesses, the DarkFi project leans heavily on zero-knowledge proofs, a cryptographic technique invented by mathematicians in the 1980s that enables targeted verification of encrypted information in a way that allows most aspects of the information remains confidential.

Experts who reviewed DarkFi’s announcement and website at POLITICO’s request said the project appeared to be technically sophisticated, though they expressed skepticism about the developers’ vision.

In a sense, the idea is an extension of the mission of the original cryptocurrency, Bitcoin, which was invented specifically to challenge government control over money and banking. As it has spread and gained wider adoption, governments have found ways to mitigate the threat posed by the original cryptocurrency and its immediate successors.

And developers are still trying to perfect blockchain systems that integrate next-generation functionality and secrecy into a single system. Doing so would help fulfill “the destiny of the crypt,” Taaki said, to bring about individual freedom at the expense of governments.

Matthew Green, a Johns Hopkins computer science professor who was instrumental in developing the privacy-focused cryptocurrency ZCash, said he also believes advances in encryption and network design could bring further crypto-driven disruption. But at least for now, he said governments have shown they can and will find ways to crack down on networks used for criminal activity.

“We’re more in the taking-the-cap-off-the-toothpaste phase,” he said. “The toothpaste probably won’t be out of the tube for 10 years.”

Read the rest of the story here.

The high-tech darling ChatGPT now has something in common with Spotify and Zoom. They all operate on a “freemium” model: users get the basics at no cost and access to premium functionality for a subscription fee.

In case you (somehow) missed it: yesterday OpenAI announced its entry into the subscription economy with a $20/month subscription to ChatGPT, its impressive chatbot, built on a family of large generative language models. You can still sign up for free and strike out songs in the style of Nick Cave or ask for it explain the code to youbut the company promises paying subscribers better access to the AI ​​service during peak hours, plus priority use of new features and faster response times.

If you’re thinking, “Wow, that was fast,” you’d be right. ChatGPT was only launched in November; even Spotify, a company that wanted to go subscription-based from the beginningwaited 6 months before early adopters saw restrictions on their free accounts. But again, ChatGPT has just set the record yesterday for the fastest growing consumer application in history.

If all this sounds a little pedestrian for a company that is already sparking serious debates about changing the industry, the economy and humanityremember that OpenAI is still a technology company (albeit one with a slightly unusual structure), and investors have shown lots of love for subscription-based Software-as-a-Service (Saas) businesses for a decade now. This model means predictable, recurring revenue from a user base without relying on niceties like ad impressions.

In the meantime, if you are still looking for a free, fast version of ChatGPT, you may need to go to Microsoft’s Bing. — Mohar Chatterjee

In the very active debate about online content moderation — with former Twitter executives set up for a theatrics barbecue in Washington next week about how they handled politically controversial content on their platforms – it’s worth thinking about the larger questions of how, or what, platforms should be moderated.

An interesting recent insight came from Ethan Zuckerman (internet personality, professor at the University of Massachusetts Amherst, sorry inventor of the pop-up ad), who wrote a blog post last September arguing that online spaces needed governance, not moderation.

You can read that post herebut the bottom line is that he worries that people have accepted being “subjects” of large internet companies, with decisions made by “people half a world away, guided by opaque algorithms.”

He argues that the public conversation would be much better if people acted more like “citizens” of the platforms they visit. This means putting the job of managing social media platforms in the hands of the most dedicated users. (Not that the tech giants are likely to change. Zuckerman and his collaborators have built and launched small, user controlledsocial networks to encourage the idea.)

One takeaway from his entire argument: Zuckerman suggests that the consumer costs, in dollars or (unpaid) labour, define the kind of digital public discourse we get. By paying nothing, either in time or money, we got the “public sphere that we paid for”—one that “puts us under perpetual surveillance” and “reinforces our worst tendencies.”

But then again, when he wrote his post in September 2022, Zuckerman couldn’t have known you could pay $8 to be a verified human on Twitter and still be exposed to sketchy moderation of content guidelines. — Mohar Chatterjee