1997 Congressional Hearings
Intelligence and Security

Cyberspace Is Our New Home


February, 11, 1997


Dan Lynch, Chairman, CyberCash, Inc.



Cyberspace is about a new space, a new home, that our children will inhabit much more easily than we can imagine. Here is a short story about what could happen in that space.

Allen owns a small company that designs computer printed circuit boards. His four-engineer design group is located 10 miles outside of Boulder Creek in the mountains near Santa Cruz, California. This morning he checked his Internet mail and found a message from Irene, a design engineering manager at a large computer company in San Jose, California. She asked him to look at a sensitive Request for Quotation (RFQ) she had just posted. The RFQ was open only to three firms, and the messaged was encrypted in such a way that only those three firms could read it.

After analyzing the RFQ, Allen again used the Internet. He checked the current prices for the integrated circuits (ICs) he would need to build Ireneís board. He examined several online catalogs for IC manufacturers, and he made rough estimates of the cost of materials. There was one thing left to deal with: a design issue he didnít quite understand.

Allen queried several engineers at Ireneís company, as well as an engineer in Amsterdam he had met at Comdex. The Amsterdam engineer referred him to an article in a back issue of an electronics association journal, which Allen promptly downloaded from the journalís Internet forum.

After lunch, Allen prepared his quotation and sent it to Irene, encrypted. Not only was the bid secret, it was a legally binding offer. Allen mused about how his access to the Internet enabled his company to get jobs that used to go to the big boys on the other side of the hill.

Allenís quotations are extremely accurate; he can always look up the most up-to-date prices and inventories in the online catalogs. His designers are very efficient, because they have access to the latest applications and utilities from colleagues all over the world. And Allenís company cash flow is improved because he sends his invoices and remittances over the Internet.

Irene, at the other end of the electronics food chain, remarks about how using the Internet has helped her companyís profitability. The publications group cuts the printing costs by putting its data sheets, catalogs, and data books online. Her engineering group takes advantage of the special strengths of different board designers, no matter their location: The other two firms bidding on this RFQ were in Oregon and Taiwan.

The bottom line: For Allen and Irene, the Internet is secure and easy to use. It provides access to services and information around the globe. It is a commercial tool, as fundamental as a spreadsheet or a telephone, that they both use to stay competitive.

That is the end of the short story. What can go wrong to prevent that scenario from playing out in the next generation? Modern day "Luddites" are trying to stop the underlying encryption technology from being used to make electronic communications secure. They correctly point out that this technology helps criminals as well as nice people. Well, so do knives and automobiles, but we have not outlawed their use. Why should we outlaw the use of strong encryption? Furthermore it is pure folly to think it can effectively be done. Let me explain why.

A fundamental reality about encryption is that it cannot be stopped by technical means. Why not? Cryptographic material can be disguised within other material. For instance, itís not possible to tell whether youíre looking at an encrypted message when itís hidden in a picture. To explain: Suppose you have a digitized picture of the Mona Lisa, in full 24-bit color. If you utilize the low-order bit to contain your encrypted message, the picture still looks like the picture. Why? That low-order bit is meaningless noise at the visual level. Furthermore, if the cost of transmission is low enough, itís worthwhile to transmit such pictures. And without the key, itís impossible to unlock the noise. (Is it or isnít it a secret message? Only the keyholder knows for sure.) This ability to hide information within another message is referred to as "creating a subliminal channel". Subliminal channels, for better or worse, can provide some basic freedoms.

Do we want our citizens to resort to such subterfuges or do we want to simply recognize their right to converse digitally with whomever they wish with as much privacy as they wish in their new home?