Cypher Bank

Does anyone know of a law, rule, regulation, or other restriction 
that would prohibit the establishment of a simple cypher based bank?

I can think of 3 basic areas that would have to be satisfied:

     1.  Federal law and agencies, Federal Reserve, etc..

     2.  State and local (California for me).

     3.  Internet "Appropriate Use" policy.

If the bank is operated on a not-for-profit basis  --as an 
experiment.  Then that should satisfy the appropriate use 
requirement.

I could use some comments if anyone can cite specific federal or 
California regulations.  Please respond either to me directly, 
donb@netcom.com, or to this mail list.

--------

The cypher bank would work like this: I would publish my physical 
address; and offer to accept deposits by cash, check, or what have
you.  With the deposit, write on it your PGP handle.  Email me your 
public key corresponding to the handle on the deposit.

I will maintain a public list showing handles vs. Amount received,
in collection, and in escrow.(Set Subject = "BANK" to get the list)

Funds will be paid out based on instructions encyphered with your 
private key.

Comments would be appreciated.

Don Bellenger
donb@netcom.com

> address; and offer to accept deposits by cash, check, or what have
> you.  With the deposit, write on it your PGP handle.  Email me your 
> public key corresponding to the handle on the deposit.

A better way would be to mail the public key itself, or a short 
hash of it along with your payment.  That is all the information that
would be required.  A "handle" would be completely optional. 
If only the hash value is mailed, then the full key can be e-mailed
or anonymously posted to a newsgroup that you montitor.  If the full key
is mailed, you should invest in a scanner and some simple OCR software.

This way, someone may print out the public key and mail it to you.

> I will maintain a public list showing handles vs. Amount received,
> in collection, and in escrow.(Set Subject = "BANK" to get the list)

You should not disclose someone's balance to anyone else, and certainly
no to the public.  Someone requesting their balance should send the
request by any communications channel (anonymous mail, newsgroup, anything)
and sign it with the private key corresponding to the public key used
when making the deposit.  Then you should encrypt your reply (the account
balance & any other info) using the public key, and send it back through
any channel.

> Funds will be paid out based on instructions encyphered with your 
> private key.

I would make it: funds will be transferred based on instructions _signed_
with the private key corresponding to the public key used for deposit.

P.S. this would be equivalent to digital checking accounts.  Do not confuse
this scheme with the much more interesting Digital Cash ideas.

--
Yanek Martinson    mthvax.cs.miami.edu!safe0!yanek     uunet!medexam!yanek
this address preferred -->> yanek@novavax.nova.edu <<-- this address preferred
Phone (305) 765-6300 daytime   FAX: (305) 765-6708  1321 N 65 Way/Hollywood
      (305) 963-1931 evenings       (305) 981-9812  Florida, 33024-5819

>If only the hash value is mailed, then the full key can be e-mailed
>or anonymously posted to a newsgroup that you montitor.  If the full key
>is mailed, you should invest in a scanner and some simple OCR software.

I have been thinking about this.  I think that pgp should have a postscript
output module, so you can print your public key on the back of business
cards and hand them out to people you meet.  Or businesses could put it on
thier flyers.  Or many other uses for times when you don't want to have to
have your computer there to exchange keys and you don't want to exchange
disks because they're expensive and big and have lots of different
incompatible formats (and some people, like me for instance, don't have any
disk drives).

I think the best font for this would be a font like OCRA, the font used at
the bottom of checks.  This font allows for very reliable scanning.  Does
anyone know where I can get a postscript version of this font?  If someone
can find it, I'll write a program that outputs a public key in that font in
the right size for a business card.

e

>>If only the hash value is mailed, then the full key can be e-mailed
>>or anonymously posted to a newsgroup that you montitor.  If the full key
>>is mailed, you should invest in a scanner and some simple OCR software.

>I have been thinking about this.  I think that pgp should have a postscript
>output module, so you can print your public key on the back of business
>cards and hand them out to people you meet.

Is anything preventing you from building seperate tools to do this?
PGP will happily put out your key into a file, from whence you can do
anything you like. Why add bloody postscript generation capability to
an encryption program, fercrissake.

Perry