Effross, Walter

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American University Washington College of Law Digital Commons @ American University Washington College of Law Articles in Law Reviews & Other Academic Journals Scholarship & Research 1997 Piracy, Privacy, and Privitization: Fictional and Legal Approaches to the Electronic Future of Cash Walter Effross Follow this and additional works at: https://digitalcommons.wcl.american.edu/facsch_lawrev  Part of the Banking and Finance Law Commons, Computer Law Commons, and the Privacy Law Commons PIRACY, PRIVACY, AND PRIVATIZATION:FICTIONAL AND LEGAL APPROACHES TOTHE ELECTRONIC FUTURE OF CASH*WALTER A. EFFRoss**A decade ago the popularity of "feudal life" scenarios in sciencefiction and fantasy literature was attributed to the fact that in suchsettings "money never has to change hands."1 Commentators asked:When did a fantasy hero ever fish a ten dollar bill from his pocket?When did milady seek alimony? When were travellers' chequesneeded in Atlantis or Cathay? When was the lead villain simplyslung into prison for debt? When did the mortgage ever fall dueon one of those labyrinthine castles?2However, even as these questions were posed a new genre celebrat-ed the cash, criminality, and computerized commerce of a future thathas become today's headlines. Indeed, "cyberpunk" denotes morethan science fiction that emphasizes the interaction of people withcomputers;' it also refers to an individual who, like the protagonists© 1997 Waiter Effross. All rights reserved.** Associate Professor, Washington College of Law. Professor Effross also is the author ofPutting the Cards Before the Purse?: Distinctions, Differences, and Dilemmas in the Regulation of StoredValue Card Systems, 62 MO. L REv. (forthcoming 1997); and High-Tech Heroes, Virtual Villains, andJacked-In Justice: Visions of Law and Lawyers in Cyberpunk Science Fiction, 45 BuFF. L. REv.(forthcoming 1997).In the summer of 1996, I suggested to Dean Claudio Grossman and Editor-in-Chief MiraVayda that The Law Review devote an issue to the Electronic Future of Cash in connection witha Symposium to be held at the Washington College of Law in the spring of 1997. I would liketo thank both of them for their encouragement, their advice, and their commitment of theSchool's resources to these projects. Special thanks are due to Heather Russell, The Law Review'sSenior Articles Editor, who oversaw the selection of the articles that appear in this Volume andwho, as my research assistant, worked tirelessly and painstakingly to help me coordinate thelogistics of the Symposium itself.1. See BRIAN ALDISS & DAVID WINGROVE, TRILLION YEAR SPREE 280 (1986).2. I (observing that "the adolescent reader, the typical reader of these fantasies," is mostin need of money and "the power that money brings").3. See, e.g., THE CONCISE OXFORD ENGLISH DICTIONARY 334 (9th ed. 1995) (defining"cyberpunk" as "a style of science fiction featuring urban counter-culture in a world of hightechnology and virtual reality"); MERRIAM-WEBSTER'S COLLEGIATE DIcTIONARY 287 (10th ed.THE AMEICAN UNIWERSrY LAW REVIEW [Vol. 46:961of these novels, "make[s his] living buying, selling and stealinginformation, the currency of a computerized future."4 In both ofthese senses cyberpunk's authors anticipated the challenges posed bythe convergence of today's banking, technology, and legal communi-ties.If other fictional settings allow novelists to avoid mundane financialtransactions, cyberpunk not only confronts but glories in the grim andgritty commerce of the street. Indeed, its heroes can escape theirphysical and economic reality only by plunging into "cyberspace,"mankind's "consensual hallucination ... [a] graphic representationof data abstracted from the banks of every computer in the humansystem."' It is in this alternate, electronic universe, where multina-tional corporations hoard their data and where financial institutionsstore their electronic cash, that cyberpunks practice their esotericdigital deceptions.In its emphasis on the technological interface between thecommercial and the criminal, this literature illuminates many issuescentral to the current controversies over electronic forms of cash. Asurvey of these areas is provided in this Book by Richard Field's 1996:Survey of the Year's Developments in Electronic Cash Law and the LawsAffecting Electronic Banking in the United States, and taken several stepsfurther by Brian Smith's How Best to Guide the Evolution of ElectronicCurrency Law.To begin, cyberpunk explores the worldwide culture of a society inwhich traditional forms of currency-bills and coins-not only areoutmoded but generally are disfavored. 6 Whether this development1995) (defining "cyberpunk" as "science fiction dealing with future urban societies dominatedby computer technology"); RANDOM HOUSE WEBSTER'S COLLEGE DIGIONARY 338 (rev. ed. 1996)(defining "cyberpunk" as "science fiction featuring extensive human interactions withsupercomputers and a punk ambience").4. KATIE HAFNER &JOHN MARKOFF, CYBERPUNK: OUTLAWS AND HACKERS ON THE COMPUTERFRONTIER 9 (1991) (chronicling the extra-legal exploits of noted hackers); see also MERRIAM-WEBSTER'S COLLEGIATE DICTIONARY, supra note 3, at 287 (defining "cyberpunk" as "anopportunistic computer hacker"); RANDOM HOUSE WEBSTER'S COLLEGE DICTIONARY, supra note3, at 338 (defining "cyberpunk" as a "computer hacker").5. WILLIAM GIBSON, NEUROMANCER 51 (1984).6. SeeJOHN BRUNNER, THE SHOCKWAVE RIDER 7 (1975) ("Cash didn't circulate much anymore . . . except in the paid-avoidance areas, where people drew a federal grant for goingwithout some of the twenty-first century's more expensive gadgetry, but activating a line to thefederal credit computers on a Sunday, their regular down-time day, meant a heavy surcharge... "); PAT CADIGAN, FOOLS 24 (1992) (featuring cab-driver who will accept "fare strips andbearer chips" but not currency, because "I don't have an accounting system that works with it");WILLIAM GIBSON, COUNT ZERO 37 (1986) [hereinafter GIBSON, COUNT ZERO] (observing thatprotagonist had cash money, but could not pay for food with it, because although cash was notillegal, "nobody ever did anything legitimate with it"); GIBSON, supra note 5, at 6 (discussing howprotagonist's "total assets were quickly converted to New Yen, a fat sheaf of the old papercurrency that circulated endlessly through the closed circuit of the world's black markets like1997] PIRACY, PRIVACY, AND PRIVATIZATION 963was the result of governmental collapse, global unification, or theincreased use of Internet commerce-and many of the novelists arevague on that point-it raises the questions of whether, when, andhow electronic cash might displace traditional currency in a form ofGresham's Law. Moreover, cyberpunk's focus on this transitionechoes current concerns over whether the "unbanked" will benefitfrom or be even more disadvantaged by a widespread shift toelectronic payment systems. Professor David Oedel's Why RegulateCybermney? addresses some of these issues.To replace cash the cyberpunk canon introduces a panoply ofexotic payment mechanisms such as "bearer chips,"7 "credit chips,"'"bearer cards,"9 debit cards,"0 "credit disks,"'" "cash cards,"12 and"credit transactors."5 The proliferation of these devices, and theabbreviated way in which their operations are described, evokes thedebates currently raging over the extent to which stored value cardsshould be regulated. Do consumers truly understand their rights andpotential liabilities when they use the real-life counterparts of thesefictional products? Professor Mark Budnitz examines these andthe seashells of the Trobriand islanders," making it "difficult to transact legitimate business");i. at 98 (noting that character buying cigarettes from a vending machine, "slotting the smalldull alloy coins one after another, [is] vaguely amused by the anachronism of the process");BRUCE STERLING, HEAw WEATHER 272 (1994) (referring to a past "[w]hen money was still onengraved paper and money still meant something").Guides for cyberpunk "role-playing games," whose participants manage the persona of acharacter in such a fictional scenario, typically emphasize that cash is archaic. See, eg., LOYDBLANKENSHIP, GURPS CYBERPUNK 27 (1990) (observing that "fiun a cyberpunk world, mostwealth takes the form of credit [and lI]aw-abiding citizens... rarely touch cash at all"); TODFOLEY, CYBERSPACE 71 (1989) (indicating that "[t]he entire idea of cash is looked down on inmany places, where its use is seen as classless, boorish and ignorant").7. See PAT CADIGAN, SYNNERS 148 (1991) (noting that hackers' work "kept them ... inenough bearer chips to survive").8. See GIBSON, COUNT ZERO, supra note 6, at 2 ("His credit chip was a rectangle of blackmirror, edged with gold. People behind counters smiled when they saw it, nodded. Doorsopened, closed behind him. Wheels left ferroconcrete, drinks arrived, dinner was served.");RICHARD PAUL Russo, DESTROYING ANGEL 101 (1992) (referring to "credit chip" keyed toholder's biometric measurements, so someone else can "'[s]ell it back to the originatingstreetbank for two cents on the dollar"').9. SeeMELISSA SCOTT, TROUBLE AND HER FRIENDS 252 (1994) (describing "money in a thinstack of bearer cards").10. SeeWILLIAM GIBSON, VIRTUAL LIGHT 25 (1993) (character uses "his new debit-card").11. See LISA MASON, CYBERWEB 1-3 (1995) (downloading value through automated bankteller onto "credit disk").12. See WILLIAM GIBSON, IDORU 59 (1996) (chronicling character's use of "Cashflowsmartcard," the amount of which "represented the bulk of the Seattle chapter's treasury");JAMESPATRICK KELLY, WILDLIFE 25 (1994) (describing transfer of value in the form of "smart chips,"or "cash cards from the Swiss Volksbank, Zurich [that are n]egotiable anywhere"); id. at 144("The cash card was guaranteed by AmEx to be secure.").13. See BLANKENSHIP, supra note 6, at 104 (offering descriptions, strikingly similar to thoseof modem stored value card, of "credit transactor" device, its method of operation, its levels ofprivacy and security, and its use by consumers); cf. FOLEY, supra note 6, at 71 (discussingoperation of wrist-borne device that acts as debit card).AA964 THE AMERICAN UNWERsrIY LAW REVIEW [Vol. 46:961related issues from the perspective of a consumer advocate in hisarticle, Stored Value Cards and the Consumer: The Need for Regulation.Gary Lorenz contributes the perspective of an issuer of stored valuecards in his Electronic Stored Value Payment Systems, Market Position andRegulatory Issues.Like an increasing number of today's consumers and businesses, thecharacters in cyberpunk fiction conduct transactions over the Internetitself.14  Their attempts to preserve their privacy and anonymityduring these activities 5 foreshadow the analysis of this Book's Howto Make a Mint: The Cryptography of Anonymous Electronic Cash, byLaurie Law, Susan Sabett, and Jerry Solinas of the National SecurityAgency. Cyberpunk also predicts the issuance of money by privateparties, including multinational corporations and perhaps criminalorganizations, 6 and the danger that electronic cash may be used inmoney-laundering operations." Both of these developments areaddressed from a banker's viewpoint in Simon Lelieveldt's How toRegulate Electronic Cash: An Overview of Regulatory Issues and Strategies.Finally, both science fiction and several of the articles in this Bookdiscuss the jurisdictional difficulties inherent in governing a "spacethat [ilsn't space"" in which individuals who may be concealingtheir identities can conduct instantaneous transactions by means14. See WILLIAM C. DErrz, BODYGUARD 30 (1994) (electronic transfer of funds incyberspace); NEAL STEPHENSON, SNOW CRASH 394 (1992) (transfer of money by transfer of"hypercard" in cyberspace).15. SeeJOHN BETmNCOURT, REMEMORY 27-28 (1990) (indicating narrator's reluctance toreceive a large amount of credit, stating that "a cash transaction seemed much moreappealing"); MASON, supra note 11, at 9 ("The exchange of any form of legal value wasaccounted for, traced, and regulated down to the last obsessive buck.").16. SeeGIBSON, supra note 12, at 170 (describing bills "[b)igger than American money" with"the comfortingly familiar logo of a [well-known] company"); STERLING, supra note 6, at 114(discussing "global pirate banks that existed nowhere in particular and made up their own lawsout of chickenwire dishes, encryption, and spit"); id. at 186-187 (stating that criminalorganizations "were electronically minting their own... electronic, private cash, unbacked byany government, untraceable, completely anonymous, global in reach, lightning-like in speed,ubiquitous, fungible, and usually highly volatile" and noting that "even the governments ofpowerful advanced countries, had already lost control of their currencies to the rollingfloodwaters of currency trading"); see also Neil Stephenson, The Great Simoleon Caper, in SEHGODIN, PRESENTING DIGITAL CASH 1 (1995) (envisioning, with humor, practical problemsinvolved in encouraging consumers to use private electronic cash).17. SeeDAviD BRIN, EARTH 294 (1990) (indicating that main character "had witnessed manyof the ways [in which] her cousins and uncles sheltered and moved money without letting itshow up on the net"); BRUCE STERJNG, ISLANDS IN THE NET 43 (1988) (identifying three majorcorporations as being "monetary banks as well ... handy for laundering client funds, and aready source of necessary bribes"); WALTERJON WILLIAMS, HARDWIRED 179-81 (1986) (describ-ing laundering money electronically through series of international transactions over electronicnetworks); id. at 186 (discussing how "[a]stronomical amounts of private-issue currency flashthrough the files, pour down a thousand chutes, disappear into some nameless laundry and thenreappear elsewhere, no clue as to their origin").18. GIBSON, COUNT ZERO, supra note 6, at 39.PIRACY, PRIVACY, AND PRIVATIZATIONof intangible forms of cash. The seminal cyberpunk novel vividlyportrays the dilemma of balancing rules and standards: the protago-nist asks government authorities, "Do you guys have any realjurisdiction out here?" only to be told, "It doesn't matter .... Weare at home with situations of legal ambiguity. The treaties underwhich our [agency] operates grant us a great deal of flexibility. Andwe create flexibility, in situations where it is required." 9As today's payments technology nears that of science fiction, theregulatory responses to each of the issues addressed in this Book willshape electronic cash, its application, and its culture for years tocome. At this critical point in the history of money, cyberpunk offersa cautionary vision of the transition from "two bits" to megabytes,from a pair of dimes to new paradigms.19. GiBSON, supra note 5, at 162-63.1997]

Piracy, Privacy, and Privitization: Fictional and Legal Approaches to the Electronic Future of Cash

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Piracy, Privacy, and Privitization: Fictional and Legal Approaches to the Electronic Future of Cash

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