The Digital Monetary Trust

[This is version 1.1 of the DMT FAQ.]

What is the Digital Monetary Trust?

The Digital Monetary Trust is a computer system and mechanism that gives users the ability to hold assets anonymously, along with the ability to anonymously transfer these assets to other parties.

You can think of a DMT customer account as an anonymously-held checking account (in which the customer is anonymous both to the bank and to other people), but one which allows the customer to write checks to third parties (and these third parties will also be anonymous to the bank and the outside world; in fact, you can even arrange for the receiver of your check to be anonymous to you also).

The "checking account" analogy here is only an analogy; there are no actual paper records involved within the DMT system.

Are Digital Monetary Trust customer accounts like secret Swiss numbered accounts?

No, they are far superior to Swiss numbered accounts. A Swiss numbered account is not really anonymous: a few upper level bank managers always know who you are (they know the name that is associated with the numbered account). Thus your confidentiality rests on the discretion of bankers, and hinges on often-leaky banking secrecy laws. Banks in banking "secrecy" jurisdictions have been frequently known to leak customer financial information to private investigators and national and international governmental authorities, simply because it is politically expedient, or because the bank is under pressure, or because bank employees have been bribed or secretly work for some outside agency. Governments have even set up their own fake "private" banks to snare unwary customers. Truly it has become a fact of life that "your banker is a snitch." Your first objective in seeking banking secrecy should be to protect yourself against your banker and what he knows about you.

By contrast, in the DMT system, DMT never knows who its customers are. Their identity is kept confidential by cryptographical protocols which allow customers to be anonymous, yet at the same time ensure that only customer-authorized transactions can take place in the customer’s account.

So the Digital Monetary Trust doesn’t follow "know your customer" procedures?

No, the Digital Monetary Trust is a system designed for anonymity. It is specifically constructed on the principle of "don’t know your customer." This anonymity protects both the customer and DMT itself. DMT employees can’t leak information about customers, because they don’t know anything about them.

Who are the target customers for DMT? Rich people?

No, DMT is targeted neither to the rich nor the poor.

Poor people, who have only a small amount of assets, can maintain their anonymity by dealing entirely in cash. In fact, we recommend they do so.

Rich people can afford to pay lawyers, managers, and bankers to look after their wealth and its confidentiality. The current banking system serves them well.

DMT is targeted to middle-level individuals who wish to hold anonymous, but transferable assets in the one thousand dollar to several million dollar range. When members of this group seek out "privacy havens", they are apt to find themselves the prey of private or government scam dogs. And they are frequently not able to afford the expensive lawyers and bankers who know their way around the sometimes treacherous offshore scene.

DMT intends to provide low-cost anonymity to this middle-level group by substituting a complete system based on cryptology for the "privacy veil" claimed to be offered by bankers and lawyers in jurisdictions with "banking secrecy".

Is DMT a digital cash system?

No, DMT is an anonymous account system. Digital cash is something different—digital cash is intended to be an Internet substitute for ordinary cash, or perhaps even a day-to-day "pocket change" substitute for ordinary cash (through smart cards or similar devices).

We have nothing against digital cash, but do not view it as the principal market or business opportunity, and do not think many current forms of digital cash represent a great advance in privacy.

For most daily transactions, ordinary cash works fine and is also anonymous. Digital cash is not needed. So "if it ain’t broke, don’t fix it."

In fact, we view the attempt to substitute digital cash for ordinary cash (bills and coins) in daily transactions with suspicion, and we suggest you do the same. Could it be that someone, somewhere, wants to track your daily activities? The web site of one so-called "privacy advocate" even boasted that while "paper notes, briefcases full of which can be passed from hand to hand without leaving any record, allow money laundering and tax evasion today", "with ecash . . . all the amounts each person receives are known to their bank." Thankfully, this person’s company went bankrupt.

For long distance transactions, such as over the Internet, there is an obvious need for digital cash. There are several functioning versions (such as PayPal) which are, however, not anonymous, in contrast to ordinary cash. Thus far the only form of semi-"anonymous" digital cash that has emerged commercially was the one associated with David Chaum (the ecash product of the now-defunct company Digicash). But even in this case the so-called "anonymity" was deceptive.

Chaum tried to have his cake and eat it too. He attempted to pick a single bank to be an ecash issuer in each one of several countries. Thus his "anonymous" cash had to please the banking regulators of all these countries simultaneously. Not surprisingly, privacy was bastardized. The digital "coins" could be spent anonymously, but they could not be received and deposited anonymously. The payer was anonymous, but the receiver had to reveal himself to the bank (which had signed the coins) by depositing those coins in an identified account.

DMT is not interested in competing with ordinary cash. A DMT account is not primarily intended for small, everyday transactions (even though this is possible, once money has been deposited within the sytem). Rather, it can be viewed more as a substitute for low-turnover checking or savings or money market accounts, where the desired service is anonymity. Both payer and receiver are anonymous within the DMT system. We have not sacrificed privacy to please bank regulators.

How do I access DMT?

Go to http://dmt.orlingrabbe.com, and your web browser will automatically be redirected to the DMT Network. There you can create a DMT/ALTA account(s) or download the DMT "browser."

What is the difference between a DMT/ALTA account and a DMT "browser" account?

There is no difference. They are both identically stored in, and served by, the DMT Network. The difference is how you access your accounts. DMT/ALTA is accessed by ordinary web browsers like Microsoft's Internet Explorer. The DMT "browser" is a dedicated piece of software (Java client).

We strongly suggest you use the DMT/ALTA system to open your initial account(s), as the environment will feel more familiar to most people. (Any DMT/ALTA account is accessible from the DMT "browser" and vice-versa.)

How do I put money into the DMT system?

If someone is paying you from another DMT account, you will simply use the "Claim" function of the system to collect your money.

If you are sending money to DMT from outside the system, then use the "Transfer In" function. Follow the instructions given by the DMT Network for wiring money to a bank account. After you are given credit for your transfer, you can then use the "Claim" function to claim the amount of the transfer into your DMT account.

Afterward, you may make or receive payments within the DMT system, or remove money from it.

Will other payment mechanisms be available to interface with the DMT system, in addition to wire transfers?

Yes, in time, once we feel we’ve had sufficient experience with the initial set up (which will only involve wire transfers into or out of the DMT system). We will then add as many payment interfaces as we find practical and cost-effective in a business sense. (Several possibilities are currently under consideration.)

Will the DMT system accept (physical) cash?

No. DMT is intended to be a low-cost electronic (virtual) operation, and this precludes us setting up physical facilities to accept and count physical cash, or check for counterfeit bills, and so on.

In addition, even though cash may be important to the privacy of a sovereign individual, it is also unfortunately true that large amounts of cash are associated with the retail drug trade. We have no interest in servicing this industry. (The ordinary banking system, in fact, already caters to the drug industry. All the major banks making up the ordinary banking world have drug suppliers and producers as important customers. This fact is used by authorities in the various nation-states as an excuse to invade the privacy of all their citizens, including the moral and upstanding.) DMT will not accept cash deposits.

How will DMT make its money?

DMT will invest customer funds and its own capital in low-risk, highly liquid, high quality securities. The goal is to achieve a 4 percent annual gross return on assets, one-half of which will be absorbed in operating costs, and one-half of which will be paid out to DMT stockholders.

This foregone interest, along with the small transactions costs, represents the cost of anonymity. This cost is low. People today are not only accustomed to giving up interest, but also to giving up 5 to 20 percent of their capital in order to obtain anonymity.

What are the DMT transactions costs?

All transactions will be subject to a 1/10^th of 1 percent fee, deducted from the account of the paying party. (That amounts to a $1 charge on a $1000 transaction.) The exception is that initial deposits into the DMT system will have minimum fees, depending on the currency. (A $20 minimum fee means that deposits of $20,000 or less will be charged a flat fee of $20 by DMT at the time the deposit is accepted into the system; larger deposits will be charged 1/10^th of 1 percent.) These fees may be adjusted up or down as business conditions dictate.

Go the the DMT fees page for more details.

Are there any other DMT charges?

No, just the ones mentioned in the previous paragraph. There may be other costs of doing banking, which are not controlled by, nor the proceeds received by, DMT. Your bank, for example, will charge you a fee for making a wire transfer anywhere, including one to DMT. Similarly, the sending bank will deduct a wire transfer fee for funds sent back to you (or to whomever) if you remove them from the DMT system.

Why aren’t DMT transactions free?

If something is free, everyone wants two. Transactions represent a use of system resources, and underpricing the marginal cost of using them invites abusive or frivolous activity, including (but not limited to) a possible large-scale turnover of small sums of money.

There is no such thing as "free checking" in the ordinary banking world. Banks that so advertise require a minimum balance, where the interest earned on the balance more than pays for the cost of "free" checking. But, unlike banks, DMT does not do this sort of intrusive monitoring of account balances. Your account balance at DMT will be checked only when you make a transfer into or out of the account.

Why doesn’t DMT pay interest?

There is no such thing as a free lunch, despite the attempts of central banks of the world to convince people otherwise. If DMT operates on a 4 percent margin, and pays customers 2 percent interest, then it must invest in riskier securities yielding 6 percent. This puts both DMT capital and customer balances at greater risk. Then why should we not pay 4 percent interest to customers and invest in securities paying 8 percent? Or pay 10 percent to customers and double our money by investing in junk bonds paying 18 percent?

We are in the business of providing anonymous transaction services, not of making loans and playing credit intermediary. If you want to be paid interest on your money, stick with the ordinary banking world.

In addition (and this is a crucial technological point), if interest were paid on accounts, transactions would have to be time-stamped, and the overall security of the anonymous system could be placed at risk. If you want your anonymity compromised, stick with the ordinary banking world.

What do you mean by "system" in the DMT system?

The DMT system begins with a virtual private network (VPN) that links together Linux servers in various areas or jurisdictions of the world. DMT customers use web browsers or the DMT java client to access guardian gateway sites. These gateway sites interact with the servers to make transactions within the system. These elements, along with the underlying cryptological protocols for communication and generation of transaction and storage numbers, make up the basic DMT system.

What is a "virtual private network"?

Our servers in different parts of the world communicate via the Internet. To make this communication private, communication packets are encrypted end-to-end, and authenticated to ensure they have not been altered in transit. This turns the server communication into a private, secure network, even though it uses the public, insecure Internet. In particular, we use Free S/WAN, which you can read about here (http://www.xs4all.nl/~freeswan/).

Why did you choose Linux?

For several reasons. The first is that Linux is open source. That is, all the Linux source code is available for inspection and development, and is in the public domain. We don’t want our life and our customer’s security to be controlled by some large company which might choose to ignore security problems, or to implant backdoors under government pressure, or charge exorbitant fees for us to use and modify their software. Therefore the basic design of the DMT system called for the exclusive use of open-source software.

Second, we wanted a system that was scalable for a large number of users, like Unix, but one that could run on cheap and fast PC processors, as well as one that could be secured. On these criteria, for example, Windows NT or XT is out of the question. Linux is it.

What about the DMT "browser"? Is it a plug-in to the Microsoft Explorer or Netscape Navigator web browsers?

No, these browsers are designed to leak too much information about the user, and plug-ins to them do not make possible proper security controls.

The DMT java client is a stand-alone browser-like piece of software written in Java. One of the goals of Java, of course, was to allow the creation of software that could run on various operating systems (such as Windows, Mac OS, and Linux) just as long as they supported a Java virtual machine.

How is communication in the DMT Network secured?

First, the entire Internet channel between the client's web browser and the gateway servers is encrypted, following the SSL/TLS protocol. Third parties are not able to observe information sent back and forth between the DMT gateways and DMT customers, except in an unreadable, encrypted form.. The basic software code used comes out of the OpenSSL project (http://www.openssl.org). The code is open source, and hence does not contain hidden backdoors.

Second, there is an intermediate stage in the information transfer process between the customer's web browser and the DMT backend servers. Namely, there are "gateway" web servers which cut off any direct customer access to the backend servers.

Using SSL/TLS, the customer's web browser (or DMT java client) connects to the proxy gateway web server. After the encrypted channel is set up, a customer will see the DMT web pages, which are written in an HTML embedded scripting language called PHP (http://www.php.net). PHP is used to initiate calls to the DMT backend servers.

The proxy gateway between the customer and the backend server is both a firewall and an anonymizing proxy, which hides the URLs of the backend servers from customers and everyone else. The proxy software used is an open source product called DeleGate. Information on DeleGate can be located at http://www.delegate.org/.

The DeleGate proxy and the DMT backend databases talk to each other using a language and protocol called XML-RPC (http://www.xmlrpc.com).

The DMT backend server system is operated as a virtual private network (VPN) that links together Linux servers in various areas or jurisdictions of the world. Messages sent between the DMT backend servers in the DMT virtual private network are ASN.1/DER encoded, and encrypted using Free S/WAN, as noted previously.

The DMT database module implements a distributed database system where the nodes are interconnected via the DMT VPN. The database nodes within the VPN handle the allocation of primary and secondary (backup) servers. By keeping the dynamic rules for determining the current primary database server within the network, an additional level of security is achieved, even if a server should fail.

DMT uses two open source databases for various parts of its operation. Remember that commercial databases like Oracle are likely to entail unexpected surprises. (For example, Oracle's Larry Ellison has recently offered to build, for free, a government ID database to contain information on every American.) There are two types of databases that are used in the DMT system. One, MySQL, is a general purpose, open source relational database useful for sorting of the type needed in the DMT LESE system. The other, Berkeley DB, is an open source database used for the high-security, anonymous customer account information system.

Keep in mind, also, that virtually all the underlying information being transmitted is itself a system of numbers derived from cryptology. No customer-identifying information is transmitted.

Is DMT legal?

Is privacy legal? Is encryption legal? If your answer to these questions is Yes, then DMT is legal. If your answer is No, then please just go away somewhere and die quietly. The Digital Monetary Trust is a self-incorporated entity in cyberspace, and in its neighborhood of cyberspace privacy and encryption are not only legal, but expected.

DMT operates a secure computer system (the DMT Network). In addition, DMT purchases computer and banking services from other entities. All these entities operate legally in their areas of the world.

Why, then, might statists not like DMT?

Tyrants maintain their power and control, among other ways, by spying on their subjects—the most important aspect of which is spying on their subjects’ financial activities. Therefore, tyrants are prone to argue that "some of your customers might be criminals." This is similar to the argument that "encryption must be banned because criminals might use it," or "rental car agencies must be banned because criminals might rent cars." Tyrants want to spy on everyone, in order to be able to label anyone who threatens their power a "criminal."

If someone is a bona fide, known criminal, then let him be arrested. If he is not a criminal, then leave him alone. DMT is not concerned with the spurious political propaganda of the Big Brother state, and it does not inquire into the background of its customers.

How can I lose my anonymity in the DMT system?

Only you, as the customer, will know which DMT accounts are yours, and only you will possess the relevant account numbers, private keys, and DMT signatures on the account balances. If you share these with others, or allow others to access your computer, then these same people will or may become privy to your private DMT information. DMT puts your private financial information completely in your hands, but after that it’s your responsibility to keep it that way.

What currencies are available?

Check the current denominations for account opening in the DMT system. You will find all the currencies that make up the Rand, as well as the Rand itself. (Namely, the US dollar, Japanese yen, the British pound, the European euro, and gold, as well as the Rand, which is defined as a composite of all these.)

What if the US blocks dollar bank accounts or transfers?

What if it does? If the US wants to destroy the credibility of its currency as an international medium of exchange, they can be our guest. We’ll simply deal in other currencies.

As a separate, but not entirely unrelated, issue, we don’t care who our customers are. If all our customers come from the Middle East or from Southeast Asia, that’s fine with us.

What if someone attacks your servers?

What if someone blows up your house, or rapes your daughter? There is little point in responding to "what ifs", based on the hypothetical activities of criminals.

But, speaking of criminals, keep in mind that banking security has been a private matter throughout most of history. While we don’t believe in initiating violence, we do believe in self-defense and protecting our customers’ assets. We have contracts with private agents to deal with thieves and scoundrels.

Secondly, keep in mind that nation-states have more to lose than we do from information warfare attacks. Disrupting DMT may inconvenience a few thousand customers for a few days. But shutting down CHIPS or SWIFT or the equivalent could bring a nation to its knees. We hope everyone gets the point.

Will the DMT source code be available?

Yes, after we’ve had enough experience so that the code is reasonably stable. This will be a while, but making the source available was part of the original design specification. An API for DMT Digital Bearer Certificates is available now.

Won’t making source code available help competitors?

Yes, but we welcome competition. At the moment, there isn’t any. We welcome competition, perhaps cynically, because it will provide more targets for tyrants. But, more importantly, it will make the job of providing anonymity easier, because each provider of anonymity can call on the others’ services.

What is the purpose, again, of the Rand, exactly?

The Rand is simply a product offering by DMT. It is not related to DMT’s basic purpose, which is to to provide an anonymous financial transaction mechanism.

But some of our customers may contemplate putting assets away for a long period of time, and may not want to take the risk that their chosen currency may depreciate against most other currencies. So the Rand (which is named for novelist Ayn Rand: it has no relationship to the South African rand) is simply a diversified currency made up of equal weights of gold and the four currencies most used in trade and finance.

Consider it a "poor man’s portfolio".

Prices for the Rand are posted daily on LESE.

Might the Rand become an independent currency?

Yes, like the component currency the ECU (European Currency Unit), which eventually became the euro, it is conceivable that the Rand could become an independent currency sometime in the future. (One economist noted that the "DMT Rand is the only cybermoney, which we found in our research up to now". An important precedent that could lead to its becoming an independent currency would be if the Rand become a means of payment for fundamental economic activities, such as the payment of wages. Again, the Rand is neither here nor there with respect to the basic business of DMT. Our priority is to provide anonymity and to make DMT a successful business. We’ll let the market sort out the rest.

What are DMT Digital Bearer Certificates?

These represent a bona fide form of electronic cash — what ecash represented itself to be, but wasn't. A DMT bearer certificate represents currency or gold or securities withdrawn from a DMT account in the form of an encrypted email message which can be stored or transferred outside of the DMT system. Eventually the certificate attains its value by being deposited into another DMT account.

The chain of an ordinary DMT transaction is like this:

DMT Account 1 -----> DMT Account 2.

The chain of a DMT digital certificate transaction might look like this:

DMT Account 1------> Party A -----> Party B -----> Party C -----> DMT Account 2.

A DMT Digital Bearer Certificate differs from ecash first in that it is withdrawn from, and ultimately deposited into, an account that is anonymous. Secondly, the DMT Digital Bearer Certificate can be verified by the DMT system, and reissued without being redeposited (a procedure that was not permitted to take place with ecash). You can read more about DMT Digital Bearer Certificates at http://orlingrabbe.com/dmt_bearercert.htm.

Where can I read more about DMT?

Other references are listed in the Guide to DMT at http://orlingrabbe.com/dmt_guide.htm.

from The Laissez Faire Electronic Times, Vol 1, No 14, May 20, 2002