by Douglas F. Gray

From...

LONDON (IDG) -- Two-year-old Zero-Knowledge Systems has released its first product, a privacy management program that allows users to decide what they want others to know about them and when.

The Montréal-based company released version 1.0 of its Freedom package, software that allows users to surf the Web, send e-mail, chat and use newsgroups under a pseudonym, or "nym."

These pseudonymous digital identities allow a user to configure his own visible information, so instead of appearing as "anonymous," he could appear as "Joe Hill," with his actual identity unknown and not traceable.

Anything a user does under a "nym" goes through between one and three servers out of a network of 150 "Freedom Servers," each one erasing the last trace of where the function came from, according to Austin Hill, president and cofounder of Zero Knowledge.

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"Each server does not know the source or final destination of the content," Hill said, comparing it to a spy that delivers a secret message to a clandestine location, but who has no idea where the message ends up.

The Freedom Servers are also housed by the participating ISPs, who get paid for the bandwidth they use for the service, as well as a 10 percent share of the revenues from the sales of the pseudonyms.

The service will also be marketed by these ISPs, who will sell the pseudonymous digital identities to users, along with the relevant free software for downloading.

Netherlands-based ISP XS4ALL has one of the Freedom servers, and although it does not sell the Freedom software to its users, it offers all 70,000 of its users an extended four-month trial version. "We're not an official reseller, we just want to recommend it to our users," said Sjoera Nas, director of public affairs.

"I use it myself," she added. "It does make surfing a little bit slower, because it has to pass through the servers, more security means less speed."

The pseudonym system allows users to build an online reputation without actually giving away their identity, and protects them from having information gathered about their personal lives, Hill said. He pointed to a recent case in California, where an employee was dismissed from his job because of his personal Web site and his postings to a fiction writers newsgroup.

The ability to have a pseudonym for Internet communications is a significant issue, said Abner Germanow, senior analyst for Internet Security for International Data Corp. "The biggest issue in the question of privacy on the Internet is not a question of remaining anonymous, because there are very few people in the world who truly want to remain anonymous," he said.

Privacy and anonymity regarding Internet security have often been confused in the media, Germanow added. "The real issue is how to put the control of an identity in the hands of the person who actually owns the identity," he said. "You can have a false identity, but you could have your real one on there too."

"Background searches on e-mail addresses are becoming second nature in [Silicon] Valley," Hill said, predicting that all companies will be doing background checks such as these in three years time.

He cites another possible example, in which an advertising company purchases a credit bureau, which then sells that information to an insurance Web site.

"They are getting access to data that I don't even know is being stored somewhere and resold to them," he said. "It's easy to paint doomsday scenarios."

The liberal encryption laws in Canada make it an ideal place for the company to be based, according to Hill. "Canada is very progressive in encryption, the ultimate decision of the government is that encryption protects far more people than it can ever do harm. The criminals have access to encryption anyway," he said.

Freedom uses 128-bit encryption, which is currently restricted for export under U.S. laws, although that may change soon. The U.S. government today announced that it would permit Network Associates Inc. a license allowing it to ship its 128-bit PGP (Pretty Good Privacy) product to a large number of countries, excluding countries such as Iraq and Cuba.

Freedom software still lets users accept the identifiers that some Web sites require, called "cookies". Each nym has what the company calls a "cookie jar," with its own cookies.

"We allow users to actually control which cookies they want and which ones they don't under each nym," Hill said.

Freedom is available for Microsoft's Windows 95/98, with versions for Apple's Macintosh and the Linux OS planned in the future. Freedom works with a variety of browsers and e-mail programs.

The complete Freedom 1.0 package includes five pseudonyms, and sells for $49.95. Each pseudonym lasts for a year. Additional pseudonyms cost $10 each. A demonstration version will soon be available, with three "nyms," each valid for 30 days.