In my last post I was firstly trying to address the issue of whether good anonymity was possible over a P2P network, and in terms of strict possibility bandwidth isn't relevent. But, I'm glad to see you agree that it is at least possible. Even with the state of bandwidth as it is today, though, I still think it could be implemented. Just put a bandwidth cap on the proxy at say 20% of the machine's total bandwidth. The main incentive for doing this, in my mind, is not to allow illegal distributing of copyrighted materials (not that I favor copyright), but to allow people censored by their governments access to content they can't view directly. Simple web page downloading is not an enormous hit on most hosts, and if some people want to download or share music and video through proxies, they will have to trade bandwidth for anonymity (but the network in general shouldn't suffer). Also, the mere fact that the network allows proxies offers protection in itself since it would be difficult to prove that a particular person is sharing illicit material and not a person proxying through him/her, even though it may seem very obvious.

The assumption is that most people won't dump their TCP stream (either because they lack the sophistication or they just don't care). And encryption *is* still then an issue. You can't decrypt public-key encrpyted data without the *private* key. Even the person who does the encryption can't decrypt without the private key. The public key encrypts, the private key decrypts. The public key might be returned with the query so if the proxy computer is just for file transfers the proxy computer wouldn't see it. But, presumably, it could just ask for it. It still then has to crack the encryption to know the content. You could have system that disposes of each public/private key pair after each use, which might prevent the proxy from even getting a public key.

As for whether you could be shut down for proxying, the DMCA isn't quite clear and it might depend on the exact implementation. For it to be contributory infrigment there has to be financial benefit in letting the transfer procede (as there was with Napster). For it to be vicarious infrigement there has to be knowledge of the violation, and if the data is encrypted no one should be expected to decrypt it to find out. And there are substantial legitiment uses of the technology (such as giving censored peoples access to the free world, whistle blowing, etc.). Let me refer you to
http://www.eff.org/IP/P2P/Napster/20...ite_paper.html
and you can judge for yourself.

As I said, cap the proxy bandwidth at 20% and only let high bandwidth hosts proxy. Those who want anonymity will have to sacrifice bandwidth, but those who don't care shouldn't be affected.