-- By JieLin - 11 Oct 2019
A few classes back, the topic of a cashless economy came up, with discussions centered around a cashless economy destroying the privacy of the free market. This got me thinking about my own presence in a cashless economy, and out of curiosity, I passed my friend my recent credit card statements for a read. She immediately noted that I always got Sweetgreen every Tuesday (an after-gym routine), or that my purchases every Friday afternoon seem to be around Midtown. I stopped her before she continued, but this was sufficient for me to realize that if a layperson could draw such preliminary conclusions about my statements, a trained data analyst could definitely draw greater inferences for use in ways that I cannot begin to imagine.
This is a massive invasion of our privacy. Banks and businesses are employing our information in an unethical way, exploiting information that they have (or can purchase) about consumers to manipulate and control all aspects of our lives. A simple regular purchase at a burger joint today could lead to the repercussion of being charged a more expensive insurance package; my own recent increase in transactions at online jewelry shops could have contributed to targeted advertising at my lifestyle.
A possible solution would be the unified payment interface, or UPI. The idea is simple – one smartphone owner who is a customer of Bank A can request a payment from, or initiate a payment to, another owner who has an account with Bank B. Neither party needs to know anything more than each other’s mobile number or virtual ID. Traditional services used to transact money online require a host of details about the receiver’s bank account before one can start transferring or receiving funds. With UPI, such details are removed. However, this does not mean that one’s information is untraceable – it is merely hidden to certain parties.
Another possibility would be to adopt the concept of anonymous digital cash, as espoused by David Chaum. One specific example would be the use of blind signatures – which takes the idea of digital signature and reinforces it with privacy. By introducing random factors, Chaum creates blinded note numbers which are essentially untraceable, to the extent that no parties know of the blinding factors and thus will not be able to determine who spent the notes. Alongside other related proposals, Chaum assumes that such proposals are viable to the extent that the system is based on “representatives and observers”, in which organizations stand to gain advantages from increased public confidence with a focus on protecting privacy.
However, the bleak reality is that no government has shown any inclination of adopting Chaum’s proposal of anonymous digital cash. Since the publication of the article in 1992, a quick assessment of 2019 has shown no further progress towards anonymous digital cash. The lack of impetus to act from the government is immense, given their participation and interest in gathering information about its citizens. In fact, China’s latest move towards developing its state digital currency, despite assurances of “controlled anonymity”, shows how difficult it is to trust governments and their purported effort towards “anonymous digital cash”.
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