Security Notes: Digital Currency’s Balancing Act

Gideon Samid • Gideon@BitMint.com

In the digital age, we walk with sticky paws, leaving our tracks everywhere we go. You better not educate yourself, using a search engine, on biochemical poisons and easy-to-prepare explosives because some algorithm programmed at the National Security Agency will flag you as suspicious. The fear of George Orwell’s 1984 dystopia sends us to Congress for help, and as we speak congressional committees and subcommittees are writing serpentine regulations aimed to safeguard our cherished privacy.

No one is too optimistic about that, but what else can we do? How about technology? It got us into this mess, let it pull us out of it. Payment technology, in particular.

Whether it’s Bitcoin, BitMint, or something else, let’s let a string of numbers, say “0100010011101” represent, say, 65 cents. When John Doe wishes to connect to the Internet for a quick search, he “hails” (electronically) an Internet Service Provider (ISP), and passes this numeric string to buy 25 minutes of Internet access. The ISP authenticates the payment and grants the access, having no clue as to the identity of its customer. This ad hoc access transaction leaves the customer untraceable, along with any politically incorrect terms he or she types in to a search engine.

The only reason we don’t have this privacy today is that we don’t yet have widespread use of a commonly accepted digital currency. That is also why, with any ISP, the majority of low-volume users subsidizes the minority of Internet addicts. We have lost our privacy and we don’t pay fairly. But we have also forfeited convenience. Most of us would rather pay a few cents per page, or per minute, to read a news article without the annoyance of distracting advertising. Digital money allows for this naturally.

To better understand the ISP example above, think of the last time you walked into a New York street and hailed a taxi. One may have stopped next to you in a New York minute, and, for a few rumpled dollars, you reached your destination. New Yorkers do this all day, and no one in any central place knows where they are going and when. This is the vision of digital-currency reality.

Now suppose this scenario: The cabs are organized in, say, three companies; we have an account with one of these companies, pay a monthly fee, and, whenever we need transportation, a cab is forwarded to our location. In this case, the heavy cab users are subsidized by the rest of us, and the privacy of all taxi users has been violated. The cab company, along with every government agency authorized by a court, knows our whereabouts. This is akin to Internet usage today.

Shy people don’t wish to advertise that they pay a therapist to overcome their shrinking-violet syndrome. Nor do they want it widely known that they bought that bestseller, “Shy No More!” But with digital cash, the therapist authenticates the payment and inquires about intimate symptoms without compromising the identity of her customer. The bookstore makes sure that the money is good, and then ships the book—perhaps to a pick-up center where the shy customer will pick it up with a code.

With digital payment, shoppers expose their shopping habits and allow stores and agencies to profile them through and through because they are operating with a pseudonym. They use a profile-dedicated e-mail address, and keep their human identity private.

Now, you ask, what about the bad guys? Don’t we expect the government to process our cyber behavior so that the proper authorities can find out who is searching the Internet for “biochemical poisons that kill slowly and don’t show up in an autopsy” or for “explosive that can be assembled from ordinary household goods”? Security vs. privacy is too big a topic for this column. I will only say that a digital-currency payment regimen offers the technology and the freedom to move the needle up or down the scale between catching terrorists and fighting crime, on one hand, and privacy and dignity on the other.

By analogy, today’s payment technology is like the old automobiles that could race up to 45 miles per hour. Modern cars, of course, can do double that and more. The law places the needle on the compromise point between fatal accidents and public convenience. Similarly, digital-currency technology will allow the public, through its representatives, to determine the balance point between security and privacy.