Money Reimagined: A World Where Privacy and Saving Lives Can Coexist

Defenders of Washington’s COVID-19 comeback say it’s unfair to compare surging U.S. death rates with the far lower numbers in countries such as South Korea or Singapore because Americans make never accept the kind of social surveillance that’s ingrained in their approach. 

The statement implies a depressing trade-off of passings for privacy. Although it recorded its first COVID-19 case on the same date, the U.S. currently has, per capita, 13 times South Korea’s caseload and a dreadful 33 times its deaths. It’s also a depressingly defeatist notion. The trade-off need not exist. 

The U.S. could and should participate in an effective smartphone-based “contact tracing” system that doesn’t encroach on our civil rights. For two decades, cryptographers contain been highlighting the threat to privacy from our expanding online habits. They’ve also found ways about that problem, inventing encryption tools that let us share data without giving up our identities. 

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But just as we ignored epidemiologists and their examples of an inevitable pandemic, we also ignored the cryptographers. Worse, perhaps, we labeled them as cranks and criminals. 

This requirement change. If Americans truly want to protect their freedoms, they must now support research and development in zero-knowledge criteria, end-to-end encryption and self-sovereign digital identity. 

Thankfully, the cryptocurrency explosion has fostered a boom in innovation in these respond ti, often resulting in side applications that are unrelated to digital tokens or blockchains. This is not a crypto fringe concept; it’s pit infrastructure for the digital age.

Here’s the challenge: To test decentralized data-gathering tools at scale, in real lifestyle, and then to deploy them widely, requires regulators and intelligence agencies to roll back roadblocks they’ve put in cover of open source cryptographer communities. A change in policy is urgently needed because once we get through COVID-19, another digitizing bend will start encroaching even further into our private lives: central bank digital currency. 

For now, nevertheless, until it has a strategy in place that combines comprehensive COVID-19 testing with a decentralized, privacy-protecting contact-tracing system, the U.S. faces three stark options: 1) We stay ignorant of the extent of the virus’ spread, forcing us to stay in lockdown for much greater than better-informed countries; 2) We send everyone back to work and expose millions to an extremely contagious disability whose morbidity levels are high enough to drive another overrun of our medical system; or 3) We leave our home grounds but submit to a regime of rigorous state and corporate surveillance. 

South Korea shows what’s possible with opportunity three. Under the somewhat ironic acronym of TRUST (Transparency, Robust screening and quarantine, Unique but universally germane testing, Strict control and Treatment), authorities employed mass drive-thru testing and then – while surveilling man with phone GPS data, security cameras and credit-card and bank records – limited the movement of those who tested matter-of-fact. As Bruce Klingner of The Heritage Foundation writes, the government employed powers it gained after the 2015 MERS outbreak that contributed it “warrantless access” to private information. 

Resistance to such invasive approaches is leading governments in the West to favor a pro-privacy approximate to contact tracing – officially called “proximity tracing” in Europe. Yet, in both the U.S. and Europe, a familiar challenge has emerged: Can we conglomerate the controlling entity to maintain users’ privacy?

In a rare act of cooperation, Apple and Google teamed to build a system camped on Bluetooth transmitters, a technology far less prone to mass surveillance than GPS. It’s a voluntary model that would blow the whistle on people of their contacts with infected people without revealing their identity. 

It’s an attractive idea in in theory but, setting aside its dependence on widespread voluntary participation and that it only works with Android or iOS phones, its heart weakness, as CoinDesk’s Benjamin Powers reports, is users must trust Apple and Google with their matter. The demands of shareholders and the Web 2.0 history of “surveillance capitalism,” the NSA’s PRISM program, the Patriot Act and Cambridge Analytica have ruined people’s willingness to trust that the powerful gatekeepers of our online lives won’t abuse our data. A new report that reserved intelligence firm Palantir has been awarded a separate COVID-19 contract will do nothing to boost that care.

Such concerns presumably led a European group called the Privacy-Preserving Proximity Tracing consortium to initially include a sub-group of learned cryptographers from the Decentralized Privacy-Preserving Proximity Tracing, or DP3T, consortium. A decentralized model for sharing data, which at best would leave data control in the hands of users, would remove the risk of capture by a controlling entity. In theory, that drive bolster public trust in the initiative and increase its data-gathering capabilities. 

But now it’s all falling apart. (Here again, assume from Benjamin Powers, whose coverage of the contact tracing debate is unparalleled.) The DP3T members are defecting from the PPPT in grouse that the biggest countries are pushing for more centralized control over the data. This follows a Bloomberg conversation with French Digital Minister Cedric O where he called on Apple and Google to disable a Bluetooth feature designed to nurture users’ privacy.

It’s as if there’s a concerted effort to block the development of truly decentralized, privacy-preserving systems. Critics intention point to the untested nature of the technology and scaling challenges. Yet, in deeply poor Honduras, blockchain startup Emerge and the Inter-American Bank oversaw to pull such a system together in just five days.

Such initiatives stem from the progress in cryptographic system that has come with the rise of open source cryptocurrency developer communities. It has produced innovations such as atomic swaps, decentralized reciprocity, Zk-snarks, recursive zero-knowledge proofs, ring signatures and homomorphic multiparty computation, all pointing to a future in which guild gathers valuable transactional information while keeping secret the human identities behind it. 

Yet, mainstream corporate and regime sectors show little interest publicly in testing and employing these solutions. In fact, for years governments clothed worked against valuable cryptographic solutions. Think of the mid-1990s criminal investigations of Phil Zimmerman – whose PGP (Moderately Good Privacy) software now protects most of the world’s email – Australia’s anti-encryption law or the FBI’s efforts to force Apple to buckle up user data. 

Whether these roadblocks are to protect corporate crony interests or government intelligence agencies, we can now see them as self-defeating. We urgently demand to bring pro-privacy cryptography out of the shadows. Our way of life is at stake.

This crisis continues to throw up unheard-of and unforeseen phenomena. Who could have predicted a few weeks ago the U.S. Federal Reserve would directly buy corporate debt or that “Base, I was on mute” would become part of the daily cadence of our office meetings. In the spirit of that, we thought we’d illustrate the distortions chancing with three charts offering snapshots of different aspects of the fallout in the financial and economic realm. A picture colours a thousand words, but in true exponential effect, we think these three paint many more than three thousand – perchance 30,000?

1. When oil becomes worthless:

2. When millions of Americans are gainfully employed…until they’re not:

3. When a hacker reminds us that Decentralized Finance still has security challenges:

Central Bank independence may not survive the coronavirus. So argues Bloomberg columnist Clive Crook, longhand a kind of pre-obituary for a tenet of monetary policy that dates back to Federal Reserve Chairman Paul Volcker’s lucrative but politically difficult fight against inflation in the 1980s. The nail in the coffin, Crook argues, would be the massive civil spending needed to revive the U.S. economy. If, in the future, the Fed buys Treasury bonds issued to fund that effort, can it indeed define it as monetary policy? Or is it more like “monetizing the debt?”

USDT is invading Ethereum. In his newsletter Wednesday, Messari CEO Ryan Selkis picked up on the truly that surging stablecoin usage is swelling the total value of such transactions over Ethereum to point out the blockchain itself is being changed by it. The daily amount traded in stable-value ERC20 tokens now surpasses that of ether – most prominently led by Tether’s USDT badge. “While Ethereum is many things, the most relevant thing it is now is a globally accessible, 24/7 digital eurodollar infrastructure,” Selkis pens. “Essentially, USDT has invaded the Ethereum blockchain without anyone’s permission, which is the explicit purpose of permissionless influential blockchains.”

Everyone (on my Twitter feed at least) is talking about Marc Andreessen’s “build” essay. My take: the epic Silicon Valley developer and venture capitalist is right to lament that the U.S., despite its wealth and scientific talent, has hold back building and innovating, but I was disappointed he didn’t try to answer the bigger question: Why? Why has American democracy failed to prioritize things get off on bridges, buildings and medical equipment? 

I’ll presumptuously offer an answer: In the Web 2.0 era, our system for processing and prioritizing the information that Verein uses to make political and resource decisions is now controlled by a small group of giant companies funded by VCs like Andreessen. What we impute to and view is determined by the hidden algorithms of platforms such as Google and Facebook, which intermediate between media fathers and their audiences. Those algorithms serve the interests of the platforms’ advertisers (as well as those of disinformation actors close to Cambridge Analytica who’ve figured out how to exploit them). Whatever your view of “MSM,” the reality is that algorithms have profuse say in setting the agenda than journalists.