Canadian Mint To Create Digital Currency

Oldcynic writes "The Canadian mint has allowed 500 developers to enter a contest to create a new digital currency. The currency would allow micro payments using electronic devices. From the article: 'Less than a week after the government announced the penny’s impending death, the Mint quietly unveiled its digital currency called MintChip. Still in the research and development phase, MintChip will ultimately let people pay each other directly using smartphones, USB sticks, computers, tablets and clouds. The digital currency will be anonymous and good for small transactions — just like cash, the Mint says. To make sure its technology meets the gold standard in a world where digital transactions are gaining steam, the Mint is holding a contest for software developers to create applications using the MintChip.'" It looks like the Canadian Mint might have a bit of Sweden envy.

Comments

A better name

[Megane]

They should call it the BitLoon.

Re:A better name

[Lord_of_the_nerf]

I was thinking the 'Aboot-eh'.

Re:A better name

[MachDelta]

Loonie -> Toonie -> MintChip?

Clearly, the name should be "Moonie"

Then we can all sound like four-year-olds when we talk about "how much Moonies" a double-double costs.

Re:A better name

[NoobixCube]

You don't want to be a pirate with your DibLoons? Digital Loonies for all! Yarr!

Re:A better name

[pnewhook]

ok, seriously. Where did the aboot thing come from cause no one here pronounces about like that.

Re:A better name

[Anonymous Coward]

Maybe it's the newfies giving us this accent stigma.

Re:A better name

[Vectronic]

I would have gone the other way... L + 8 = T... L - 8 = D... digital currency, Doonie...

Re:A better name

[Anonymous Coward]

Gimme all your Loon-e-bits!

Re:A better name

[belg4mit]

It seems to be a distortion of the actual distortion the word undergoes in many Canadian mouths, which is akin to "aboat" but not quit such a long-o.

Re:A better name

[Kielistic]

Some french-canadians pronounce it very "aboot" like. But I doubt you would hear it outside of highly francophone areas.

Re:A better name

[pnewhook]

Ok, thats the first explanation that has made any sense. Thanks! Americans confusing a french accent with 'geez that must be how Canadians speak english!'. lol

Re:A better name

[avajcovec]

Strange Brew

That was the first time I encountered any Canadian pronunciation tropes, anyway.

Re:A better name

[Toze]

The Canadian ear doesn't hear it. To the American ear, we evidently pronounce it more like "oot" than "owt," which is what they consider normative. or something. https://en.wikipedia.org/wiki/West/Central_Canadian_English

Re:A better name

[Dr. Spork]

I don't think that's right. In Nova Scotia and in places like London, Ontario, people speak very strongly in that way and many of them don't know any French. I thought it had to do with the fact that so many of the original Canadians were Scots, and in Scotland they also say "a-BOOt" and "a-GAIN-st".

Re:A better name

[19thNervousBreakdown]

Almost all of you say it, to some degree or another. It's just an accent, so you don't hear it. I guess our version of "about" sounds weird to you in some way?

Re:A better name

[Cmdrm]

Nova Scotia, you mean near where the french colonized what would become Canada? Where people still speak Acadian French... yeah, no french history there.

Re:A better name

[Anonymous Coward]

"ou" in french is pronounsed "oo" (english), but those pronoucing about "abooth" are mostly joking or making fun of you (or living in rural area, never heard English of their life and trying to translate using a dictionary, but the probably don't happen a lot). Montreal English (both Quebecois and Canadian) accent are quite strong in many ways, but not that one.

Re:A better name

[DarwinSurvivor]

That's the really strange part, unless you go south of Oregon, Americans don't sound very different to us Canadians. Then again, I live on the west coast, so there is a less french influence over here...

Re:A better name

[starfishsystems]

Yeah, Nova Scotia, good name for a French colony. That's French for what exactly?

Re:A better name

[0100010001010011]

Where are you from? When I visited out in Halifax I didn't notice it as much as when I visited northern Minnesota / Wisconsin. I'm going to guess that central canada has it a bit heavier than where ever you are from.

Re:A better name

[VVrath]

It's not French for anything - Nova Scotia is Latin.

The French call it Nouvelle-Écosse, meaning New Scotland.

Re:A better name

[Anonymous Coward]

Nothing so amusing than hearing the Americans laugh at the Canadians about their accents and spelling and the the Australian asking the the New Zealanders to say six and then fofl, from an english perspective, when its all we can do to try and stop jamaican patwa becoming the normative in the mother tongue.

Re:A better name

[mcneely.mike]

Well, maybe it's aboot time we did!

And yes, I AM CANADIAN!

Re:A better name

[Renig]

And if you do go south of Oregon, Americans sound strange to Americans.

Re:A better name

[Phrogman]

People tried to coin "Doubloon" for the 2 dollar coin but it never caught on.

Re:A better name

[pnewhook]

I've been to and know people from both London and Nova Scotia, and I can assure you they dont speak in that manner.

Re:A better name

[nyctopterus]

When I lived in Toronto most people pronounced it something like that. I think it's closer to "abewt" though. Kinda annoying that people can't seem to help themselves from making stupid jokes about this stuff (France gets it worse with all the stupid "surrendering" bullshit). It's tiresome.

Re:A better name

[Bob the Super Hamste]

I was thinking more of BitLoonie.

Re:A better name

[mcgrew]

Second City TV. YouTube, Wikipedia. Taken farther by South Park.

Re:A better name

[carbonUnit42]

My vote is for Wi-Loon!

Re:A better name

[alaffin]

Nope - not our fault. Oh we have a wonderfully fun accent (actually - we have a bunch of wonderfully fun accents, you can often tell where someone is from in Newfoundland by the lilt of their speech) but we do not say "a-boot". That's a mainland product pure and simple.

Re:A better name

[Cruciform]

I lived in London for 15 years and never heard anyone speak in a way that was reminiscent of "aboot".
I'm on PEI now, where I grew up, and you'll find that in the fishing villages that were originally french there's people who say "dis, dat, dese, and dose" for "this, that, these, and those" and some other humorous applications, as artifacts of their ancestors pronunciation of 'th' and other letter combinations.
Most people I know pronounce 'about' with the latter syllable sounding like a 'bout' of boxing.
In the game studio I worked at we had people from all over the world, and it was noticeable in at least one American that they pronounced 'about' with an extra beat in the 'ow' part. So a two syllable word sounded like it had three syllables. Kind of a reverse of the Japanese tendency to remove syllables from pronunciation in common speech. (The name Asuka for example, which we'd hear as Oska)
Meanwhile If I talk to someone from the southern US, they think I have a funny accent. If I talk to someone from the west coast or someone that speaks with the common 'broadcast' dialect (notice that most major anchorpeople have a "neutral" accent) we can't immediately identify the area the other is from.
But there's also just as much dialect variety here as the US. Just like "Bawston" and "Bal'more", or down in "Noble's Holler" (Yay, Justified). Probably not as much as Scotland though. :) I've read that in Scotland the separation of villages by as little at 10 miles could have villages barely able to understand each other in the "old days".
Language is neat!

Re:A better name

[wickedskaman]

U mad bro?

Re:A better name

[Anonymous Coward]

No you couldn't, as currently the Toonie could already be called the Moonie, since the coin has the Queen with a Bear bottom.

Re:A better name

[pnewhook]

east coaster now living in central canada

Re:A better name

[DemonGenius]

I don't know, when I cross the border from Manitoba into North Dakota and Minnesota, there is a bit of a different accent, doncha know?

Re:A better name

[jxander]

I was leaning towards Digi-Duck.. But BitLoon does have a nice ring to it.

Re:A better name

[GameboyRMH]

It's an exaggeration of the slight difference in the pronunciation of the OU sound, they same way Brits think Americans say "Stap" instead of Stop.

If you think the stereotypical Canadian accent is fictional though, that just tells me you haven't gone far from the major cities.

Re:A better name

[AnonyMouseCowWard]

Please mod this up.

"I'm oot and aboot", my gf likes to say mockingly (she's Scottish). As a Quebecer I can swear to you none of us would pronounce "aboot", we would say "abowtte" or something like that (pronounce it in your mind as you wish, I can't convey a Quebec accent through text).

Re:A better name

[Anonymous Coward]

pwned

Re:A better name

[VisceralLogic]

it was noticeable in at least one American that they pronounced 'about' with an extra beat in the 'ow' part. So a two syllable word sounded like it had three syllables

It's a diphthong.

Language is neat!

I agree!

Re:A better name

[mcgrew]

I find that the strangest soiunding Americans live on the northeastern seaboard. They sound like they have speech impediments, unable to say the letter "R". Why is "Boston" pronounced "bwastin" by Bostonians?

Maybe it's because the southerners stole all the Neoo Yawkuh's Rs. "Roll down the winder, Billy Bob!"

Re:A better name

[Suddenly_Dead]

Americans can hear it. I was flabbergasted the first time an American (a Californian, whose accent I couldn't tell apart from my own) recognized I was Canadian just from speaking to me; then I realized I'd just said "about". I have a pretty standard west/central Canadian accent.

Re:A better name

[sudog]

It's called a diphthong and yes, the Canadian ear can hear it. We can tell it's a different phoneme from both the phonemes in around, and the ones in the actual "boot". It's the American ear that can't hear the difference, which is why when Canadians say it, the American ear translates it to the nearest sound they grok, which is the "oot" in boot, and why we sit there puzzled when Americans think we're saying "a boot".

Re:A better name

[Anonymous Coward]

True, in Scotland each 'shire' had a different dialect. then they all upped and moved to Canada making a real muddle of everything:) Oh ya, and their M
asons built the country for about 50 years.

Canadian digital currency

[jd2112]

So it's like bitcoin eh?

Re:Canadian digital currency

[vux984]

"And unlike BitCoin, a peer-to-peer hosted digital currency with a fluctuating value, MintChip is simply a new way to exchange Canadian dollars. Plus, itâ(TM)s backed by the Canadian government. "

Re:Canadian digital currency

[Anonymous Coward]

It actually works very much like Bitcoin, except for the way that transactions are verified. Bitcoin publishes all transactions publicly to ensure that money cannot be double-spent, while Mintchip relies on a tamper-proof client which is physically incapable of spending the same money twice.

Re:Canadian digital currency

[jd2112]

"And unlike BitCoin, a peer-to-peer hosted digital currency with a fluctuating value, MintChip is simply a new way to exchange Canadian dollars. Plus, itâ(TM)s backed by the Canadian government. "

Try imagining my original post spoken by Dave Thomas or Rick Moranis.

Re:Canadian digital currency

[hobarrera]

If I can get my hands on it, I can tamper it. Period.

Ok, not me, but rather, an expert on the subject.

Re:Canadian digital currency

[c0lo]

If I can get my hands on it, I can tamper it. Period.

Ok, not me, but rather, an expert on the subject.

Security is a matter of balancing the cost/benefit - if the attacker incurs a cost of $1000 to break one device used for micropayments (assumed to be used for petty change), I'd say it is safe enough.

As a user, I'd rather have concerns on the anonymity of the transactions, though.

Re:Canadian digital currency

[Anonymous Coward]

Wow, my humour center is oscillating between imagining Rick Moranis in Ghostbusters boring people to death at his party with that speech, or a ludicrous SCTV sketch. Man I gotta find those SCTV DVDs... well played.

Re:Canadian digital currency

[1s44c]

So it's like bitcoin eh?

If a government is creating it you should expect strong central control along with the ability for them to revoke and create money at will and some form of tax system built right in.

It's going to be a sick. sick parady of BitCoin, basicly SolidCoin.

Re:Canadian digital currency

[1s44c]

"And unlike BitCoin, a peer-to-peer hosted digital currency with a fluctuating value, MintChip is simply a new way to exchange Canadian dollars. Plus, itâ(TM)s backed by the Canadian government. "

On the negative side it's also backed by the Canadian government. I don't see govenments queuing up to make currency anonymous, they will want absolute control.

Re:Canadian digital currency

[1s44c]

Tamper-proof software? That's putting the trust in the wrong place and it's going to get tampered.

Re:Canadian digital currency

[1s44c]

If an attacker figures out how to crack one device he most likely knows how to crack all of them. Then it's a short step to faking billions of transactions.

There isn't a 'Safe enough'.

Re:Canadian digital currency

[makomk]

As far as anyone can tell, if an attacker breaks one device then she'll be able to create arbitrary amounts of money out of thin air and transfer it to other devices through the Internet.

Re:Canadian digital currency

[Anonymous Coward]

Plus, it's backed by the Canadian government.

This is actually a negative. MintChip is backed by the Canadian government, which means that the Canadian government can inflate away its value if it so chooses. BitCoin is backed by the laws of mathematics, and can't be inflated away by anyone.

But MintChip is also accepted by the Canadian government, as payment for taxes, etc., which is a lot more important in the short term.

Re:Canadian digital currency

[hey!]

Well, there's an issue of *scope* here. Counterfeit physical dollars are expensive to produce, almost impossible get absolutely perfect, and risky to put into circulation in large quantities. Counterfeit virtual dollars are digital; either they're perfect or they're completely useless.

Once you know *how* to create a fake digital dollar, your counterfeiting operation becomes cheaper and safer to scale. You could handle the whole operation from a laptopat a public wi-fi hotspot and have unlimited use of the full faith and credit of the Canadian government.

Re:Canadian digital currency

[w_dragon]

from TFS:

The digital currency will be anonymous and good for small transactions — just like cash

Re:Canadian digital currency

[Anonymous Coward]

So it's like bitcoin eh?

If a government is creating it you should expect strong central control along with the ability for them to revoke and create money at will and some form of tax system built right in.

It's going to be a sick. sick parady of BitCoin, basicly SolidCoin.

Actually, it will be "the screw you in the ass" currency system that does not allow for the anonymous purchase of a a bag of potato chips because the government needs to collect it tax revenues and monitor your health at the same time. Point of sale terminal says, "I'm sorry Dave but you have exceeded your daily sodium intake. No sale."

Re:Canadian digital currency

[AdrianKemp]

You're assuming a purely hardware crack.

I've read about "tamper-proof" chips. In one example one of them was compromised using acid to carefully etch away the protective housing and they said an electron microscope (but it was clearly something else that did the actual manipulation) to manually recode it.

That's not something that scales well, and thus such an implementation would be inherently secure... Secure, not unbreakable.

Re:Canadian digital currency

[hobarrera]

Safe enough? For $1000?
I could pay my breakfast every day (~$20) for a couple of months to recover the investment, from then on, free breakfast!

Re:Canadian digital currency

[bdabautcb]

I think jd was thinking more along the lines of Elsinore Beer, ya hoser.

Re:Canadian digital currency

[JoelKatz]

If you break one chip, you can spend the money that chip holds thousands of times. Presumably, at some point they'll have to invalidate that chip remotely, but because the system is a primarily offline system (just like cash) you can't propagate that invalidation to devices in the field. The first time a transaction is invalidated indirectly (while a non-compromised chip holds it), confidence in the system will collapse.

Jack breaks his chip. He immediately spends the same money to Abel, Baker, Cain, and Eddie. Eddie pays Fred. Baker pays Gerry. Abel pays Harry. The duplication is detected and .. whose money is invalidated? Gerry and Fred innocently accepted the same money -- does their money get remotely removed from their wallet?

As soon as that happens, everyone will have no way to know whether their money is legitimate or not because there will be no way to know whether or not some other chip that has not reported to the network is holding the very same money you have.

Re:Canadian digital currency

[AdrianKemp]

Well hold on, there's a few assumptions you're making there that I'm not entirely sure are valid yet (given that it's still in the R&D phase)

You say that bad devices cannot be blacklisted by others -- I'm very hesitant to believe that any system would be created that worked this way. There will be a method for adding money to the device and at that time a list of blacklisted devices could be added as well (in a write only fashion, of course).

As far as bad money getting into the system -- I'm sorry but organized (and disorganized) crime has been doing that for... ever? The cost of illegitimate transactions has to be eaten just as it is now with credit cards. The goal will be to make the system secure enough and low value enough that the cost of expected breaches don't outweigh the costs of the system that it's replacing.

There's making a perfectly secure system, and there's making a system that is as secure or better than the existing one (cash) but without the massive cost of printing and circulation. Let's not forget which we're talking about here.

Re:Canadian digital currency

[DJohnsonCA]

It'd be just like an email bank transfer between two accounts. Internet access needed. It should be just as secure as online banks so tamper away at those for practice. If you think you can catch the wifi/bluetooth or whatever and tamper then try a man in the middle on a standard SSL online bank and steal money like that. Not likely to happen.

Re:Canadian digital currency

[Anonymous Coward]

Yeah, that's what they want you to think. /me goes off to buy another tinfoil hat.

Re:Canadian digital currency

[hobarrera]

RTFA, it will allow both online and offline operation.

My Ass

[bistromath007]

"The digital currency will be anonymous..."

What a depressingly boring example of the One Big Lie technique. Don't they know they're supposed to blame a minority for something?

Re:My Ass

[rtb61]

Even more amusing would be digital currency tripping over a patent or two, only to discover a few years down the track, Canada locked into making patent payments for 10% or more of the electronic currency they are trading.

Re:My Ass

[vux984]

I assume there are patents covering most of the modern anti counterfeiting techniques that are in use along with the counterfeit detection techniques...

Re:My Ass

[Anonymous Coward]

I think it's possible for them to anonymize it. You just sign up with an anonymity provider which lumps a whole bunch of transactions. All they would know is that something was routed through FooCan. As long as there is BarCan, BazCan, etc. you have a decent market. Then it all boils down to whether or not BarCan gets a subpoena. If that happens, it's understood that trust is out the window and it's not anonymous. Drug dealers just go back to using paper cash, gold, or whatever else it is they use to move large ammounts of money.

Re:My Ass

[Ihmhi]

How would you even collect royalties on something like that? Every time a digital "coin" is produced, every transaction, or something else?

Re:My Ass

[GumphMaster]

In my personal experience of royalty claims... the claimant will want to be paid for any conceivable use of the "technology" even if it really has nothing to do with them. Create a unit, pay them. Transfer the unit, pay them. Bank the unit, pay them. Collect interest on the banked unit, pay them. Convert the unit into "real" money, pay them. Produce any sort of system that can be used to handle the units, pay them. Do the same thing on a mobile, pay them. ... or a social network etc. There's no common sense involved, it's a case of what they can get away with. Doubly so when they are a large concern, and the user of the "technology" is not.

Re:My Ass

[pnewhook]

Why would you assume that? Since governments print the money and different governments share techniques on how to make it counterfeit proof, it would just be a trade secret. There's no point in making a patent on it.

Re:My Ass

[Anonymous Coward]

Government holds the anti-patent trump card... Legislation. If it proves to be too onerus, they can ultimately win by simply passing a law exempting themselves from the auspices of the relevant patents. They'll casually point this out to any trolls that come calling, along with some drive-by hints that the legislation might be worded in such a way that said patents would be invalidated, and I suspect the trolls will slink-off into the dark preferring not to risk waking + angering the sleeping (Parliamentary) giant again...

-AC

Re:My Ass

[Anonymous Coward]

Canada doesn't have software/algorithm patents. Sorry.

Re:My Ass

[dryeo]

They disclose many of the anti-counterfeiting techniques, especially the obvious ones like the new hundred I just got. Hard to hide that it is plastic, has holograms and even a transparent window on it. The idea is as much to discourage people from even trying to counterfeit as well as catching them.

Re:My Ass

[Chuck Chunder]

Why would you assume that? Since governments print the money and different governments share techniques on how to make it counterfeit proof, it would just be a trade secret. There's no point in making a patent on it.

Of course there is, just because you are are printing money doesn't mean you don't want to make money. Securency (involved in producing a lot of modern polymer notes) certainly hold patents on techniques they use.

Re:My Ass

[Anonymous Coward]

Canada locked into making patent payments for 10% or more of the electronic currency they are trading.

Or since they're the government they could pay out a single fair-sounding lump-sum and that's the end of it.

Re:My Ass

[Anonymous Coward]

It would be relevant if the ultimate user didn't have the power to write a law that excluded them from paying royalties. But since they do, it's a non-issue.

Re:My Ass

[pnewhook]

The methods are disclosed, but not how they are implemented. How they make the polymer notes is a secret (and yes patented - I'll correct my earlier assertion)

Since this complaint is fashionable...

[MobileTatsu-NJG]

Um, excuse me, but this is a world site, not a Canada-centric site. Boy this place stinks, amirite?

Re:Since this complaint is fashionable...

[Anonymous Coward]

Yes, but submitter threw in the obligatory "Sweden is better than everybody" angle, so it's okay.

Re:Since this complaint is fashionable...

[Anonymous Coward]

As someone from the US, it is always good to hear stuff about Canada. Why? A tinge of envy:

Decent health care.

The fact that an illness won't swipe your nest egg.

The fact that you won't face life in prison for possessing a joint or peeing on a fence.

The fact that your kids won't wind up in jail (with a permanent criminal record) because they backtalked a teacher.

The fact that one doesn't have to carry a firearm in Canada everywhere one goes due to major swaths of the country belong to gangs or cartels.

The fact that Canada cities are clean and relatively crime-free. In the US, you either live in the suburbs or in a gated community in order for your kids not to be in the obituary.

The fact that Canada has an actual functioning school system that teaches more than to be docile consumers.

The fact that the food supply actually is monitored rather than depending on the word of the lowest bidding Chinese importers.

Re:Since this complaint is fashionable...

[Formalin]

It would be if .999 posts were canada based also.

Argh, that isn't even english.

Re:Since this complaint is fashionable...

[Hamsterdan]

"The fact that you won't face life in prison for possessing a joint or peeing on a fence.

The fact that your kids won't wind up in jail (with a permanent criminal record) because they backtalked a teacher."

Don't worry , we're getting there...

Re:Since this complaint is fashionable...

[theheadlessrabbit]

Harper is working real hard to change a lot of this.

Re:Since this complaint is fashionable...

[Anonymous Coward]

As someone from the US...

From the rest of your post, I'm guessing that you meant to qualify that with "but not living in the US recently"

Wiping out our savings

[cpu6502]

Digital currency just means the Central bank can wipe-out our savings more efficiently (by devaluing the dollar). You work and scrimp to save a million dollars for retirement. But by the time you're an old man, its purchasing power will be diminished to just 100,000 thanks to the actions of the rich bankers,

We're heading in the wrong direction. We should be looking for a STABLE currency that can not be devalued.

Re:Wiping out our savings

[Hamsterdan]

Something like Canadian Tire money?

Re:Wiping out our savings

[Anonymous Coward]

Yeah, it's the bankers and conservatives who are trying to devalue the currency by inflation. ... because they have tons of outstanding loans that will be easier for them to repay once currency has been inflated ridiculously.

Re:Wiping out our savings

[green1]

I think this is 2 completely unrelated problems. What this article is talking about is a way to exchange Canadian Dollars with people without physically carrying and handing them paper bills or metal coins. The currency itself isn't changing, just the method of transfering it.

As for devaluation. This is actually a touchy subject, in some ways currency needs to devalue, doing so stops people from sitting on vast piles of it and keeps them spending it which keeps the economy going, which generates jobs, and allows more people to spend money. Of course it also needs not to devaluate too quickly for the reason you list in that you have to be able to save for future big purchases, and be able to save money for retirement. Balancing the 2 is very tricky, but also completely unrelated to this particular initiative.

Re:Wiping out our savings

[vux984]

only an idiot would build their retirement in cash dollars. this is why as soon as you've got more than a few thousand bucks in cash savings you should invest them.

One of the many purposes of investjment is to preserve the value of wealth in an inflationary environment, where the devaluation of currency over time is assumed, and hedged against.

Re:Wiping out our savings

[Z34107]

Digital currency just means the Central bank can wipe-out our savings more efficiently (by devaluing the dollar).

I hate to break it to you, but "digital" has jack shit to do with whether or not a central bank can devalue the currency.

Hint: It can.

Re:Wiping out our savings

[knorthern knight]

> As for devaluation. This is actually a touchy subject, in some ways currency needs to
> devalue, doing so stops people from sitting on vast piles of it and keeps them spending it which
> keeps the economy going, which generates jobs, and allows more people to spend money.

The 1930's called. They want their "funny money" back. See http://turmelpress.com/socred1.htm

Re:Wiping out our savings

[Anonymous Coward]

Currency does not need to be devalued, devaluation is theft. Hoarding is a false argument made by people who confuse money with wealth. Balancing the flow of wealth (ie: money) is indeed very tricky, so tricky in fact that it cannot be planned by a central authority using fanciful economic models but should rather be left to free markets. So fuck off "independent" central banks with your fractional reserve bullshit, the power to create money belongs only to the people.

Re:Wiping out our savings

[Anonymous Coward]

Digital currency would have no effect on the ability of central banks to 'print' money. Central banks can already deposit money into accounts electronically and out of thin air. That doesn't mean basing our currency on rocks is a solution either though.

Re:Wiping out our savings

[Anonymous Coward]

I would like every libertarian to conduct the following thought experiment:

What happens if one king owns all the gold?

I don't know what will happen when a libertarian conducts this experiment. I just know what happened when I conducted it. First, I realized that gold would have no use as currency in such a situation. All the other people in the kingdom would use silver. If the king owned all the silver, they would keep finding subsitutes in turn until they had something that circulated in reasonable ammounts among all the people.

Next, on the way from a functioning gold-based economy to the degenerate case of control at the hands of one man, there would be an intermediate state. Say perhaps, only the lords and ladies had gold. It would still not function as a currency among the peasants.

As the peasants were drained of their gold, they would gradually turn to other things. There might even be a bizarre state of affairs where gold became cheap relative to other goods because the writing was on the wall, and it was apparent that it would be a dysfunctional currency.

Now draw a parallel between this bizarre medieval kingdom and our moder society--one where US Dollars are increasingly concentrated in the hands of a few. We see that the dollar is beginning to fail.

As much as we might like to assume that money is strictly the measure of a mans talent and willingness to work, we must also acknowledge that it is a public resource. Determining at what point we leave the "Newtonian" world of personal responsibility and enter the "relativistic" world of wealth imbalance is a job that has been left to politicians. Our current society is the result.

Re:Wiping out our savings

[Anonymous Coward]

True, it should remain with the treasury, and the banks should be buying currency at interest from the government, not the government buying currency by selling bonds.

That wouldn't change the fact some level of devaluation is necessary to maintain liquidity in an economy. That would be accomplished without the transfer of wealth to private entities, and could (and has been) be done by a federal government. The Americans had something called colonial scrip that served this function. Unfortunately it wasn't well controlled and they devalued it into oblivion, but that can be avoided with appropriate regulation and legislation.

Re:Wiping out our savings

[c0lo]

Digital currency just means the Central bank can wipe-out our savings more efficiently (by devaluing the dollar).

Why do you think that the "digital" attribute is what enable them to do that? Like they aren't doing it already with printed banknotes or minted coins? You think it cost them much to add other 3 zeroes on a note?

Re:Wiping out our savings

[Bonobo_Unknown]

The main difference in the real world is that there are as many US dollars as there are numbers. You're comparing a finite resource with an infinite tool.

Re:Wiping out our savings

[Anonymous Coward]

Right... Quote from the blurb "meets the gold standard". BitLoon certainly does not meet the standard of a stable currency.

Re:Wiping out our savings

[Wildclaw]

Implying that bankers are the direct cause of a devaluing dollar shows just how little you know. Bankers love to keep general inflation down as inflation cuts into their ability to profit from loan activity.

A properly run economy (as in one neither run by loan creating bankers nor homeopathic Austrian economists) should focus on maximizing actual real production. If that means inflating the currency 10% per year, so be it. Workers won't mind, because their salaries will tend to rise faster than inflation in a productive economy. The government won't mind, because they want said production. The pension savers won't mind, because they will have their money in government bonds as stocks, both of which are tied to actual production.

The only ones who mind are financial people that won't be able to squeeze an economy that has sufficient currency to function.

Re:Wiping out our savings

[Anonymous Coward]

And ^this is the underlying problem behind modern economics: Governments try to run themselves like businesses: leading to them not caring about what their populace does.

A recession is simply either the majority WANTING less, or the inability for people to achieve what they currently want. An economic boom simply people WANTING more or following through on a plan that get's them there.

I love the "blame the banks" tangent, it gives people something common to want. (as silly a path as it is)

Re:Wiping out our savings

[Anonymous Coward]

And you, like most of the people, do not understand the purpose of money. Like the GP said, money devalues. It devalues because its purpose is to facilitate trade, not be wealth.

Fiat currency is not an asset. It is a liability of the backer (the government). It is devalued (ideally) *slowly* such that people can save liquid currency for times they need it while at the same time desuade one from hoarding onto more of it than needed for immediate or short term.

If you want an asset, buy something with your money. Then you have an asset, not gov't debt.

Re:Wiping out our savings

[Anonymous Coward]

Its already been tried, and has failed miserably in Russia and most of Eastern Europe, Asia etc

Re:Wiping out our savings

[tthedford]

No, what the article is really talking about is creating a way for the rulers to cut off your money supply by the stroke of a key.. locking your digital money account.. effectively turning you into a street person beggar instantaneously at any time they desire. Total control.. thats what they are talking about.

Re:Wiping out our savings

[Anonymous Coward]

All the other people in the kingdom would use silver.

“Gold is the currency of kings; silver is the currency of gentlemen; barter is the currency of peasants, and debt is the currency of slaves.” –author unknown

You can guess what American's currency is; all dollars in circulation are debt, ergo they are using the currency of slaves.

Re:Wiping out our savings

[Vaphell]

A properly run economy

Economy doesn't need to be run, it's not a car. It's like saying that ecosystems need to be run or the weather needs to be run or the water circulation needs to be run. It just happens because there are naturally existing forces that initiate actions.
Just look at the track record of human interventions in ecosystems to make it better. Aral Sea nearly gone, Australia is full of nasty foreign species that were to fix an existing problem, but caused greater one, Aswan Dam has its own share of problems. That's how good people are at controlling things they don't understand.

Thanks to decades of debt-heavy "optimization" geared to inflate the holy GDP metric, we have a global economy that is at the brink of collapse.

Re:Wiping out our savings

[Anonymous Coward]

Digital currency just means the Central bank can wipe-out our savings more efficiently (by devaluing the dollar). You work and scrimp to save a million dollars for retirement. But by the time you're an old man, its purchasing power will be diminished to just 100,000 thanks to the actions of the rich bankers,

We're heading in the wrong direction. We should be looking for a STABLE currency that can not be devalued.

(External) Devaluation of Iceland's krona helped them recover some semblance of an economy. Compare and contrast that with Ireland (small, isolated island economy with a small-ish population) where folks have been going through economic pain via a (internal) devaluation / deflation.

A flexible monetary policy gives countries more options when the shit hits the fan when economically speaking. This is why I think Iceland's plan to adopt another country's currency is dumb: it was the floating krona which allowed the domestic economy to bounce back.

If you want to know more about this read Paul Krugman's weblog / writings: he spells things out quite well with plenty of examples.

Re:Wiping out our savings

[Anonymous Coward]

in the middle ages and renaissance there were centuries with essentially ZERO inflation.

saying we have to have inflation is a false and dishonest premise with which to start a discussion.

Re:Wiping out our savings

[GLMDesigns]

Thank you. Perfectly stated.

Re:Wiping out our savings

[dj245]

Joking aside, the value of the Canadian Tire discount coupons given to the customer during a sale are tied to a percentage of the sale. (The coupon rate earned was initially 5% of the eligible purchase price, but was subsequently lowered to 3%, then 1.4%, and now is 0.4%.) This means that as the Canadian dollar depreciates, the Canadian Tire discount coupons depreciate also. Additionally, since the Canadian Tire rebate percent has decreased over time, the total purchasing power of all Canadian Tire discount coupons has decreased substantially over the years.

Its an interesting topic, and one that is pretty much exclusive to Canada. I'm not aware of any retailer this large having a discount program like this for such a length of time that the discount coupons are considered a permanent part of Canadian culture. I'm sure some Canadian economics students could come up with a variety of thesis' on Canadian Tire money, if they have not already.

Re:Wiping out our savings

[BetterSense]

The king's hoarding of the gold is not that big of a deal without a "legal tender" mandate. In a free banking system, as you point out, the peasants can use other things as money, and the value of gold as a currency just changes in real time to compensate based on the King's shenanigans. "Imperial credits aren't worth much out here, I need something more real" etc.

When the King requires that gold be the only legal money--that's what really allows him to manipulate the economy. Legal Tender laws are the real problem. With legal tender laws, there is no competition to keep a currency in check, and the for the purposes of manipulation, the sky's the limit. Without legal tender laws, devaluing one currency just results in people switching to a superior currency. Governments like power, and they like to mandate that taxes be paid in a certain currency. The gold standard is an attempt to limit the ability of a government to manipulate a 'legal tender' currency, by tying that currency to something physical. But without legal tender laws, you don't need gold. You can use soybeans, bitcoins, kongbucks, averaged indices of all the above, or whatever you and your customers agree on.

Re:Wiping out our savings

[cpu6502]

>>>in some ways currency needs to devalue, doing so stops people from sitting on vast piles

It has devalued by 95% since my grandfather was a young man. He earned about $10,000 a year and saved a lot of it, so that he had about $200,000 saved when he retired. Then he passed the money to his children. BUT today thanks to devaluation, it is nothing. An entire lifetime of work devalued to just 2-3 years of current labor.

I prefer the 1800s economy. Back then the U.S. dollar lost none of its value. A dollar in 1800 had just as much purchasing power in 1900. It was a stable currency and when you stored away your money, you knew it would still be there ~100 years later, rather than devalued to just 5%.

Re:Wiping out our savings

[Anonymous Coward]

"Abandoning practicality in the name of principle is the hallmark of an extremist."
- Churchill

Re:Wiping out our savings

[wintersdark]

I'm sorry, maybe I've missed something, but how is this any different than cash in this regard? Inflation devalues all currency over time.

Re:Wiping out our savings

[ultranova]

We're heading in the wrong direction. We should be looking for a STABLE currency that can not be devalued.

That would entail absolute market control by the government. After all, as you save up your million dollars, the amount of money circulating decreases, so it's value increases. If you then spend them, the amount of money circulating increases, so it's value decreases.

The former can be solved by printing more money, but the latter is more difficult - while it's in principle a simple matter of increasing taxes to remove money from circulation, in practice the million dollars spent don't enter the economy evenly and will even make many people worse off due to the rising prices, so they can't really take the increasing tax burden. So, either you accept that the government can tell you how much you can spend and where, or you accept that currency can and will be devalued.

And besides, why would you even expect that money you saved when you were 20 would have the same purchasing power 40 years later? Thw world has changed in the meantime, nations have risen and fallen, energy and raw materials are more expensive than they were in your youth, and the productivity of work is likely far higher. Money is meant to simplify the logistics of transactions; why on Earth do you think you're entitled to treat it as an option you'll cash in 40 years later? And why in Hell do you think that enabling such schemes should be the primary or even any concern of economic policy?

Re:Wiping out our savings

[Anonymous Coward]

Interesting response, you had me going until the "left to the free markets". Free market currency manipulation happens more than you may be aware. Government oversight (in the US, the Federal Reserve) serves to keep a hand on this for many reasons, not the least of which is national security. Paraphrased from another Slashdotter:

Here's a quiz to tell if you're a Ayn-Rand-worshipping-batshit-crazy-libertarian or a normal person. Finish this sentence:

"An ounce of prevention is ___________________":

a) "worth a pound of cure."
b) "an unconscionable interference with the free market and an offense against human liberty."

Go back to your President Paul fantasyland.

Re:Wiping out our savings

[GameboyRMH]

Thank you, there are many good arguments against a digital currency but this is the dumbest and it comes up in every discussion. If we were currently trading exclusively in gold coins it would be at least a little understandable, but we're currently using bits of paper and - drumroll...numbers in computers!

Re:Wiping out our savings

[Anonymous Coward]

Currency does not need to be devalued, devaluation is theft. Hoarding is a false argument made by people who confuse money with wealth. Balancing the flow of wealth (ie: money) is indeed very tricky, so tricky in fact that it cannot be planned by a central authority using fanciful economic models but should rather be left to free markets. So fuck off "independent" central banks with your fractional reserve bullshit, the power to create money belongs only to the people.

Well, you are free to hoard something else than U.S. dollars, and many of us are. Also, nothing prevents you from creating your own money.

You'll just need enough dollars to pay your taxes and settle your dollar-nominated debts.

Re:Wiping out our savings

[Bigby]

But that asset gets taxed. So you can store wealth. I completely agree with your premises, if there were a "trade" money and a "wealth" money. Maybe drop capital gains taxes and loss writeoffs on commodities...

Re:Wiping out our savings

[strikethree]

Invest? ROFLMAO. A few thousand people took the investment money of hundreds of millions people around the world and almost caused the collapse of a dozen or more governments. We are all sheep just waiting to be sheered.

We are just resources to be harvested. The fact that we are humans is irrelevant to those who are doing the harvesting. The fact of the matter is that the money was never yours to begin with. It is a convenient fiction to allow you to be as productive as possible. Once your productivity is over, you are simply discarded.

Re:Wiping out our savings

[Anonymous Coward]

Balancing the flow of wealth (ie: money) is indeed very tricky, so tricky in fact that it cannot be planned by a central authority using fanciful economic models but should rather be left to free markets.

There is NO such thing as a "free market". It is a concept that was invented by Right Wing economists.

Every time somebody wants to leave the economy up to the free market, what they REALLY mean is that they want corporations to have a right to pollute without consequences, take land away from people, take water rights away from people, etc. The "free market" is actually just an excuse for bad people to take advantage of weak people.

There is nothing that is "free" about being allowed to trick people out of their money with a pyramid scheme.

Re:Wiping out our savings

[green1]

Actually, this does not appear to be the case, they talk specifically about anonymous. Which means that they can not have that sort of control.

This, if done properly, (and without being able to see the end product, it's impossible to tell if it is being done properly) would give nobody any more power than they already have, it would simply simplify existing transactions and allow us to migrate away from paper and coin. I actually am glad the Mint is doing this, they are one of the few entities I would trust with this initiative as they are likely not in it for a profit motive being a crown corporation, nor are they high enough up the food chain to likely be doing it for a power/surveillance motive. Their most likely motive is simply to reduce their costs of minting coins.

Now of course neither you nor I can speak with any certainty as to how the end product will turn out, it could be better than I imagine, or worse than your nightmares, but at least the system as described in the article is on the right track.

Re:Wiping out our savings

[green1]

Would you prefer a system where your gradnfather's wealth permitted you to live off it indefinitely without lifting a finger of your own to work? Obviously for you that would be great. But imagine if that was common place for everyone, for the economy as a whole that would be a disaster. In fact that situation would actively cause inflation because it just isn't a sustainable situation. If nobody needs to work (because they already have enough money to be wealthy) then how to you get people to work?

Re:Wiping out our savings

[green1]

The interest rate was also zero, there was no stock market, or way of investing. Poverty was rampant, and most of what you would buy with your money today simply didn't exist (not that you would likely have had any anyway unless you were of noble birth)

Saying the situation in the middle ages is in any way at all comparable or possible in today's world is a false and dishonest premise with which to start a discussion.

Re:Wiping out our savings

[brunes69]

There are other reasons you have to de-value currency as well... the main one being that the whole purpose of currency is to act as a representitive unit of someone's work product. Work product is not constant every day, the world produces more work. At the end of that day, somehow, somewhere, that work needs to be accounted for in the economy... and it will end up happening by creating more currency, via one method or another. When more currency is created, the value of all the existing currency is IMPLICITLY de-valued.

This is also why all "gold standard" currencies end up as nonsense... because gold is finite... at some point, it will all be gone... then what will you represent the next day of global labour with?

Re:Wiping out our savings

[lsatenstein]

This digital currency option with cell phones has been in use for years in Africa. You go to a pharmacy, postoffice, bank, and you buy some digital money.
Take a taxi, and you go cellphone to cellphone and transfer money to the driver. (In Africa, there is no fee, and no tax to make and receive payments). The fee is imposed when you purchase the digital money.

The idea for North America is that you can load up your cell with money for a days purchases at the electronics store, buy that tv or whatever, and be assured that your credit or debit card will not be hacked. It beats paying by cheque.(check).

How do they keep track or prevent counterfit funds? I am not sure, but the system works well, so I am told.

Security Through Obscurity

[Anonymous Coward]

MintChip operates in either an online or an offline mode. The online most is basically the same as EMV cards used in europ. The offline mode relies entirely on a master secret key which is on every single mintchip.

Let me repeat that, the security of offline transactions is based entirely on a secret which is on every single mintchip.

Right, good luck with that.

Re:Security Through Obscurity

[CastrTroy]

That's what I was thinking. How do you have digital currency that is anonymous? Makes no sense to me. Either there is a verifiable record of the transaction on some 3rd party machine to ensure that money was actually transferred from one account to another, which means it's not anonymous, or it is anonymous, but depends on some hard-to-break DRM going on inside the card. The problem is that there's just too much to be gained from breaking the DRM. If you break the DRM you can basically print money. This is the same problem that's existed on all non-centrally managed payment cards. From photocopier cards to transit systems. People figure out how to break the DRM and charge up their card as much as they want. When it's photocopies and transit, there's isn't much lost or gained in breaking the system. But with something that's actually equivalent with cash, there's room for a lot of fraud.

Re:Security Through Obscurity

[green1]

My hope is that this is a misunderstanding or simplification generated by either a PR person or reporter and not in fact what the people designing this have done.

What I find more likely (assuming they are doing this even remotely right) is that it relies on some form of cryptography where each MintChip as it's own unique security key that is secret from other users. Not security through obscurity, but rather public/private key cryptography which would be the only safe way to do this properly.

Re:Security Through Obscurity

[Anonymous Coward]

In the digital cash context, anonymous or more properly, untracability, means the bank cannot correlate withdrawals with deposits. When you present a coin to the bank for deposit or exchange for an unspent coin, they know it is a good coin because it has a valid RSA signature, for instance, but they have no idea to whom they gave the coin originally. David Chaum patented a scheme based on RSA in the late 80's and his student Stefan Brands came up with another scheme (and there may be others.) Offline support usually works by exposing your identity to the bank if you try to spend a coin twice.

I have no idea if the Canadian Mint is using Chaumian or Brandsian digital cash but it is possible, try reading Schneier's "Applied Cryptography."

Re:Security Through Obscurity

[knorthern knight]

A patent granted in the late 80's would've expired by now.

Re:Security Through Obscurity

[DarwinSurvivor]

An RSA signature by itsel can verify that something is what it says it is and has not been modified, but it cannot verify that something hasn't been copied (or *is* a copy). There needs to be something else as well.

Re:Security Through Obscurity

[hvm2hvm]

Well it can work like a prepay card. You put money on it with some code or whatever and a server registers the value on it. The places you pay get the confirmation from the server and server registers that the card has less money on it. You don't need a name associated with it.

Re:Security Through Obscurity

[MadKeithV]

We had this for a while in Belgium (http://en.wikipedia.org/wiki/Proton_%28bank_card%29) - it failed.

Re:Security Through Obscurity

[hvm2hvm]

It's not the same... the transaction on those cards (the Protons) are not approved through a central server which makes them vulnerable to the attacks everyone is talking about here.

Also it seems they didn't really fail because of the flimsy security (people abusing them) but because people don't understand them or don't want to use them.

I venture a guess that's because you can't recharge them, they have to be bought at markets which is kinda dumb since if you go to market to buy those you might as well always bring your credit/debit card and use that. If there would be a simple system of transferring money on a prepay card online it would be very useful.

Re:Security Through Obscurity

[200_success]

Furthermore, the Mint is currently not publishing details on how the cryptography works. I would assume that the system relies on the assertion that the paying chip will only generate a MintChip Value Message with a valid Transaction Authentication Code after decrementing the value stored on the card.

Re:Security Through Obscurity

[MadKeithV]

I venture a guess that's because you can't recharge them, they have to be bought at markets which is kinda dumb since if you go to market to buy those you might as well always bring your credit/debit card and use that. If there would be a simple system of transferring money on a prepay card online it would be very useful.

No, you could recharge them just fine. It was actually on the same chip as the regular debit card. But indeed no talking back to the server - that was it's supposed "strong point" - no connectivity needed to pay with one of those.
It failed because there's no need for it. If you want to pay with cash, you use cash, because they accept that *everywhere*. Everything else you use the debit card (and that truly works for almost everything here these days).

Re:Security Through Obscurity

[Anonymous Coward]

yes the bank both verifies the signature is good and that the serial number has not been deposited before, seriously read a frickin' book

Re:Security Through Obscurity

[hvm2hvm]

True I guess... Now the selling for point for these could be moving cash from a card to another... That would let you do completely anonymous transactions. Of course, the government probably wouldn't like that since it would let people launder money very easily.

Re:Security Through Obscurity

[Bigby]

But there was an "offline mode". What if it were spent twice offline?

Re:Security Through Obscurity

[JoelKatz]

Which means your money can verify good today but bad tomorrow, when someone else deposits the same serial number. The security then becomes a matter of who gets to the bank first, which may or may not be the innocent party.

Re:Security Through Obscurity

[Anonymous Coward]

More to the point is when they audit all the transactions to verify the transactions - They now know your exact spending habits.
And I'm sure law enforcement would be interesting in this information to discover the new digital money launderers.

I think I'd prefer my personal money spending to be private.

Re:Security Through Obscurity

[Anonymous Coward]

To further my point.....

Health Insurance companies might be interested in packets of cigarettes you purchased..... To decline your claims with.
Car Insurance companies might be interested in any car performance enhancements you may have purchased.
Police might be interested in the weekly lotto syndicate (Or perhaps it's drug) payments you make to your friend.
Think of the children groups might be interested in any alcohol purchases parents have made.
And the list could go on forever....

But can they do it right?

[green1]

I'm actually all for digital currency. But there are a few caveats, the obvious security ones apply, don't want people copying my digital money, don't want people stealing my digital money, don't want people creating money out of thin air. But in addition it needs to have a few other characteristics:
- Doesn't cost me anything to use. This is why I currently ignore Interac email transfers and still write people cheques, it's much cheaper for me. (even if it should be in the bank's best interest to push me the other direction, the cheque should be a lot more expensive for them to process!)
- Isn't tied to any one platform. Don't tell me I need an iPhone, or a Windows PC, or any other specific device, make it work on just about anything (obviously within reason)
- Anonymous. (listed in the summary, so it's a good start, but I can't emphasize enough that you will never get rid of physical currency as long as you make all your digital currency leave a trail)
- Hard to lose. I don't want to lose all my cash to a hard drive crash, or other similar event, so I need to either be able to back it up, or better yet not have to. (of course this is very difficult to accomplish while maintaining both anonymity and security, but there are a lot of bright minds out there, hopefully someone can come up with a good way to do it.)
- Ideally non-network dependent. A couple of years ago requiring an internet connection for the transaction would have been a deal breaker, but with the increased ubiquity of the internet on mobile devices this has lowered somewhat in priority. I still think though that you need to be able to pay someone without necesarily having network access at the time.

Re:But can they do it right?

[Anonymous Coward]

three of those are mutually exclusive, to a certain extent: Can't lose to a hard drive crash, not network dependent, and secure.

Re:But can they do it right?

[Anonymous Coward]

And preferably is administered by a company with a stellar accounting record...

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKwwOGSy.k1g

Re:But can they do it right?

[dcbrianw]

You forgot one caveat: strip clubs now have to affix digital card readers to their employee's legs. "Please hold still, miss." :-)

Re:But can they do it right?

[Twinbee]

Do we really need the anonymous clause? It seems it's in most honest people's interest for it all to be recorded, and it would seem to help security.

Re:But can they do it right?

[Anonymous Coward]

I wouldn't worry about that. There is no way in hell that the US will let Canada use anonymous digital cash.

Re:But can they do it right?

[pnewhook]

So its obvious for money but not obvious for other digital commodities like music? The 'I should be allowed to copy digital music' argument goes it is not stealing since I'm only making a copy of what you have and am not depriving you of any property. If I make a copy of your digital money is that not the same thing?

Re:But can they do it right?

[SecurityGuy]

I think we do. There's a lot of zealotry out there. I lot of vigorous disagreement over whether it's ok to be, say, gay or not. Get an abortion or not. Use one kind of drug or another. Be a member of one religion or another. I should be free to anonymously buy...whatever gay people buy...if I want. I should be able to go anonymously buy a nice bottle of scotch. I can now. If I want to drop a $20 in the collection plate, I can and no one's the wiser.

We should be able to focus less on proving we didn't do anything wrong and more on the idea that we don't HAVE to prove we didn't do anything wrong. The whole presumption of innocence thing, ya know?

Re:But can they do it right?

[c0lo]

three of those are mutually exclusive, to a certain extent: Can't lose to a hard drive crash, not network dependent, and secure.

As are the "anonymity" and "can't lose to a hard drive crash" (replace HDD with whatever will support a mutable information about the amount of coins you store - "engraving" coins on a ROM won't make the coin digital).

Re:But can they do it right?

[shutdown -p now]

For one thing, there are far more interesting spots to place a card reader onto. For another, there's NFC.

Re:But can they do it right?

[DarwinSurvivor]

copyright != counterfeiting. If I photocopy your $100 bill with a super-duper photocopier, did I rob you?

Re:But can they do it right?

[1s44c]

copyright != counterfeiting. If I photocopy your $100 bill with a super-duper photocopier, did I rob you?

Actually yes, If you make a $100 bill and it enters general circulation the entire economy just inflated by $100. You robbed everyone who holds dollars.

Re:But can they do it right?

[Anonymous Coward]

> If I make a copy of your digital money is that not the same thing?

No, because the value of money is based on the assumption that people either can't or won't create new money out of nothing.

Assume there is only $100 in existence, which can be exchanged 1:1 with some other currency (let's call it '~', so $1 buys ~1). I have $50 and you have $50. I copy my money until I have $150. Even though you still have $50, because of my actions the exchange rate is now 2:1, so your $50 only buys you ~25 (and my $150 is worth ~75). While I haven't taken from you directly, my actions have devalued your property. In effect, I have transferred half your money to myself. Creating more money is essentially stealing.*
Of course, once people learn that I can (and will) arbitrary create any amount of dollars people will lose confidence in the currency and your $50 won't even buy you ~1, because nobody will take your money. However, it is also in my interest to avoid this scenario, so I won't create *too* much new money...

It could be argued that sharing digital music devalues it but since digital music was never scarce to begin with and nobody uses it as a currency copying doesn't actually transfer any wealth, so it's very different compared to money.

* Or a hidden tax, if the government does it ;-)

Re:But can they do it right?

[pnewhook]

So a music company pays the musician based on how much of a hit they think the song will be and how much money they will make off of it, and spend money promoting it accordingly. If the song is simply copied then less sales are generated and their value of the music is essentially devalued. Same thing,

Re:But can they do it right?

[pnewhook]

Ok so if you copy digital music, you are making a counterfeit copy of that music. Feel better? Still illegal.

Re:But can they do it right?

[Anonymous Coward]

No, robbery involves the use or threat of physical force. You mean theft.

Re:But can they do it right?

[werewolf1031]

We should be able to focus less on proving we didn't do anything wrong and more on the idea that we don't HAVE to prove we didn't do anything wrong. The whole presumption of innocence thing, ya know?

Why do I only find these kinds of comments the day AFTER I've spent all my mod points?

Honorary +1, sir.

Re:But can they do it right?

[Errol backfiring]

I'm abosolutely against virtual (so by definition non-existing) currency. You can judge the real money for tampering. There already exists so much "digital money" which was never printed and therefore does not exist at all.

Re:But can they do it right?

[TeknoHog]

If you make a $100 bill and it enters general circulation the entire economy just inflated by $100. You robbed everyone who holds dollars.

The same thing happens when you take a bank loan of (a little more than) $100. But it's OK because it's done by banks. Of course, you have to pay back this imaginary money with your real, hard-earned cash.

Re:But can they do it right?

[Anonymous Coward]

"Actually yes, If you make a $100 bill and it enters general circulation the entire economy just inflated by $100. You robbed everyone who holds dollars."

Then inflation must also be theft by your estimation.

Re:But can they do it right?

[Bob the Super Hamste]

Personally I don't want government tracking all of my purchases. Anonymity is much better for personal security. Lets say the system tracks everything and each person is tied to a specific device. This would be the "honest" system you mention and government would be able to see that the buyer needs to pay sales tax, I assume that this what you mean by being in honest people's interest. Now lets assume that the central government's servers get hacked so no evil doers can watch transactions in real time, would you expect any thing less from government. They now know where each person's last transaction was and can tie that to them. Toss in a bit of location awareness (the transactions probably contain an address any way) and now you have a great way of finding out who is and isn't home. Toss in some people making purchases at specific shops (high end jewelry stores, gun shops, etc) and you now have an idea good places to break into, plus the added bonus of knowing when the people who live there aren't around since you can see when their last transaction was. To me this sounds like a really bad idea (maybe I just need to go brake out some tinfoil instead) but feel free to think that it is good.

Re:But can they do it right?

[Twinbee]

If it was THAT much of a problem, then we'd see devastating things happen with all the paypal, credit card and bank transfer actions too, which are all recorded. If I have to prove money has been stolen (or merely that I didn't receive money, or did actually send money), the possible loss of privacy is more than made up by security and transparency.

Put into perspective, I'm sure Facebook creates 10x the privacy loss than non-anonymous cash could possibly do, and I don't see the world exploding yet ;)

Re:But can they do it right?

[Bob the Super Hamste]

I totally agree with facebook creating more privacy issues than non-anonymous cash, but there have already been instances of thieves using facebook to plan crimes. The difference with most of those other things is that they are not instantaneously tracked, it always takes time to see updates to those accounts. Besides people are already always trying to hack into paypal, credit card processors, and bank transfers and there have been breaches. Do you honestly expect government to do any better?

Re:But can they do it right?

[Dwonis]

Not at all.

Too late.

[Anonymous Coward]

The competition is apparently full. They limited it to 500 contestants. Apparently, there is hardware that gets sent out to each contestant.

The inflation is coming...

[stanlyb]

The real news is that the Canadian government is intending to kill the penny. Or for those of you who have not read about the importance of the penny, this is the only way to control the spending of the central bank. It is actually quite simple, if the cost of creating a penny is 1.6 penny, then the central bank is "encouraged" to not to cut too many pennies, and thus to not to print too much money, and thus to not to lend the current loans to our future generation. Simple, ain't?

Re:The inflation is coming...

[thebigmacd]

My sarcasm detector is going off...

Central bank loans are virtual money anyway, so it doesn't matter.

Re:The inflation is coming...

[Anonymous Coward]

So your argument is that the only thing keeping the central bank from printing more money is the cost of minting the penny?

Definitely a "simple" argument and I don't mean simple as in easy.

so whats that thing I carry in my wallet?

[Osgeld]

you know that bit of plastic with my information encoded on the back, I swipe it into a miniature computer where that information wisks away to be validated and approved ... fucking smoke signals?

its just a pet peeve of mine ... digital

digital currency, fucking already have it
digital distribution, thank god, those fucking analog CD's and DVD's were so poor sounding when I copied them in my car
digital download, how the hell else is that going to work?

I dont know what shit for brains started replacing "internet" with "digital' but its fucking retarded

Re:so whats that thing I carry in my wallet?

[Anonymous Coward]

"internet" is last century. "digital" is shiny and new.

Re:so whats that thing I carry in my wallet?

[psiclops]

digital currency, fucking already have it

a creadit/debit card is not a form of currency. you do not trade credit cards with other people. it is essentially part of an authentication system that allows you to connect to a banks system and authorise a payment to someone else. you can not recieve payment using one.

digital distribution, thank god, those fucking analog CD's and DVD's were so poor sounding when I copied them in my car

those cd's and dvd's that contain digital content however were distributed via physical means. unless you have some sort of futuristic 3d printer and access to a service which will digitally transfer the required data for said printer to 'create' a copy this cd/dvd.

digital download, how the hell else is that going to work?

this is a stupid term and the digital is redundant.

Re:so whats that thing I carry in my wallet?

[complete loony]

I have no problem with the government replacing the bank credit card system. That is, if they can reduce or eliminate the 2%(ish) merchant fee that everyone must currently pay to the bank cartels to use it.

Re:so whats that thing I carry in my wallet?

[MiG82au]

Nah, it's an 80s revival!

Re:so whats that thing I carry in my wallet?

[MrAngryForNoReason]

That is, if they can reduce or eliminate the 2%(ish) merchant fee that everyone must currently pay to the bank cartels to use it.

So your of the opinion that Banks and credit card companies should provide their services for free out of the kindness of their hearts?

Re:so whats that thing I carry in my wallet?

[complete loony]

No, I think they have too much of a strangle hold on this particular market, and I believe the cost of providing electronic transactions should be decreasing.

Re:so whats that thing I carry in my wallet?

[Anonymous Coward]

You know, the years have passed, and it was a wild ride looking back on it, but unfortunately we didn't have the digital technology available at the time to realize my true creative vision. Of course, the time has passed and everyone else is long dead and buried in the soil, so now I've been able to look back at the old footage and realize you know, I could use today's digital technology and give it a little spitshine...

Re:so whats that thing I carry in my wallet?

[MrAngryForNoReason]

I believe the cost of providing electronic transactions should be decreasing.

I don't know what you are basing this belief on? The majority of the cost of being a payment provider like Visa or Mastercard isn't the process of taking the transaction it is covering the cost of fraudulent transactions which they take liability for. Credit card fraud costs them hundreds of millions each year. Credit card fraud in the UK amounts to over £500 million a year, and that cost is passed on to merchants and customers.

Glow in the Dark Dino Bones Coin More Interesting

[theshowmecanuck]

The Canadian mint is releasing a quarter with a dinosaur on it where, when you turn off the light, a glow in the dark image of it's skeleton shows up. I find this more interesting and relevant to my day to day life than digital currency I'm not likely to use in the near future... unless forced. Well that, and the fact they Canadian mint has just been ordered to stop producing the penny... Canada will penny free very soon. Anyway, I like the current system of Interac and cash very much, thank you. With the Harper government busily trying to catch up to the U.S. in terms of snooping on its own citizens (not sure anyone could catch up to the British government... even the Chinese), the less I want to do with any form of Canadian government information network.

Canada as a test bed

[Snausagez]

My wife's originally from Canada, and I lived there for a while. I noticed that Canada would try new things, including tech, and later you'd see it in the states. They're smaller and more nimble (1/10th the population) and North American companies could try new things there and see if they work. Also, maybe there's the benefit of: if the idea crashes and burns, it's not noticed in the states and the company doesn't need to worry about damaging their brand in the states.

Re:Canada as a test bed

[Snausagez]

True. I noticed it happened in the reverse sometimes. I had a cable modem in a small city in Ontario long before most major US cities were offering the service. I seem to remember hearing some Australians friends talking about having fast Internet before us as well. Something about putting in huge amounts of fiber optic..

Re:Canada as a test bed

[shutdown -p now]

That would probably be because you've had a working solution (Interac) long before that, so there weren't that many incentives to introduce such a thing. Australia & New Zealand have a similar thing with EFTPOS.

What advantage would this have over PayPal?

[BitterOak]

Love it or hate it, PayPal has become a de facto standard for Internet payments. What would this service offer that PayPal didn't?

Re:What advantage would this have over PayPal?

[hipp5]

I suspect:
- No fees
- None of PayPal's douchebaggedness.

Re:What advantage would this have over PayPal?

[Anonymous Coward]

Oh, maybe they won't take money out of your bank account without your authorisation, like Paypal do? Just for starters...

Re:What advantage would this have over PayPal?

[pnewhook]

Well considering I know several people who have had their PayPal accounts hacked (I refuse to get one) I'd hope security would be a lot better.

Re:What advantage would this have over PayPal?

[cosm]

What would this service offer that PayPal didn't?>

'It wouldn't be PayPal' is a necessary and sufficient condition for its existence.

Re:What advantage would this have over PayPal?

[1s44c]

What would this service offer that PayPal didn't?

Lower fees.
Customer service.
A more respectable business model. You know they close accounts for stupid reasons and just keep the cash don't you?
No dirty trickys like converting non-USD debts to USD at their exchange rate in order to bump up the amount they claim people owe them.
Terms and conditions that are not an exercise in customer abuse.

Re:What advantage would this have over PayPal?

[Anonymous Coward]

Love it or hate it, PayPal has become a de facto standard for Internet payments. What would this service offer that PayPal didn't?

The "service" that real money and real central banks have over PayPal is the property of reliability; the fact that Canadian "cash" (digital or analog) is reliable. PayPal is unreliable, and just like Facebook, only fools and the willfully ignorant use it.

micro-trans?

[Anonymous Coward]

how are you going to have micro transactions if you get rid of pennies? a nickel charge for a candy bar, micro transaction is not.

Re:micro-trans?

[cmarkn]

Because even though pennies are going away, cents aren't. Transactions using credit cards, debit cards or whatever other non-cash methods you have, aren't rounded to the nearest nickel.

Software Developers?

[sykes1024]

They are going about this the wrong way. You don't want a bunch of software developers coming up with this stuff in competition. I'm sure there are plenty of very competent software developers out there, but what you want is a collaborative group of computer scientists with specializations in cyber security and encryption. This isn't exactly something you want to leave to the lowest bidder. If you want it to be a success, you need to know this system is going to be secure for a long time. How do they plan on judging the security of the contestant entries? With a crack team of security and encryption experts? Why not just have those people design the damn thing, it would take nearly just as long for how thorough they should need to be.

Re:Software Developers?

[DemonGenius]

I'd probably feel much safer having those design it that are likely to crack whatever solution the so-called experts come up with. And don't tell me something like that hasn't happened before.

Gibbons

[smg5266]

I'm developing a computer program which rounds down the fractions of nickels left over from micro transactions and deposits the remainder into my bank account.

Re:Gibbons

[pnewhook]

There's been several movies where the main character did the same thing with the fractions of cents on interest calculations. That is not new.

Re:Gibbons

[ChunderDownunder]

Yes, indeed, including Office Space whose main character is Peter Gibbons

Envy of Sweden?

[aristotle-dude]

Was the summary written by an American by any chance? Canada embraced debit card transitions under the name "Interac" long before the US started experimenting with visa debit/check cards. I have a Interac bank card that I can use almost anywhere in Canada for making purchases which also works as a "visa debit" card in the US and as a visa that is tied to my checking account on some US online sites. We have been largely cashless for some time but I still like to have cash as a backup in case the interac network goes down which has happened quite a few times.

I remember one time going to the movies and I was one of a handful of people who actually had enough cash in the wallet to buy movie tickets and concession snacks while almost everyone else were up the creek without a paddle when the network went down in the entire city.

Re:Envy of Sweden?

[Anonymous Coward]

I find that hard to believe. US has had debit/credit bank cards for nearly 40 years. Some visa, some mastercard. Depends on the bank.

Re:Envy of Sweden?

[Anonymous Coward]

-snicker- Sweden Envy
My bum is on them.
OK?

Although, I will admit a I'm embarrassed by the superiority of their style of government.

Re:Envy of Sweden?

[Anonymous Coward]

"Interac" has nothing to do with the described idea.
Interac describes a merchant to customer system that allows "credit like" transactions from cash-on-hand accounts. (more and more, you're seeing banks implement "overdrafts" with interest, making them NO different.)

Have you ever had a debit card stolen and fraudulent transactions charged against your account? has your bank reversed these charges?
If so: it's nothing like a valid cash transaction. Cash is transaction fee free, irreversible, and there is (rarely) a record kept of the transaction details.

Chargebacks are a bitch, but you have to deal with them in the payment card system.
Interac's system fees for merchants are also quite high. in sub $20 transactions they can be as high as 6% of the transaction. have you ever tried to make a purchase only to be told that there's a "debit fee" for transactions under a certain value? that's not because the merchant in question in a "cheap dick" (well, sometimes they might be, but wtf) it's because they don't mark up EVERY product they sell to cover these fees.

Re:Envy of Sweden?

[starfishsystems]

Canada embraced debit card transitions under the name "Interac" long before the US started experimenting with visa debit/check cards.

I got a debit card in Canada in 1984, at the first bank that implemented one without requiring me to consent to a credit check as part of the application process. It's like, dude, it's a debit card. You're only giving me my own money back. We may have been ahead of the States but we're still a bit slow in the head.

Then I moved to Sweden. I was working and motorcycle touring. I got a debit card, no problem. It worked across the entire country at every ATM. It worked at gas pumps even in the middle of the night when the pumps were unattended. It was brilliant.

And Swedish currency? They had already got rid of their one-öre coin and if I recollect were in the process of losing the 5-öre as well. Some things in Sweden were a bit lame but their monetary and postal systems were topnotch.

Re:Envy of Sweden?

[Anonymous Coward]

Was the summary written by an American by any chance? Canada embraced debit card transitions under the name "Interac" long before the US started experimenting with visa debit/check cards.

It should be noted that Canada has a lot fewer banks, which are bigger, and most of which are national. The US has thousands and thousands of banks, which range from county-, state-, and country-wide coverage.

Interac is a company that the Big 5 (RBC, CIBC, BMO, TD, Scotiabank) set up a few decades ago. That level of co-operation would be also impossible / unheard of in the American system. The only way that the banks in the US would talk to each other would be via a "neutral" third-party, which turns out is what the credit card companies (Visa, MasterCard) are.

So the high concentration and less competition of the Canadian banks allows them to do things like Interac, but the lack of competition gives us higher fees for many things. The American system is more chaotic, and so less co-operation can happen, but the competition helps drives down fees.

Re:Envy of Sweden?

[Anonymous Coward]

Read this: http://mises.org/daily/5968/Laundered-Money

In Swedish cities, cash is no longer acceptable on public buses ... Many small businesses refuse cash

It seems we have a global push for cash-free economy. ASAP. Privacy be damned.

Interac

[Anonymous Coward]

Interac is going to be pissed.

Re:Glow in the Dark Dino Bones Coin More Interesti

[hipp5]

I liked Interac a lot until I stopped being a student and no longer get unlimited transactions. $0.65 for every transaction after 8 in a month!? And it's going up to $1 in June! I've shopped around a bit too and can't find anything that works out better than that. So now I just use my CC for everything and make sure I pay it off before getting interest.

I'm a little hesitant to like this

[dcbrianw]

First, I will admit my first reaction to this is a sentimental one, but that doesn't make it irrelevant. A currency's appearance --the artwork people, places, and events depicted-- demonstrate the identity of a nation. Canada's $5 bill has hockey players on it. Another bill has the queen of England for historical and even current international relations reasons. We in the US have our dearest founding fathers on our monetary notes. (Side Note: I'd really like to have some bill introduced with Frederick Douglass on it.) I'm not opposed to the idea of digital currency. Heck, we pretty much have it with our banking system now. Second, I wonder if a 100% digital currency in the US would make it easier for the Fed to engage in quantitative easing. My first guess is that it would. And if keeping paper and coin notes in circulations at least slows down the Fed's ability to do so, I'm all for maintaining physical currency.

Re:I'm a little hesitant to like this

[Anonymous Coward]

Bitcoin stops quantitative easing in it's tracks. In fact it pretty much makes boom and bust economics a thing of the past.
 
  No government is willing to give up it's control over currency however.
 
  The taxless aspect is another problem, but it's one which I'm sure will be resolved quickly enough.
 
  It's true that when the government can create money out of thin bits without actually printing it they have less people to contend with about producing the cash and distributing it to whomever they please. Government fiscal policy needs to be a matter of public record, much like government ethics, problem is no one wants to tie their hands and the influx of ethical geniuses from around the world isn't assured.
 
  The big thing here is that the government tried to attack VISA/MASTERCARDs high fee rates and gouging of retailers a little while ago. Businesses simply can't survive without those resources making them almost as important as government validation... then VISA and MC jacked up their rates astronomically and a whole government division had to be created to deal with their skulduggery... whether this proceeds or not the government is simply saying "if it becomes easier for us to provide credit cards than to monitor and arbitrate you doing it. We will." which the government should really say about every industry. The credit card industry is pretty stable, the only innovations being new ways to defraud and confuse the customers.
 
  + if you're Christian they're technically a sin, that sin being Usury. It's a lesser known sin because it was used to justify killing moneylenders and Jews during the crusades and then again in WWII. Basically it says "work to make money, don't lend to make money". It's also in the Talmud (Jewish law) which means that Jews trying to follow the law "invest" or "become partners" rather than lending money, which is a nice thought but this law is taken literally... there are dozens and dozens of books about following the letter of the law while still lending money.

Re:I'm a little hesitant to like this

[pnewhook]

Well if you like the current designs on he Canadian bills, wait for the new ones as we replace all our paper money with difficult to counterfeit polymer notes. New $100 and $50 are already out with more to follow.

Re:I'm a little hesitant to like this

[Jmc23]

She's the queen of canada too you know.

Re:I'm a little hesitant to like this

[DarwinSurvivor]

Actually, the new 50's (probably the 100's as well, but I've only seen the 50's in person) are still paper, they just have polymer *sections* in them. The majority (everything that isn't transparent) is still the same paper (well actually special fabric) as before.

Re:I'm a little hesitant to like this

[pnewhook]

Actually no - the entire note is polymer. The clear sections are just parts of the original polymer that have been blanked out in the printing process to make them transparent.

Re:I'm a little hesitant to like this

[DarwinSurvivor]

I have TOUCHED these bills. TRUST me, the clear part is a smooth polimer, the non-clear part (except for a small border around the clear part) still has the exact same paper/fabric feel as the old bills and even bends/folds differently than the clear part.

Re:I'm a little hesitant to like this

[pnewhook]

I dont care what you felt, I read how they are made. They are entirely polymer with no paper/linen at all.

Woot! I got one of those developer spots.

[Harkin]

Just got the email today! Any other slashdotters selected?

Re:Woot! I got one of those developer spots.

[Amorymeltzer]

So what's your gameplan? I look forward to hearing about what you receive, too.

Re:Woot! I got one of those developer spots.

[Prairiewest]

Yep, I'm in too! I don't know what to make with the kit yet, but I hope it's going to feel like tinkering with an electronics kit from the 1980's :)

Re:Woot! I got one of those developer spots.

[Harkin]

Man I wish I knew! I am thinking something that involves transfers between devices without a RF based wireless link. Should be cool. Ya, I'm pretty stoked to get the goods and monky arround with them. Who knows, maybe I'll find a way to make free money. Although, I'd have to keep that secret until they release the thing.

Re:Woot! I got one of those developer spots.

[psema4]

Yup.

I spent some time as the Pirate Party of Canada's IT Director and was accepted into the challenge. Our Deputy Leader was also accepted and I'm sure we'll have something to say after a bit of play time. ;-)

A few more steps

[SilverBlade2k]

And we'll have a MintChip implanted into our right hand...

Canadian penis joke

[issicus]

how big do we tip? just buzz her. pause for laughter,

The greed of banks, the stupidity of government

[Anonymous Coward]

What a mess this is going to turn out to be.

I mean, already the spokesperson for the payment industry says it is "highly competitive" yet Canadians pay some of the highest ATM and banking fees in the world. Our government is so inept that the Canadian Mint itself lost millions of dollars of gold bullion just three short years ago. Or lost track of it. Or didn't. Nobody f*cking knows except those that have it.

Take a pass on this and save your money. Between Interact, Visa/etc., the banks, and the Canadian government the calculated odds of success are.....0%.

Re:Glow in the Dark Dino Bones Coin More Interesti

[pnewhook]

What the heck? I don't pay anything for interact transactions, nor should you. Its money right out of your account just like cash. There's no service being provided.

Re:stuuuuuuuupidddddddddd

[Anonymous Coward]

Mondex

Digital Currency

[hackus]

translation....

How can we as the banking elite, make wealth creation at the push of a button on a computer for ourselves and our minions (any politician or judge)?

Without all of that Gold or Silver or value based paper that limits out ability to print money so we can fund unlimited wars to destroy and rape other countries using the USA military?

After all, we don't like currency that is backed by anything. We just want to make any we want, with no work involved at any amount we wish.

Plus, if all currency is digital we can centralize it and have a power orgy like the world has never seen! No man women or child can buy anything unless they play nice. (Do exactly what we say....with none of that indepedant thinking crap....or we just turn off their card!!!)

We could rule the world!

What a good idea.

Yeah, lets have a centralized digital system so a small handful of individuals can meet in private rooms and just decide everyday what to enter into a computer for the rest of us.

Wow,...what a _fabulous_ idea.

-Hack

Obscure, Proprietary, Patented

[Dwonis]

Let me repeat that, the security of offline transactions is based entirely on a secret which is on every single mintchip.

I don't think that's true. I had a look at some of their protocol documentation---which isn't all that detailed---and it looks like they're probably using PKCS#7 signatures and X.509 certificates.

Unfortunately, they aren't willing to publish enough information to actually analyze the security of the system to determine whether it's trustworthy (nothing about how the chip itself is secured, for example), but they have released enough information that we can figure out some limits on its security, and it doesn't look all that great. I'll probably get modded down for karma-whoring here, but here's what I posted on that forum, after looking at the limited documentation they provided on their website:

Let me get this straight: MintChip is a proprietary, patented, centralized, unpublished cryptosystem, where a trusted-third-party (the Mint) signs a certificate saying "this private key was stored in a tamper-resistant hardware token that is designed not to double-spend", so we're supposed to just be able to assume that any valid MintChip transaction signatures are trustworthy, even offline. As soon as one person extracts a private key from a MintChip token (which they will, given that there's a monetary incentive), the fundamental assumption that the whole system relies upon is destroyed.

Your organization appears to know this, which explains why you emphasize that MintChip is intended for "low value" transactions.

Fine, so the security of the whole system depends on the security of these hardware tokens, and yet you're "not in a position to release" any tangible information about them? Why should anyone invest in this system? Because you're The Mint?

You have the threat model wrong, too. Why on earth would you want to emulate cash? Cash is easy to counterfeit. It only remains useful because there's a high risk vs. payoff associated with uttering counterfeit cash. On the other hand, MintChip is supposed to be used online, so even if we detect a counterfeit, there's not much chance that the fraudster will actually go to jail. There's also a much larger number of potential fraudsters (basically, everyone connected to the Internet).

MintChip also doesn't deliver on its privacy claims. "No personal data is exchanged in the transaction." That's not true at all. According to your documentation, every MintChip has a *single*, 16-digit ID that's generated by the central authority and used in all transactions, so there's no reason why these IDs couldn't be tracked the way companies already track credit card numbers.

The funny thing is that this all could have been implemented on top of Bitcoin. Make some tamper-resistant hardware with some Bitcoin private keys inside it, and sign a certificate saying "the keys for these addresses are in tamper-proof hardware". For low-value transactions, they could be accepted at face value, but if we wanted greater certainty, we could inject the transaction into the Bitcoin network and wait for a few confirmations to avoid double-spend fraud.

Way back in 1999, Bruce Schneier posted a list of nine cryptography "snake oil" warning signs (http://www.schneier.com/crypto-gram-9902.html#snakeoil). I see 3 of the 9 warning signs here already.

Re:Obscure, Proprietary, Patented

[Dwonis]

To clarify, I mean that there probably isn't a single secret that's on all the MintChips. There is probably one private key per MintChip, but you are correct that the security of the whole system appears to depend on all of these private keys remaining secret from their users. Good luck with that, indeed!

Re:Obscure, Proprietary, Patented

[wrook]

I don't disagree with your main thesis, but i don't think you could implement a system with Bitcoin the way you describe necessarily. Bitcoin relies on the idea that the compute power necessary to fake the block chain is more expensive than the benefit your receive for participating in creating the correct block chain. This is why people receive bitcoins for "mining". There has to be an incentive to mine that is higher than the cost of cheating. With Bitcoin as it stands now, the reward for solving the block chain is enough incentive. But if you vastly increase the amount/size of transactions, the incentive for cheating increases. This means you have to increase the reward for participation. Bitcoin's method for doing this is to have transaction fees. But I suspect that people will not be willing to pay enough fees, especially for small transactions.

Re:Obscure, Proprietary, Patented

[wigbold]

Good thread. I refreshed my read of Bruce's snake oil warning signs. With the 500 contest slots filled in 4 days, let's hope the best solutions get a smart-trust way to do anonymous cash which would please even Bruce, and have less overhead cost than 1.6 cents per penny. Maybe Bruce even threw his hat in the ring, now that his new book requires less dedicated effort.

Re:Obscure, Proprietary, Patented

[Dwonis]

I think you misunderstood my observation. I'm not saying they could replace the Bitcoin network with an incompatible one; I'm saying they could implement their trusted-third-party-based offline security model using the *existing* Bitcoin network.

It would be a lot like if I paid you in Casascius coins. You could accept them immediately as-is (trusting the hologram and the fact that you've seen me in person), or you could open them up and load their contents into the Bitcoin network before proceeding further.

Clouds

[Anonymous Coward]

"MintChip will ultimately let people pay each other directly using smartphones, USB sticks, computers, tablets and clouds."

That's a good one.
I no longer carry cash. I just go around with a cloud in my pocket.

Re:Clouds

[ushere]

hopefully it has a silver lining ;-)

The thing is, gold is shiny...

[NotQuiteReal]

So, basically you are saying government (aka "the King") can distort economies. Surprise, surprise!

That said, gold does have a tangible value, in that it represents X amount of labor to move Y tons of raw ore + Z amount of energy to refine it to a known amount of bullion, coin, ring, chain or what-have-you. In contrast to a printed banknote, of any denomination, that currently has only the tiniest of a fraction of worth compared to the "gold standard".

It may only be a coincidence, but the comparison of a month's labor to the value of an ounce of gold hasn't been far off for quite a while.

Personally, I convert most of my "excess" [$currency] into "assets" and "investments" (not "cash under the mattress" or even entries in some bank's computer).

All bets are off, if a solid gold meteor of any size is heading for us...

Re:The thing is, gold is shiny...

[similar_name]

I don't know that the work required to retrieve it is what gives gold an intrinsic value. Its intrinsic value is in its uses. Its properties as a metal. Anything more than that is circular. It has value because it takes effort to retrieve it and we retrieve it because it has value. I've always thought a currency backed by units of energy would be interesting. Since we've industrialized it arguably has the most intrinsic value to society.

Re:The thing is, gold is shiny...

[Anonymous Coward]

Keep in mind that gold is a deflationary value system:
There's only ever going to be so much of it in the world.

The value of gold itself goes down over time, as there's less and less available (as people horde it) and with little actual use beyond trinkets and knickknacks: the desire for people to acquire gold for it's limited list of use decreases as the supply becomes scarce. (as other metals work just as well, and are plentiful)

The "price" of gold goes up, because other inflationary currencies "value per unit" goes down; not because the value of gold goes up.

Re:The thing is, gold is shiny...

[Anonymous Coward]

Gold (and a few other metals) have intrinsic properties that make them ideal for currency. To quote Murray Rothbard:

"Why gold and silver? (And to a lesser extent, copper, when the other two were unavailable.) Because gold and silver are superior in various "moneyish" qualities – qualities that a good needs to have to be selected by the market as money. Gold and silver were highly valuable in themselves, for their beauty; their supply was limited enough to have a roughly stable value, but not so scarce that they could not readily be parcelled out for use (platinum would fit into the latter category); they were in wide demand, and were easily portable; they were highly divisible, as they could be sliced into small pieces and keep a pro rata share of their value; they could be easily made homogeneous, so that one ounce would look like another; and they were highly durable, thus preserving a store of value into the indefinite future. (Mixed with a small amount of alloy, gold coins have literally been able to last for thousands of years.)"

Re:The thing is, gold is shiny...

[Anonymous Coward]

Try reading that post, where XXX= gold, vintage race cars, rare art, or some other suitable item, even "NIB Star Wars Figurine", whatever.

Keep in mind that XXX is a deflationary value system:
There's only ever going to be so much of it in the world.


The value of XXX itself goes down over time, as there's less and less available (as people horde it) and with little actual use beyond looking at it or fondling it: the desire for people to acquire XXX for it's limited list of use decreases as the supply becomes scarce. (as other desired objects work just as well, and are plentiful)

The "price" of XXX goes up, because other inflationary currencies "value per unit" goes down; not because the value of XXX goes up.

The last sentence, is of course the whole point... you don't want to hold the currency that you pay the "price" with, you want XXX.

Re:The thing is, gold is shiny...

[Anonymous Coward]

You need to recognize that very little wealth is concentrated, so much as created. The idea that it is the job of the government to take wealth from creators is morally repugnant to many.

Given your way, none of those "robber barron" philanthropic organizations would be around today, since the government would have pissed the wealth away before it could grow to a useful size.

Envy is really ugly... and usually turns towards hatred. I don't hate the guys with the yachts, it's no skin off my nose. Besides boat making beats making crates for government cheese, so I think boat makers are happy too.

Re:Glow in the Dark Dino Bones Coin More Interesti

[Jmc23]

Presdent's choice financial. It's basically CIBC without any fees and no minimum balances. Even have a selection of CIBC mutual funds with lower MERs

Non-troll question

[NotQuiteReal]

What problem is this "micro payment" system going to solve?

This is a serious question - what real-life purchasing have you failed to offer because there is no cheap "micro payment" method you can accept?

I really want to know what opportunities I am missing out on, aside from "if you build it they will come" type dreams... (but I will accept those answers too, I suppose).

Maybe:

I would sell you an
awesome haiku for a nickle
if you could pay me

Re:Non-troll question

[Anonymous Coward]

I'd like to have a micro-payment system that works because the overhead on transactions right now is so high, it pushes prices up (along with V/MC's merchant terms prohibiting price discrimination based on payment type).

Re:Non-troll question

[Anonymous Coward]

4kg of coins in your pocket at the end of the week, because you get change and just dump it in without thinking. Funny enough, before I flew out to alberta, I counted the loose change in my pants. $103 in loonies and toonies.

Howabout

[goombah99]

canadigit.

Re:Howabout

[GameboyRMH]

I can dig it.

Corporate middlemen hate cash

[knorthern knight]

This system is supposed to handle micropayments. Yeah, the penny costs 1.6 cents to produce. But, because it's metal, it can easily survive being used in 10,000 transactions. This is equivalant to a surcharge of 0.016% per transaction. In the case of nickels/dimes/quarters and $1 and $2 coins, the overhead ratio becomes even more microscopic. Compare this with what credit card companies charge. From http://www.cbc.ca/news/story/2009/04/16/f-cardfees.html

> Merchants pay two to four per cent of the sale price in various
> transaction fees whenever they accept a credit card for payment.

> âoePlayers you wouldnâ(TM)t have thought of beforeâ are looking for
> ways to get into the market of secure transactions, she said.

The article in the summary ( http://www.thestar.com/business/article/1159513--royal-canadian-mint-to-create-digital-currency ) says...
> âoeYouâ(TM)re seeing competitors that have been in the space in a while
> and new competitors looking at the payments market as an opportunity.â

Being a middleman is very profitable. It would be even more profitable if every minor transaction was charged.

Re:stuuuuuuuupidddddddddd

[Time_Ngler]

If the private key is encrypted, or the computer is offline, how are you going to steal the digital decryption key? You can protect bitcoin as well or better than regular money.

Then break my OTP!

[Anonymous Coward]

Sorry, you'll never break my one time pad encryption... period.

Re:Then break my OTP!

[DarwinSurvivor]

The encryption no. The device used to perform it, hell yes!

A revolution is what would happen.

[xmark]

Followed quickly by a headless king.

This does not require an elaborate analysis, only a cursory reading of history.

wasn't this a story about the canada mint?

[Anonymous Coward]

Without all of that Gold or Silver or value based paper that limits out ability to print money so we can fund unlimited wars to destroy and rape other countries using the USA military?

On the other hand, maybe canada is really just secretly using the USA military to do it's bidding in the world ;^) I have to hand that do them, that's a brilliant strategy!

Shhhhh

[jthill]

doing so stops people from sitting on vast piles of it and keeps them spending it which keeps the economy going, which generates jobs

Shhhhhh. Do you want people to figure out who the real job creators are? Let them, just once, count up how many jobs it costs if a million fewer people have the money to spend on nice things and they'll never vote for us.

Re:Shhhhh

[Anonymous Coward]

Is that supposed to be an argument for why we should not tax the rich? Because it sounds more like an argument for why investments in businesses and such should not be taxed, but that general income should be taxed at the same or higher rate as everyone else.

Re:Shhhhh

[jthill]

The ones already paying lower tax rates than the people who actually do the work will have money to spend on nice things no matter what.

After World War II the U.S. economy _roared_ for decades. It became the eighth wonder of the world, and it did so at a time when the top marginal tax rate was above 90%. It was above 90%.. All during that time, the top marginal tax rates were above 90%. Americans then knew that if it doesn't float all boats, it isn't a rising tide.

Ronald Reagan's tax cuts pushed this nation's economy off a four trillion dollar cliff, and his adoring beneficiaries worship him because it accelerated.

The _real_ job creators are the same as the real productive people. They're the ones who actually do the work. When they can't afford the wealth of this nation, when the only real hope of affording it is skimming the cream if not gouging the flesh off others' work and calling it "capital gains", the economy will really and truly tank, not only because the productive people can't afford it but because they'll know the fruits of their labor are going to someone else, and the American Dream is at long last truly dead.

Re:Glow in the Dark Dino Bones Coin More Interesti

[Anonymous Coward]

Interac is a crap annoying system that should just go away. My bank would call me several times a year to change my PIN because of the number of compromised terminals or something. Further to that, it's only usable in Canada. I live in Europe now, and everywhere has been chip+pin with the credit cards for years. The only big western countries that haven't come in to the modern age are Canada and the US, which is still pathetically asking for signatures and not checking them.

I just use a debit card

[Anonymous Coward]

I just use a debit card, get cash, and pay people cash. Paper (or what used to be paper) works just as well as the gadget cash, except you don't need the gadget. Also, if paper gets torn, people still take both halves. Cut a gadget in half, and the money goes away.

Re:Glow in the Dark Dino Bones Coin More Interesti

[theshowmecanuck]

Old news. Canada has had chip + pin for at least two years now. I'm pretty sure I've had my CC with chip and pin three and just got my debit last year with the c&p when my old swipable one wore out. I'd rather have the swipe since the chip cards take longer to process and are a pain in the ass. I'd rather swipe, put the card back in my wallet and leave when the transaction clears instead of waiting with it in the machine forever. And personally, I don't see what extra security a chip has over a magnetic strip. Besides aren't the chips open to unauthorized proximity scans? I know magnetic strips aren't. Anyway, I don't remember the last time I signed for a CC transaction. So stick that in your pipe and smoke it. Canada has a long history of being ahead of the curve with electronic banking. I was using a debit card.in 1981 or 1982 in Canada. B4 interac was the standard. We were one of the first to have widespread use of direct debit. Mah and pah stores on every corner in every city here were using them by 84. So maybe someone else could take the lead for a short while. Just don't get uppity about it. Besides, I'd rather have a banking system with swipe cards that can manage its money than one that is constantly in the throws of defaulting and credit downgrading. At least my money is safe in Canadian banks. So, how's that whole eurozone thing going anyway?

Re:stuuuuuuuupidddddddddd

[DarwinSurvivor]

If the private key is encrypted, or the computer is offline, how are you going to steal the digital decryption key? You can protect bitcoin as well or better than regular money.

You just answered your own question. The general population seems to have some phobia of encryption.

Hmm...,

[Anonymous Coward]

What could possibly go wrong?

"Gold Standard"

[Anonymous Coward]

Ironically it won't actually be on THE gold standard.

Globalist banking FTL, Ron Paul and sound money for a better future FTW.

Re:"Gold Standard"

[Errol backfiring]

Agree. In fact, digital, non-backed money is as far from the gold standard as possible.

Bitcoin?

[bickerdyke]

Sounds rather like another PayPal than another Bitcoin.

But whatever it'll turn out to be, it'll be another payment system. So even if it is actually better than anything in existence, it adds to the fragmentation of payment systems.

Re:Bitcoin?

[wiedzmin]

I would mod this up if I had the points. This really does sound like reinventing the wheel that has not only been invented already, but perfected and widely utilized to boot. Unless this will be a free of charge system, in which case I can see it taking over all sorts of PayPals, Google Wallets and Interac email transfer systems... However, I still think that "we're from the government and we're here to help you" is one of the scariest phrases one could hear, and seeing some of the government of Canada online systems, I highly doubt that they have what it takes to develop a system more robust and more secure than PayPal.

He who controlls the database

[ThatsNotPudding]

Digital currency just means the Central bank can wipe-out our savings more efficiently (by devaluing the dollar).

The same reason so many 'small government' folk constantly push for electronic voting; once in power, stay in power with the push of a buttton.

Yes, let's take every durable, distributed system and convert them to a single point of failure - and corruption.

Granularity and electronic currencies.

[ahfoo]

I'm so pleased to see this announcement and I would like to address those individuals here at Slashdot who are familiar with software development and ask you to consider something about electronic currencies that has long been in my mind and that I've posted about here and in other places before. I'd like to draw everyone's attention to the notion of granularity.

One of the cool things about being a software developer and one of the things that makes it so addictive to those who get into it is the fact that a software developer is like a god in relationship to the program under development. This is not unique to programming, writers of other sorts share this ability to simply create things out of thin air but in software development it is a fundamental skill. You declare a variable and it exists. That's all there is to it, you imagine it into existence.

So, sometimes when you're working on developing a program and you might find that the variables you've previously defined are insufficient for some task and you need to create new ones. This isn't a problem in software, you just make it happen. And you may find that there are places in your code that can be optimized with finer control so you make the finer degree of control by simply creating it. That's what I am referring to as granularity.

Being able to optimize granularity is a very cool thing. Now imagine applying the topic of granularity as it exists in software development to the economy.

There is no such thing as a free market in our world today. What we've got in the Anglo-American system is not a free market but a market with very coarse controls. It's not the case that it is or every will be or ever has been completely free. It has controls and those controls are what is called monetary policy. Basically, the government by being the largest borrower in the market can set interest rates. There's that and then there's spending and taxes and otherwise the government is pretty much out of the economic equation. The lack of granularity means that governments have very little control over the economy once the interest rates go down to zero.

An electronic currency opens up the possibility of creating a whole new level of control. Instead of all currency being exactly the same it would be possible to create individual units of currency with different depreciation or appreciation rates. The currency itself could become not unlike the bond market.

Now why on earth would anyone ever take payment in a currency that was pre-destined to depreciate? There would be no incentive to use it right? Well, there would if it was being offered as a form of social welfare. That is, in order to make a welfare state sustainable you would avoid the classic problem of creating inflation by making payment in a form of currency that had to be spent or else it would lose its value. The money would either be used quickly to stimulate the economy in times of economic hardship or it would disappear from the ledger completely.

I've mentioned this idea before and I realize it's a hard one for many people to get their heads around but I think it's important to remember one thing about electronic currency.

Adam Smith, Karl Marx, John Keynes no economic theorist could have imagined the role of electronics and digital communications today. It simply didn't exist. So when we apply the same old 19th century ideas to our current situation we're really selling ourselves short. We are in a new era. We've been here for a several decades now and yet the predominant attitude is one of denial. It's as if we collectively imagine that we're all going to go back to the way things used to be some day like Dorthy waking up back in Kansas but I think it's time to face the fact that the world can change for the better.

We simply need to make it so.

Re:Canadian Rising

[Phrogman]

Canadian Rising is the cause. Its a linguistic distinction in much of English Canada (and some parts of the northern US) which alters the pronunciation of a few vowels combinations, essentially shortening the time it takes to make them. Most US English speakers do not make the distinction, and thus hear the sound differently, mistaking /au/ for /u/.
Its laughable to Canadians who can hear the distinction because the Americans seem clueless for not being able to hear it, but its just a matter of dialect. Most Canadians hear a lot of US pronunciation and it seems distorted in a different manner: "out" /owt/ to a Canadian takes a fraction of a second, but some US English speakers would pronounce it (to a Canadian) as sounding more like /owwwwwwwwt/ taking 2 seconds or more.
http://en.wikipedia.org/wiki/Canadian_rising

An ounce a month?

[jeffb (2.718)]

It may only be a coincidence, but the comparison of a month's labor to the value of an ounce of gold hasn't been far off for quite a while.

Funny thing. I make around 80% more than I did ten years ago in dollars, but in terms of gold ounces, I make less than a third of what I did then (gold has gone from $300 to $1650).

Now, there has been inflation during that time -- but I can say with certainty that my buying power has increased, not decreased. Unless, of course, I'm buying gold.

If you choose to believe that Stuff In General has dropped sharply in value in the last ten years, I'm not sure how to argue the point. But to me, it certainly looks like the value of gold has increased. Use it as a yardstick if you must, but in my opinion, a yardstick shouldn't be that elastic.

Re:An ounce a month?

[dargaud]

Maybe the conclusion would be that salaries ought to be paid in a mix of currencies, say 33% in $, 33% in gold and 33% in the $ equivalent of a standard shopping cart (and 1% in BJ, but I digress).

Re:Functioning Economies

[Phrogman]

Not an economist here. However, if I am not mistaken, what makes an economy effective, is the exchange of money between its members.

What most businesses, economists and governments seem focused on is growth. If that means more people exchanging money, no problem. But if it refers to expansion of the economy by means of producing increasing amounts of raw materials then surely that is not sustainable in the long term? For instance, there is only a fixed available amount of timber we can harvest before we are denuding the Earth of its forests (the current method it seems). Surely its better to try to build a sustainable economic model so that our resources last us as long as possible no?

The other fallacy I think we see banded about is that if we give the ultra-rich corporations breaks on taxes, or support them via government bailouts, that they will then take that money and use it to create jobs. It seems to me that a lot of businesses accept the bailout gratefully, then put most of it in the bank to hedge their bets on future success. I would like to see some proof of this "trickle-down" concept, because what I see is various businesses being propped up by various governments and then either walking away with the money, or using it to create jobs - overseas, where they can maximize the benefits to them by utilizing cheap labor.

It seems to me that most jobs are being created by the small companies that open up and close regularly all around us. It might only be a job here or there but I bet the net aggregate of all those jobs is far greater than that represented by the occasional mass expansion of a major corporation here or there. Unfortunately all I seem to see of late is small businesses going out of business with nothing to replace them.

Re:Canadian Rising

[corbettw]

That's because when we Americans want to tell someone to "get out" we want to make sure they get the message. "Get ooooooooooouuuuuuuuuuuuuuutttttttt" is far more ominous.

Re:Cheap Louis Vuitton

[Anonymous Coward]

Those are good deals for LV

Re:Glow in the Dark Dino Bones Coin More Interesti

[Anonymous Coward]

A lot of people pay money for Interac transactions. Most people don't notice because a few of their dollars per month goes towards having a "package" that includes enough transactions for the month.

Open Source eCash / DigiCash implementation

[Anonymous Coward]

Why they didn't chose opencoin.org which is an open source implementation of David Chaum's anonymous eCash / DigiCash?

What's Cash?

[Anonymous Coward]

Canadian here. I have not used cash in ages. I think I still have a $100 bill I got from the company at Christmas stuffed in my wallet somewhere. Debit card, always, all transactions, all the time. No more stupid coins filling up my pockets and jars. My currency is already digital.

Anti Trust?

[Anonymous Coward]

"Less than a week after the government announced the penny’s impending death, the Mint quietly unveiled its digital currency called MintChip"

How convenient to be able to eliminate the competition, right before you launch a new product. What is next, a micro tax for using the new digital currency?

authenticity versus anonymity: can you have both?

[peter303]

On one hand you want some authority to verify a chunk of digital money is valid and owned by given person. RSA certificates like they do with websites is one way. On the other hand, any centralized certificate authority can track the exchange. Bitcoin distributed the authentification to preserve anonymity. But this turned out to be hackable.

Re:Canadian Rising

[jheath314]

So you're saying the problem is that Americans are a little slower. Huh...

My thought exactly!

[PaulBu]

Also, I did cringe a bit reading "To make sure its technology meets the gold standard in a world where digital transactions are gaining steam..." in a summary about completely fiat digital currency. Some figures of speech just should not be used in the areas where they still have their, hmm, original meaning!

Paul B.

Backed by religions though?

[jago25_98]

Backed by quite a few religions though, no?

Would like to mod you up, but already posted...

[PaulBu]

http://slashdot.org/comments.pl?sid=2780763&cid=39660593

But, actually, AC you were replying to did have a point: from libertarian standpoint (and, apparently, his too, though he was trying to distance himself from "those crazy guys" ;-) ), money is what *people* choose to trade with. If all gold is hoarded by the "King", they *will* use silver, or copper, pelts, or cigarettes...

Where "Kings" and governments can do real harm is when they use force to introduce "legal tender laws" -- Take my clipped coin, or piece of paper with my name on it, which also mentions "This is legal tender for all debts, public and private" (note that old-old USD did not have that, when they were still backed by gold), OR ELSE!

Paul B.

Clouds?

[Anonymous Coward]

Still in the research and development phase, MintChip will ultimately let people pay each other directly using smartphones, USB sticks, computers, tablets and clouds.

Coffee just came out my nose and went all over my keyboard.

I don't get it...

[DarthVain]

So MintChip (which is a stupid name btw), is a way to digitally exchange normal Canadian dollars?

Like you do already with a debit card, visa, MC, email, gift card, Wire, or a host of other alternatives...

Beaver Pelts

[DarthVain]

Go big or go home.

Who wouldn't like to get a message saying they just received 5 Canadian Beaver Pelts!

Re:Glow in the Dark Dino Bones Coin More Interesti

[pnewhook]

A lot of people pay money for Interac transactions.

Then they're stupid cause there are banks that don't charge at all like mine.

give more power to the billionaires

[Anonymous Coward]

This is fucking horrible. Debate me @juanbillion

Re:Glow in the Dark Dino Bones Coin More Interesti

[phoenix_rizzen]

Guess you've never been into a Superstore, or heard of PC Financial? Free banking. Free Interac. Free access to CIBC bank machines. Free cheques. Free online access. Basically, all your normal day-to-day banking is free.

http://www.pcfinancial.com/