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

[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: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. "

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

[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

[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

[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.

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.

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?

[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?

[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.

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

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.

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.

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: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: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.