A Cashless, High-Value, Anonymous Currency: How?

jfruh writes "The cashless future is one of those concepts that always seems to be just around the corner, but never quite gets here. There's been a lot of hype around Sweden going almost cashless, but most transactions there use easily traceable credit and debit cards. Bitcoin offers anonymity, but isn't backed by any government and has seen high-profile hacks and collapses in value. Could an experiment called MintChip brewing in Canada finally take us to cashless nirvana?"

Comments

Mint Chip?

[Moheeheeko]

So ice cream for currency?

Bitcoin hacked? Um no

[Anonymous Coward]

Theft, yes. Bitcoin itself ever hacked, no.

Re:Bitcoin hacked? Um no

[seepho]

You're also not your IP address. That doesn't mean it can't be traced back to you.

Re:Bitcoin hacked? Um no

[TheCarp]

I actually tracked down who probably stole some bitcoins once. Yes it can be done, however, there are caveats, and they pretty much require the person to have been careless.

The problem is that the account numbers, unlike IPs, are not assigned. They are generated, by the client. A client may generate as many accounts as he likes. How do you track down a random number to the person who generated it?

Yes, you can see the transactions.... you can see both randomly generated numbers but... you don't know who is on each end. Then you have splits of value where the amount goes to two or more accounts (common as the default client generates a new address to send change back to, each time)

For example, when I did it, there was an address the stolen coins came from, and they were sent directly to another account, along with several others. For various reasons relating to how all this came about, I knew that the destination address was connected to an anonymous coin laundering service. No point chasing it forwards from there, as it would have been an unholy mess.... but I knew enough about how it worked to know that the inputs were going to all be the same person or group.... and there were multiple inputs to the address....

So a few quick websearches found that the owner had mixed his coins and one of the addresses was listed in some online posts. A bit more searching found that the person in question fancied himself a hacker. Talking to the person who lost the coins confirmed that the person I trakced down was known to him and considered a likely culprit already.

So can it be done? Yup it can... but its some work, and its often quite hard.

Gold

[Anonymous Coward]

Gold:
[x] Cashless
[x] High-Value
[x] Anonymous

Re:Gold

[Iceykitsune]

Gold:
[x] Cashless
[x] High-Value
[x] Anonymous

[ ] Digital

Re:Gold

[istartedi]

GLD; but then you blow the anonymous feature. Of course gold is "cash" too, so I don't know what the GP means when he says it's "cashless". If he means, "not requiring government backing to have value", then yeah, sure; but AFAIK the definition of "cash" is tangible money whereas "cashless" to me implies money that is only a ledger entry in electronic form. The ledger entry may be associated with physical hardware; but the hardware itself is not the money, simply a means of proving that there is a unique ledger entry symbolizing money.

This whole topic is silly anyway. The summary implies that a cashless society is "nirvana" which in the west we synonmize with "paradise" or "heaven". For many, myself included, the vsion of cashless is "hell", which for our Hindu and Islamic friends I do not know how to translate. Dystopia. I think we can all understand that.

For me, heaven was when I was a kid and adults still paid for a lot of things with coins because they actually had some purchasing power. We could bring back this bit of heaven by simply striking new coins of the same composition with 10X the value. A "new penny" would carry a value of $0.10, a "new nickle" $0.50, etc. Pocket change would be worth something again, the zinc lobby would be OK with it (only reason we still have the penny is the zinc mining lobby), the vending machine people wouldn't have such a hard time accomodating this, and we would effectively and painlessly introduce dollar coins in the form of dimes instead of bulkier coins that people hate.

Of course there would be some resistance at first; but society ran just fine when a dime had a purchasing power equivalent of $2.00 today!

Re:Gold

[betterunixthanunix]

No, that is why it is not useful when the population grows faster than gold can be mined. Gold has value primarily because at one time, it was accepted as currency by most world governments, which only happened because no better system could be devised with the technology of the time. The industrial uses of gold account for almost none of its value, and make gold even less useful as a currency (since some currency may simply vanish when it is used industrially).

Money that is deflationary encourages hoarding, which only worsens the deflationary trend. That is why currency needs to at least scale with a growing population.

Re:Gold

[Anonymous Coward]

The value of precious metals is static, it's the value of the fiat currency against which they are measured that changes.

Bullshit.

Precious metals are subject to the same forces of supply and demand as everything else in the world. That they are MORE STABLE than fiat currencies is not the same thing as them being static.

Re:Gold

[Sir_Sri]

World GDP is up to 60 trillion dollars BECAUSE the dollar is not backed by gold anymore. The money supply has been inflated, which devalues the currency.

Correct. Progress. Were not for fiat currency the US would have been bankrupted by the french and Swiss in the 70's demanding repayment for all outstanding debts in gold, china would still be horribly impoverished as rich countries hoarded gold and kept it away from the chinese etc. And we'd still have world GDP would be significantly smaller, everyone would have less wealth and less money flowing through their hands. This is perhaps the greatest success of ditching metal as a currency dramatically improving peoples lives. If it weren't for that the UK could theoretically still be buried with 200 or 300% of GDP in debt in gold that it could never pay back from WW2, leaving it a shell of a country.

Devaluing the currency removes the incentive to save, and forces people to 'invest'

Yep, that's probably the most profoundly useful thing about fiat currency. Gold sitting in a vault isn't flowing into the economy. Investing, even into boring government debt at least keeps the money moving around. Admittedly I probably should have clarified that I was talking about a crude approximation on the velocity factor in economic theory. It makes a huge difference. Sitting on money in a vault is pretty much the most useless thing you can do with it, and deprives everyone else of access to it, contracting the economy as a whole.

If gold was still used by everyone as money, politicians couldn't promise things they can't afford, and bankers couldn't endlessly inflate the money supply, forcing everyone to 'invest' with them.

Right. That's the situation Greece is in. They don't control the supply of euro's any more than they would control the supply of gold. They have 160 or so percent of GDP in debt, can't get investment (euro's or gold) so they need to devalue, which, when you have euro's and gold basically spirals the country deeper into debt that it can't pay off. If they could print more money, say an inflation target of 4% they would be devaluing greek labour relative to say germany, which would fairly quickly make greece a good investment opportunity for business (decreasing relative labour costs), a cheaper vacation spot as time goes on etc. And all that debt they had would start to chip away. They'd still be 10 years getting to 100% of GDP in debt, but as it is in 10 years greece is going to have 170 or 180% of GDP, if not more (unless they go bankrupt obviously) in debt, a population that's fleeing and they're going to face a complete economic disaster. In that sense the Euro and Gold are no different. Note that I'm explicitly not saying the US dollar is the same way, since the US has a federal system that doesn't cut health spending or pensions in florida just because there was a housing crash in florida. By that reasoning another option for the Euro is a more federal state where certain things (pensions, healthcare, justice, education, state ownership of pan euro corporations, such as the bank bailouts, would be trans Eurozone). But that's a whole other topic.

Nobody really knows ...

[bill_mcgonigle]

... what the best way will be, any anybody who professes omniscience on this is lying to you. We'll have to experiment to find the best solution.

If you're in the US, ask your legislators to support a short act to make such experiments legal. Right now, trying to figure this out is a good way to land in prison.

Why?

[SirGarlon]

For the sake of discussion: what is wrong with cash and/or what is the benefit of doing away with it?

Watts

[krn1p4n1c]

Why not use what it all comes down to in the end? Watts. Secondary benefits would be that there would be a huge push to make transferring and storing more efficient and people would actually be able to correlate what they're buying with the cost.

Re:Watts

[ImprovOmega]

This is far too dangerous. It's bad enough that our cars are running around with gasoline equivalent to about 600kg of TNT (132MJ / gallon of gas, 4.164MJ / kg of TNT *20 gallons in a big tank) though gas is certainly less immediately explosive. Now imagine carrying far more than that on your person, in a far denser medium and imagine the mayhem that would ensue when people started letting loose with uncontrolled discharges of energy.

Laptop batteries already accidentally start fires from overheating. If something like you're proposing overloads we could be missing a city block or two.

Corrections

[Cyphase]

"Bitcoin offers anonymity, but isn't backed by any government and has seen high-profile hacks and collapses in value."

"...isn't backed by any government..."
Sounds good to me. Certainly true anyway.

"...has seen high-profile hacks..."
Bitcoin hasn't been hacked, some Bitcoin websites have been hacked.

"...collapses in value."
There was certainly that big bubble, but other than that it's been fairly stable. Certainly for the last many months.
http://bitcoincharts.com/charts/mtgoxUSD#tgCzm1g10zm2g25

Re:Gold pressed Latinum.

[jythie]

What can be done mathematically in an abstract environment is one thing, what can be done in the real world with competing interests and (rather importantly) physical implementations.. are often two very different things.

Re:Gold pressed Latinum.

[gmuslera]

The main problem with anonymous currency is that is being pressed to be outlawed all around the world. The second problem, of course, is people.

Not going to happen

[Animats]

With the currency troubles in Greece and Spain, a "cashless society" is much further off. One plan for Greece is to suddenly convert the bank account of everyone in Greece from euros to drachma, then immediately devalue the drachma. Since this is well known, everyone with any money is pulling it out of Greek banks.

Keeping money in "the cloud" means someone else controls it. For a good laugh, read the EULA of WePay, a wannabe PayPal competitor. Or those of Dwolla, which is a pseudo financial institution run out of a hacker space in Iowa. The terms offered by most psuedo-banks in the "cloud" are awful.

Prepaid means no legal tender required

[tepples]

Notice the three words after "legal tender" on Federal Reserve notes: "for all debts". Technically, only businesses that extend credit have to accept legal tender. If a business never gives credit, such as a business that requires payment in full before services are rendered, it's my understanding that it need not accept legal tender.

No

[Rix]

If you don't check to see that the transfer has been confirmed, sure, but that's no different than putting a bill on the counter and then snatching it away. It's not a hack, and you can't do it to someone that doesn't allow you to.

Re:No

[JesseMcDonald]

It's not a Bitcoin hack because it's only possible if the person on the receiving end doesn't follow the Bitcoin protocol, which is to wait for at least one confirmation before treating a transfer as legitimate, with six confirmations being recommended. Most vendors wait three to six confirmations (30-60 minutes average), which is still a lot better than an ACH transfer at three-plus days, but one is more than enough to offset any reasonable risk of reversal for normal purchases.

If you don't have any confirmations then the transaction isn't part of the block chain, which means it might as well not exist so far as the rest of the Bitcoin network is concerned. At that point the signed transaction is just a declaration of intent, not an accomplished fact.

Re:Not backed by a government...

[gatfirls]

Not backed by anything...is a flaw in bitcoin. I find it hilarious how gold bugs and paultards are some of the biggest fans of a "currency" that has literally nothing behind it. At least our little fiat currency has an army and a bunch of nukes backing it. I'm not against a digital currency but no one in their right mind is going to seriously consider a ponzi-ish currency with absolutely no security in value as a legitimate alternative to the banking/CC industry middlemen for electronic transactions.

Re:Unifying online and offline payments

[snowraver1]

'Real' digital cash lives at a banking institution, and may be private (depending on your definition of private), but it is not anonymous. Electronic payment certainly does not have the same advantages as cash. You can't use it without an account. How can you give your child $5 for candy? It is not anonymous, and is not accepted everywhere. Real cash is easier too. Cash is also easily converted between different currencies. It's not as easy to convert a Visa card to a Mastercard.

Re:Unifying online and offline payments

[betterunixthanunix]

Someone forgot to look at the work done by this guy:

https://en.wikipedia.org/wiki/David_Chaum

Real digital cash involves an issuing authority, which can be a bank or a government, but which neither knows who it has issued any specific token to nor when or where that token has been spent (well, strictly, it only requires this if it is to be both scalable and support offline payments). Real digital cash allows transactions to happen offline i.e. requiring no parties other than the two parties involved in the transaction. That is what Chaum and many other cryptographers spent lots of time developing.

what is currency

[circletimessquare]

It is an abstract representation of value that only has meaning in the context of a society.

It has no meaning or value in and of itself: can't do much with a sack of gold in the middle of the Sahara, unless you meet some tauregs, which brings us back to the point: whatever you agree is a medium of exchange has to derive meaning in terms of what other people think of as value.

Gold has ancient meaning, but ones and zeroes have to stand for something else: a sack of gold in a bank somewhere.

Which implies accountability, traceability, authority.

Without those things, no one in their right mind will accept your currency.

You have to know what currency actually means, and you can't design currency that defies those meanings, or what you have isn't really currency. Except amongst other idealistic clueless fanboys of alternacurrency, but this is a fringe group playing silly games, not actually making something that will replace real currency at large.

There is no trust in the parameters you have outlined. And with no trust, no trade.

It's a TRAP

[Ralph Spoilsport]

This would put banks in control of ALL money. That's a Very Bad Idea. If you can't "hide it under your mattress", you essentially have ZERO privacy.

Re:Gold pressed Latinum.

[demachina]

What part of the last 10 years did you miss where judges have been letting the U.S. government literally get away with murder. They sure haven't been any kind of brake on stopping the government from spying on its citizens.

Judges aren't saints, they are political appointees and they aren't any more reliable or trustworthy than the politicians who appoint them. If you put them on 3, 5 or 9 judge panels they get a little more reliable but if you manage to pack a 9 person court with 5 corrupted or partisan judges, all voting together, you are still screwed.

You should have zero confidence in letting one judge control anything important.