Law in the Internet Society

Losing Our Anonymity in a Cashless Society

-- By JieLin - 11 Oct 2019

A few classes back, the topic of a cashless economy came up, with discussions centered around a cashless economy destroying the privacy of the free market. This got me thinking about my own presence in a cashless economy, and out of curiosity, I passed my friend my recent credit card statements for a read. She immediately noted that I always got Sweetgreen every Tuesday (an after-gym routine), or that my purchases every Friday afternoon seem to be around Midtown. I stopped her before she continued, but this was sufficient for me to realize that if a layperson could draw such preliminary conclusions about my statements, a trained data analyst could definitely draw greater inferences for use in ways that I cannot begin to imagine.

The Cashless Revolution

A Wikipedia definition of a cashless society is one which describes an economic state whereby financial transactions are not conducted with money in the form of physical banknotes, but rather through the transfer of digital information between the transacting parties. It is predicted that by 2025, 71% of the population potentially will have access to digital payment technology.

The Cashless Consequences

In a world without cash, every payment made will be traceable. More than just having governments access such information, do we really want banks or payment processors to have access to that information? The power that is handed to them is enormous, and one that commodifies our behaviors and actions in ways that we cannot begin to fathom. For starters, insurance companies are able to aggregate data about individuals from credit-card spending in order to judge risk, such as looking at one’s grocery purchases for an insight into the state of our health. Analytics firm Cardlytics has admitted to helping some banks use customers’ transaction data to target coupons or other retail offers. Even hospitals are buying our credit card data to identify high-risk patients and modify their medical plans accordingly.

This is a massive invasion of our privacy. Banks and businesses are employing our information in an unethical way, exploiting information that they have (or can purchase) about consumers to manipulate and control all aspects of our lives. A simple regular purchase at a burger joint today could lead to the repercussion of being charged a more expensive insurance package; my own recent increase in transactions at online jewelry shops could have contributed to targeted advertising at my lifestyle.

Convenience vs. Privacy?

In the face of a movement towards an increasingly cashless economy, how can we protect our anonymity? To the extent that the use of cash as a payment method is gradually but significantly falling, is there anything we can do to protect ourselves without excluding ourselves from the broader society and economy? Or is there simply a tradeoff today between the convenience of cashless payments and one’s privacy? Indeed, many articles questioning the increasingly cashless economy fall back to the power of holding cash, thus implying that a necessary trade-off with efficiency/ convenience is necessary in order to win back our privacy. I believe that both concepts are not antithetical.

A possible solution would be the unified payment interface, or UPI. The idea is simple – one smartphone owner who is a customer of Bank A can request a payment from, or initiate a payment to, another owner who has an account with Bank B. Neither party needs to know anything more than each other’s mobile number or virtual ID. Traditional services used to transact money online require a host of details about the receiver’s bank account before one can start transferring or receiving funds. With UPI, such details are removed. However, this does not mean that one’s information is untraceable – it is merely hidden to certain parties.

Another possibility would be to adopt the concept of anonymous digital cash, as espoused by David Chaum. One specific example would be the use of blind signatures – which takes the idea of digital signature and reinforces it with privacy. By introducing random factors, Chaum creates blinded note numbers which are essentially untraceable, to the extent that no parties know of the blinding factors and thus will not be able to determine who spent the notes. Alongside other related proposals, Chaum assumes that such proposals are viable to the extent that the system is based on “representatives and observers”, in which organizations stand to gain advantages from increased public confidence with a focus on protecting privacy.

However, the bleak reality is that no government has shown any inclination of adopting Chaum’s proposal of anonymous digital cash. Since the publication of the article in 1992, a quick assessment of 2019 has shown no further progress towards anonymous digital cash. The lack of impetus to act from the government is immense, given their participation and interest in gathering information about its citizens. In fact, China’s latest move towards developing its state digital currency, despite assurances of “controlled anonymity”, shows how difficult it is to trust governments and their purported effort towards “anonymous digital cash”.

Turning Back to Cash

Given the bleak realities of solutions which would theoretically marry concerns of convenience and privacy, perhaps the only realistic option to protect our privacy rights would be to simply use cash. My previous draft failed to recognize this as viable. However, I have now realized that my resistance to this option stemmed from a reluctance to give up the advantages of convenience, and a false expectation that the different societal players recognize the importance of privacy enough to wish to embrace the solutions stated above. Having realized this, I am resolved to modify my payment stream to reflect more cash, starting from choosing cash over card payments whenever possible. Having done so during my winter break, I have realized that the initial “inconvenience” of carrying cash pales in comparison to the need to reflect a desire for more privacy. Until society is ready to truly recognize the importance of privacy, I (and I hope everyone else reading) must voice out resistances towards its current state.

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r3 - 11 Jan 2020 - 18:43:36 - JieLin
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