{"id":321638,"date":"2019-09-30T12:37:33","date_gmt":"2019-09-30T10:37:33","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=321638"},"modified":"2019-09-30T12:38:47","modified_gmt":"2019-09-30T10:38:47","slug":"tech-can-save-us-from-big-brother","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/security\/321638-tech-can-save-us-from-big-brother.html","title":{"rendered":"Tech can save us from big brother"},"content":{"rendered":"

By Elaine Ou for Bloomberg Opinion<\/em><\/p>\n

Information used to be a localized affair. Before the internet, bank accounts were confined to physical ledgers in a filing cabinet and took so much work to copy that they rarely left the building.<\/p>\n

IBM mainframes entered the office in the 1960s and \u201970s and introduced the era of digital centralization. It wasn\u2019t a conscious shift as much as a convenient one. Computers were good at managing information, so we kept giving them more. Bank checks, bond coupons, and stock certificates soon disappeared in favor of electronic record keeping. Today it would be unthinkable to rely on a paper bearer instrument of significant value.<\/p>\n

Digital databases enabled features that would otherwise be unwieldy: fraud detection, credit scores, targeted advertising. But it placed a responsibility on the data collectors as well. As a central source of information, they inevitably become arbiters of human interactions.<\/p>\n

Historically, powerful entities tend to consolidate their power. But the recent populist backlash might push technologists to move in the opposite direction.<\/p>\n

Humans originally<\/strong>\u00a0lived in small communities where social capital was paramount and trust was granted accordingly. It wasn\u2019t that long ago that people conducted all their banking at a single branch office and bank staff knew customers by name. This led to the sort of personal relationships we see in old movies such as\u00a0It\u2019s a Wonderful Life<\/em>.<\/p>\n

Such relationships may feel comfortable, but they don\u2019t accommodate the size and scale of modern societies. As civilization evolved, institutions arose to enforce rules and lower the risk of cooperating with strangers. Instead of trusting each of our counterparties, we need only trust the institutions. Now we can trade trillions of dollars in assets in the financial markets every day without worrying whether a stock certificate might be a forgery.<\/p>\n

We don\u2019t outsource trust in all aspects of life. A lot of laws aren\u2019t strictly followed or enforced. Instead we rely on communities to come to a consensus regarding socially acceptable behavior. For example, U.S. traffic laws: Boston-area drivers get away with a lot of behavior that would get them promptly arrested in Portland, Ore.<\/p>\n

It\u2019s not unusual for friends to get together for a game of poker with a cash buy-in. Technically, gambling is illegal in the U.S.! The Constitution\u2019s Fourth Amendment limits the state\u2019s power to control our lives, protecting us from having police randomly barge into our homes. Even if the government wanted to regulate private behavior, it couldn\u2019t station a police officer in every home to follow our every move.<\/p>\n

Except, increasingly it can. Today, people are unlikely to pay cash for their March Madness office betting pools. More likely they\u2019re using Venmo, where payments are automatically screened for suspicious activity. Anything that appears illegal, even transactions between friends, results in a locked account.<\/p>\n

Digital panopticons<\/strong>\u00a0enable stricter enforcement of rules than previously seemed possible (and maybe were ever thought desirable). Money laundering was criminalized in the 1930s, but it wasn\u2019t until the Bank Secrecy Act of 1970 that financial institutions were required to actively police it. Back when customer records lived in filing cabinets, it was infeasible to monitor every transaction for suspicious activity.<\/p>\n

Once it was established that a financial-services provider could be found liable for a customer\u2019s source of funds, its responsibilities rapidly expanded. Today, not only do banks need to comply with know your customer (KYC) laws, they\u2019re also expected to know your customer\u2019s customer (KYCC). The idea of\u00a0currency\u2014money that belongs to its current holder\u2014is gone, replaced by the notion that the provenance of every asset must be traced. Even gold bars can be\u00a0burdened\u00a0by their history.<\/p>\n

Regulatory outsourcing isn\u2019t limited to banks. Any company with an internet-connected database can be deputized for law enforcement. Facebook Inc. and Alphabet Inc.\u2019s Google\u00a0respond\u00a0to tens of thousands of\u00a0government data requests\u00a0each year. Amazon.com Inc. has been ordered to turn over\u00a0Echo recordings\u00a0from its smart home speakers. Large tech companies even provide handy\u00a0web portals\u00a0through which law enforcement agencies can request records.<\/p>\n

Facebook Chief Executive Officer Mark Zuckerberg made the most compelling\u00a0case\u00a0against breaking up his company at the Aspen Ideas Festival in June, when he pointed out the potential loss of an ally in helping regulators address problems like election interference and misinformation campaigns: \u201cBreaking up these companies wouldn\u2019t make any of these companies better. \u2026You would have those issues, you\u2019d just be much less equipped to deal with them.\u201d<\/p>\n

Facebook keeps intimate information on more than 2 billion people in one convenient location. Why would the government break that up?<\/p>\n

There\u2019s a conflict<\/strong>\u00a0here. Technology that was created to promote cooperation between strangers is now being used to control them.<\/p>\n

As businesses become increasingly global, they\u2019re torn between a need to comply with U.S. laws and a desire to avoid alienating their own customers. After Edward Snowden\u2019s disclosures of tech companies\u2019 complicity in National Security Agency surveillance, foreign customers\u00a0fled\u00a0U.S. tech providers in favor of overseas competitors. More recently, workplace productivity app creator Slack Technologies Inc. came\u00a0under fire\u00a0for blocking users in Iran, Cuba, and other countries sanctioned by the U.S. Microsoft Corp.-owned GitHub followed with\u00a0similar actions\u00a0soon after.<\/p>\n

That tension is creating demand for technology design choices that won\u2019t permit companies to police their customers. Facebook enabled\u00a0end-to-end encryption\u00a0for its Messenger app, and Apple Inc. built its iPhones in such a way that even Apple can\u2019t hack into them. When Open Whisper Systems received a subpoena requesting user information for its encrypted messaging app Signal, it was only able to supply the duration of a user\u2019s membership. The company retained no other information about its users.<\/p>\n

Tech companies are also starting to use a\u00a0double-blind information-sharing technique\u00a0known as\u00a0homomorphic encryption\u00a0to collect and analyze data. They get the benefits of massive data mining without the responsibility for monitoring it. Proposed\u00a0applications\u00a0for this technology range from medical records to voting software. Double-blind computation used to be prohibitively expensive, but technological advances have made it feasible for large-scale analysis. Instead of a reassuring motto like Google\u2019s \u201cDon\u2019t Be Evil,\u201d systems can now be designed to preclude evil.<\/p>\n

The cyberpunk\u00a0<\/strong>movement in the early \u201990s foresaw the lawlessness of cyberspace. It proposed technological solutions to facilitate cooperative behavior in the absence of a governing body. The goal was anarchy\u2014not in the sense of chaos, but in the sense that no one would be in charge. Instead of relying on regulators and police, user-defined rules would be enforced with economic incentives and software.<\/p>\n

Bitcoin is the most prominent example. It\u2019s a bearer instrument, but instead of a certificate, cryptographic signatures are used to authorize unforgeable transactions. Ledger history is stored in a database replicated across tens of thousands of machines around the world, and users are expected to verify transactions for themselves.<\/p>\n

In a world where confidence in the establishment has fallen to an\u00a0all-time low, \u201cDon\u2019t trust us\u201d is an attractive sales pitch. When Facebook announced Libra, the company was careful to emphasize its limited authority over the proposed cryptocurrency. Libra will be managed by a Swiss foundation of which Facebook is only one member.<\/p>\n

The company didn\u2019t fool anyone with those decentralization claims, but the goals are instructive. Facebook knows that the best way to win over users is to minimize its own involvement.<\/p>\n

Even central banks<\/strong>\u00a0can appreciate this. At this year\u2019s Economic Policy Symposium in Wyoming\u2019s Jackson Hole, Bank of England Governor Mark Carney suggested a\u00a0synthetic hegemonic currency\u00a0that could be provided through a network of central bank digital currencies.<\/p>\n

It\u2019s a distinct break from a half-century of dollar dominance. U.S. Treasuries make up about\u00a0two-thirds of global reserve holdings, all residing as database entries at Federal Reserve Banks, where every transaction can be monitored or stopped.<\/p>\n

Other countries don\u2019t share Americans\u2019 appreciation for U.S. regulatory authority, especially those at the receiving end of sanctions.<\/p>\n

European Union member states are reluctant to sacrifice trade and investment opportunities with Russia, Iran, and other economies by adhering to U.S. sanctions. As a solution, European banks set up a special-purpose vehicle called the Instrument in Support of Trade Exchanges, or Instex, to help companies do business with Iran without actually sending money across borders. Instex acts as a clearinghouse that matches credits and debits for trade, but transactions get netted and batched so that money doesn\u2019t cross Iranian borders. It hasn\u2019t been put to much use so far, but an informal version has existed for centuries. Hawala is an international value-transfer system that relies on a global network of brokers. It may look primitive because of the absence of contracts and courts, but hawala scales remittances to poor countries that international banks find too risky to serve. Hawala brokers don\u2019t comply with KYC requirements\u2014not in the legal sense, anyway. Participants know each other based on informal relationships in local communities.<\/p>\n

A crypto version exists as well.\u00a0Bitcoin Lightning\u00a0is a decentralized clearing system where participants send Bitcoin payment messages all around the world. Earlier this year, a series of Lightning payments took place between users in the U.S. and Europe, then to Iran, then Israel, concluding with a donation to a humanitarian aid program in Venezuela. The payments were privately cleared through the Lightning protocol, and if participants hadn\u2019t announced their game on Twitter, no one would have known.<\/p>\n

Trust takes<\/strong>\u00a0a long time to create but only a moment to destroy. When people lose confidence in the institutions that serve them, economic activity breaks down. The solution isn\u2019t to make powerful institutions even more powerful but to create technology that reduces the need to trust powerful institutions.<\/p>\n

The greatest innovations leverage human instinct to expand what\u2019s possible. Financial institutions talk a lot about banking the unbanked, but that might do the unbanked a disservice. A monolithic panopticon is no substitute for local knowledge.<\/p>\n

This all sounds bad if you\u2019re in charge of U.S. foreign policy or any type of regulation. It\u2019s good if you want a world where people can cooperate without interference. After all, that\u2019s how economic progress is made.<\/p>\n

Now read: New malware uses existing programs to control PCs<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"

Historically, powerful entities tend to consolidate their power. But the recent populist backlash might push technologists to move in the opposite direction.<\/p>\n","protected":false},"author":341034,"featured_media":106185,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[32262,191,835,21397],"class_list":["post-321638","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-security","tag-banking","tag-cryptocurrency","tag-ibm","tag-surveillance"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/321638"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341034"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=321638"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/321638\/revisions"}],"predecessor-version":[{"id":321640,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/321638\/revisions\/321640"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/106185"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=321638"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=321638"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=321638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}