Cryptocurrencies offer an alternative to traditional methods of electronic value exchange, promising anonymous, cash-like electronic transfers, but in practice they fall short for several key reasons. We consider the false choice between total surveillance, as represented by banking as currently implemented by institutions, and impenetrable lawlessness, as represented by privacy-enhancing cryptocurrencies as currently deployed. We identify a range of alternatives between those two extremes, and we consider two potential compromise approaches that offer both the auditability required for regulators and the anonymity required for users.
Current architectures to validate, certify, and manage identity are based on centralized, top-down approaches that rely on trusted authorities and third-party operators. We approach the problem of digital identity starting from a human rights perspective, with a primary focus on identity systems in the developed world. We assert that individual persons must be allowed to manage their personal information in a multitude of different ways in different contexts and that to do so, each individual must be able to create multiple unrelated identities. Therefore, we first define a set of fundamental constraints that digital identity systems must satisfy to preserve and promote privacy as required for individual autonomy. With these constraints in mind, we then propose a decentralized, standards-based approach, using a combination of distributed ledger technology and thoughtful regulation, to facilitate many-to-many relationships among providers of key services. Our proposal for digital identity differs from others in its approach to trust in that we do not seek to bind credentials to each other or to a mutually trusted authority to achieve strong non-transferability. Because the system does not implicitly encourage its users to maintain a single aggregated identity that can potentially be constrained or reconstructed against their interests, individuals and organizations are free to embrace the system and share in its benefits.
For decades, proponents of the Internet have promised that it would one day provide a seamless way for everyone in the world to communicate with each other, without introducing new boundaries, gatekeepers, or power structures. What happened? This article explores the system-level characteristics of the Internet that helped it to succeed as well as it has, including trade-offs intrinsic to its design as well as the system-level implications of certain patterns of use that have emerged over the years that undermine those characteristics or limit their effectiveness. We compile some key observations about such patterns, toward the development of a general theory of why they emerged despite our best efforts, and we conclude with some suggestions on how we might mitigate the worst outcomes and avoid similar experiences in the future.
We present a scalable architecture for electronic retail payments via central bank digital currency and offer a solution to the perceived conflict between robust regulatory oversight and consumer affordances such as privacy and control. Our architecture combines existing work in payment systems and digital currency with a new approach to digital asset design for managing unforgeable, stateful, and oblivious assets without relying on either a central authority or a monolithic consensus system. Regulated financial institutions have a role in every transaction, and the consumer affordances are achieved through the use of non-custodial wallets that unlink the sender from the recipient in the transaction channel. This approach is fully compatible with the existing two-tiered banking system and can complement and extend the roles of existing money services businesses and asset custodians.
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