Technological Threats to Personal Privacy in a Digital World.
Abstract.
Rapid technological advances in the past 10 years have completely transformed our world. In a famous 2011 article, veteran venture-capitalist Marc Andreessen noted that “Software is eating the world” and while Andreessen saw this development as a sign of progress, the last decade has also shown that software is eating at our privacy too .
Privacy is a complex concept that is often met with apathy (“I’ve got nothing to hide, why should I worry about my privacy”) or confusion (“Privacy is for hackers and terrorists”) by the general public. This limited understanding reveals an urgent need for public education around the importance of privacy in our digital world.
In 1967 US Supreme Court Justice William O. Douglas gave a timeless description of privacy:
[Privacy] involves the choices of the individual to disclose or to reveal what he believes, what he thinks, what he possesses…”.
It’s also important to stress that privacy (the option to not disclose information about yourself) is different from anonymity (the desire to complete obfuscate your identity).
Similarly to global warming, the erosion of privacy has mostly been an invisible process which consequences have only started to manifest in the last decade or so.
Cambridge Analytica, Edward Snowden’s revelations, Facebook’s social experiments on users emotions or the development of the Chinese Social Credit Score are all symptoms of this silent threat.
In this essay, we will place the focus on how technological innovation threatens our privacy and what socially responsible organizations are doing to combat these threats and build a world where privacy is understood by the public and respected by organizations and governments.
I - Technological Threats to Personal Privacy.
Facial recognition is a powerful technology that can threaten public liberties if left unregulated (A). In the face of this danger, some socially responsible organizations such as Microsoft are mounting a response (B).
A- The rise of facial recognition.
Facial recognition is a fast evolving domain of computer science that deals with teaching machines to build, compare, search and analyse very large data sets of human faces.
Thus far, most of its development has been the result of three initiatives: Face by Microsoft Azure, Watson Visual Recognition by IBM and the Chinese Face++ Project.
Long confined to the realm of science fiction, facial recognition is now deeply embedded in our lives: from the iPhone’s Face ID feature to China’s dystopian traffic surveillance system, its use has become commonplace despite the threats it poses to personal privacy.
In 2018, MIT’s Media Lab launched its Gender Shade initiative to expose and tackle the problem of algorithmic bias in facial recognition. This research established a concerning lack of accuracy in facial recognition technology, particularly regarding its ability to distinguish between genders across different skin colors.
In October 2019, the New York Times published a video detailing how facial recognition is used by U.S. police to build large-scale databases of facial portraits in order to recognize and track suspects of criminal activities across the country.
The piece outlined the risk for wrongful convictions and reinstated the threat of algorithmic bias, particularly against people of color.
In today’s world, control systems using facial recognition can surveil you anywhere. In places like the U.S. or Hong Kong where freedom against an oppressive government is on the line, these systems can also send you to jail.
With this great power must come great responsibility.
B- The need for public regulation and corporate responsibility around facial recognition.
In a remarkable interview published in November 2019 on Hidden Forces, Financial Times Global Business Columnist Rana Foroohar observed that the cyberspace (in the U.S. but also in China) is mostly unregulated. As a result big tech companies’ practices no longer live up to the cheerful “Don’t Be Evil” motto popularized by Google in its salad days.
Echoing this concern, President of Microsoft Brad Smith wrote a series of important blog articles that address the urgent need for regulating facial recognition technology.
In the articles, Smith highlights that: “in the current state of development, certain uses of facial recognition technology increase the risk of decisions, outcomes and experiences that are biased and even in violation of discrimination laws.”
Smith concludes that regulatory intervention is needed in order to provide a development framework and standardize the industry so the technology is not used to ends that go against human rights and privacy.
To this end, he proposes a set of six corporate principles that can guide both tech companies and regulators towards developing practices around facial recognition that maximize for innovation but minimize for negative externalities in terms of privacy and public liberties.
Facial recognition is not the only threat to privacy in our digital world.
II – Technological Threats to Financial Privacy.
The rapid spread of digital finance also constitutes a threat to our financial privacy (A). Some innovative companies are working hard to push back on the threat and help individuals regain financial sovereignty (B).
A- The rise of financial censorship in China.
In 40 short years, China has managed to lift hundreds of millions of people out of poverty and to become a major player in the world’s affairs.
In 2011, China became the 2cd most powerful economy in the world in terms of GDP, a position it has held ever since.
Some observers now predict that China could overtake the U.S. as the world’s biggest economy within the next decade.
One outcome of this profound economic miracle has been a radical digital transformation of its financial system.
In just over 10 years, China’s annual digital payment volume has gone from 505 billion yuan in 2009 to 26,900 billion in 2019 (a whopping x53 increase in 10 years).
In Q2 2019, the number of WeChat users reached a staggering 1.132 billion or roughly 80% of the total population.
It is now estimated that over 50% of financial transactions are made through smart phone apps (Ali Pay, WeChat and TenCent), 25% through credit cards and only 25% settled in cash.
This rapid transition from a cash-based society to a “cashless society was noticed by Bloomberg journalist Shelly Banjo who declared in a February 2018 article that “it is becoming harder to use cash in China”.
The digitization of China’s financial system, though instrumental in transforming the country into a hyper-modern, even futuristic, powerhouse has also vastly benefited the Chinese police state.
China’s mostly digital financial system allows the Chinese government to go to companies like WeChat or AliPay to more tightly control society via financial levers.
This development is extremely concerning from a civil liberty point of view because it allows for the deployment of a very powerful form of financial censorship.
At the demand of the government, any Chinese citizen can see their access to the digital financial system revoked, effectively barring them from accessing their bank account, buying groceries, paying rent, sending money abroad or even obtaining a visa to exit the country.
This form of censorship is particularly suited to oppress human rights activist, political opponent or members of ethnic minorities because it relies on discrete yet very powerful means of control.
As soon as 2020, China’s government financial censorship capabilities will be facilitated thanks to the implementation of a blockchain-powered digital yuan.
The use of blockchain technology will further enhance government control over its citizens by allowing the People’s Bank of China to directly issue, distribute, surveil and audit any transaction settled in digital yuan without going through third parties like AliPay, Tencent or WeChat.
But perhaps the rise of government control via financial censorship has found its best expression in the Chinese social credit score.
The social credit score is a government-led big data project aiming at building a nation-wide system of financial surveillance via financial means.
Projected to launch in 2020, this system will put machine algorithms in charge of automatically predicting the creditworthiness and financial fitness of every Chinese citizen based on their online shopping habits, credit history but also based on who they are socially connected to and how creditworthy their connections are.
This new breed of financial control (strangely reminiscent of Orwell’s 1984 or some of the most dystopian episodes of the British TV show Black Mirror) has recently been described by Havard professor Shoshana Zuboff in her breakthrough book:”The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power” as the direct outcome of the birth of a new form of capitalism she dubbed “Surveillance Capitalism”.
As its name suggests, surveillance capitalism is based on secretly extracting behavioral data from users (mostly via their smartphones) in order to make predictions as to their future behavior.
If successful, China’s experiment in surveillance capitalism could potentially lead other countries, including capitalistic democracies, to follow its lead and sacrifice individual financial privacy for efficiency and control.
The development of surveillance capitalism calls for the need for alternative, more private financial tools geared towards protecting individual financial sovereignty.
B- The push against financial censorship.
Unknown to many, the years 2017 saw the growth and subsequent pop of one of the biggest financial bubbles since the tulip bubble in 17th century Holland.
The crypto bubble of 2017 was marked by an incredible rise in the price of crypto-currencies such as Bitcoin which saw its price going from roughly $1000 USD in January 2017 to an eye-popping $19,783 USD at the peak of the bubble in December 2017.
Many, including JPMorgan Chase CEO Jamie Dimon, were quick to dismiss Bitcoin and other cryptocurrencies as “frauds” but the space survived the bubble mostly unscathed and has been engaged in what VC fund Castle Island Ventures Nic Carter has called finance’s most peaceful revolution.
This technological push promises to create the foundations for a new, more empowering and inclusive financial system that could one day become the only lever to push back against state-sponsored financial censorship.
One such project is Zcash, helmed by the Electric Coin Company and the Zcash Foundation.
Similarly to Bitcoin, Zcash is a cryptocurrency project aiming at creating a private decentralized blockchain financial system that doesn’t rely on banks or governments.
To this end, Zcash has been focused on developing cryptographic tools and funding research to bring privacy to blockchain finance (also known as DeFi for “Decentralized Finance”).
Their work has been very important to DeFi which, in its current state, is plagued by a severe lack of privacy.
In Bitcoin for example, any user’s Bitcoin balance is publicly and easily auditable and point to a ledger of every single transaction ever made from and to that balance.
When leveraged to fight criminal activity, this lack of privacy is a real advantage for authorities. However, when placed into the hands of a tyrannical government it not only threatens public liberties but also undermines the monetary function of digital money (like Bitcoin) by destroying its fungibility.
Fungibility is one of the 7 essential properties for any form of currency that want to assume a monetary function.
Fungibility means that any unit of exchange is as good as any other regardless of how they were used in the past. For example, two different $2 USD notes always have the same monetary value and, barring very specific cases, each of them can be redeemed for an equal amount of goods and services.
Cash money for example is usually highly fungible because each unit of cash has the same value as any other regardless of what these units were used to buy in the past.
On the other hand, blockchain currencies like Bitcoin are not fully fungible (yet) because each unit cannot be separated from its transactional history since there is a permanent public record of that history.
One consequence of this lack of fungibility is that coins having been (even very remotely) involved in activities a government deemed illegal can be easily "earmarked" or even blacklisted by exchanges or merchants operating under its jurisdiction.
Zcash’s work on blockchain privacy thus can help restore the fungibility of decentralized money by bringing much needed privacy to its users so they can feel comfortable retreating to DeFi in the event that their government might become tyrannical or financially bankrupt (similar to what is happening in Venezuela).
In the event of surveillance capitalism and financial censorship becoming the new norm in liberal democracies, alternative financial systems such as Bitcoin could become the last place where people can freely and private transact without fear of government surveillance.
This is why the work done by companies such as Zcash is important because it fundamentally aligns with the long term goals of corporate responsibility to create a world where happiness is maximized and individuals retain their public liberties in the face of increasingly greater digital threats.
I hope you enjoyed the article, stay tune for more.
Until then,
F0x
References.
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