The name David Chaum might not mean much to the ordinary mortal, but Blockchain followers know exactly who is being meant. Chaum is a mastermind and one of the prime fathers of technology. Under the title “Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups” he wrote his dissertation in 1982. With E-Cash he did pioneering work in the 90s in the field of digital currency and thus decisively initiated the movement. His current project, the xx-Network, aims to solve the problem of security, scalability and decentralization. In doing so, he is relying, among other things, on the shredding of metadata.
Remember the beginnings of crypto currencies? Please describe this time for us.
Those were very exciting and exhilarating days! Already in the 1990s my company DigiCash issued the first electronic currency. In 1994 I made the first payment from Geneva to Amsterdam. So, the first crypto currency was actually eCash from 1994 – issued by Deutsche Bank among others – and an Airdrop from DigiCash.
However, after our announcements, it seems to me that a lot has happened. Many national smart card projects and initiatives later emerged, including the globally ambitious Mondex system, which was developed more in secret at National Westminster Bank. At that time, there were a number of research projects in companies and universities dealing with so-called “micro payments”.
Recently I have set up a digital museum for DigiCash on my website (chaum.com), which shows most of the history and development of crypto currencies in a timeline. I am not aware of any other initiatives that could be considered the beginnings of crypto currency in the 80s or early 90s.
As a crypto pioneer: Would you have thought back then that crypto currencies would develop in this way? And do you believe in the abolishment of cash by crypto currency?
I have always focused on consumer payments, and the uncorrelated value investment surprised me. Crypto currency can actually be a superior form of cash. But existing systems are always a familiar state of the art, even if new currency systems would dominate them. The development is dependent on external factors; who could have predicted that the public health problem would arise now, and it is still unclear what impact this crisis will have on society, the economic system – but also on privacy and the protection of our data.
With your company you have now created your own crypto currency…
Blockchains are forgery-proof, distributed data structures, in which transactions are recorded in chronological order, – traceable, unchangeable and without a central instance. With block chain technology, ownership can be secured and regulated more directly and efficiently than before, since complete and unchangeable data recording provides the basis for this.
Almost all commercial cryptography uses the NSA’s encryption standards, but they don’t even use their own standards to protect their secrets – they have other protection. We have therefore created our own crypto currency that runs on our xx-Network: xx-Coin – a quantum-safe encryption method based on our proprietary software.
Our goal is not only to enable secure and confidential communication, but also to facilitate financial transactions. Our xx-Network uses a quantum secure version of the original eCash. Xx-Coin is therefore a digital payment technology that enhances privacy because the accounts are not linked together.
This is because the transaction records that occur on thousands of computers within our global network are constantly monitored and secured by the xx community, so that every single violation would be detected immediately.
How justified is the concern that privacy is no longer protected?
The protection of personal communication and payment channels is the essential and necessary feature of a free and stable democracy and the possibility of freely sharing thoughts and beliefs is obligatory for any democratic society. Our xx-Network wants to contribute to this and create a protected sphere for the most important interactions. Our blockchain-based privacy transaction platform Elixxir supports secure messaging, payments and dApp data transfers. Xx-Network nodes guarantee data protection by running the Elixxir mix software, which makes metadata generated by daily user activities unrecognizable.
People need user-friendly alternatives, and they will shift their messaging and payment activities to applications that actually protect their information. That’s why metadata shredding that the xx-Network provides is essential. The entire digital fingerprint is made irrecognizable.
The block-chain ethos was to put control of our financial infrastructure back into the hands of the people, because centralized organizations have proven to be flawed. We must take the same approach to the control of our personal data.
What exactly is Metadata-Shredding and why is it so important for the financial industry?
SWIFT is actually a messaging system with a few payment instructions. Our digital fingerprint, i.e. the social diagram, is the most important asset for companies like Facebook, and the “who talks to whom and when” has long been the best source of information for spy agencies.
The provision of a protected sphere for communication between citizens must include the destruction of metadata for payments, otherwise payments can reverse the shredding of the entire message exchange. Many of today’s messaging and payment applications are encrypted, but they do not protect the metadata.
This includes data such as the time a message was sent and received, who the parties are, from where, and so on. This metadata may be collected by third parties. In order to protect the personal data of our users, our xx-Network uses the already mentioned metadata shredding: we destroy this data before it is even constituted, actually like shredding all those little pieces of information that, taken separately, say little. So that no information about the sender or recipient is collected, stored or sold. The xx-Network also allows you to send your quantum safe payments in its messages, so you can communicate with someone or send money to someone without third parties knowing about it.
How well known is the topic of metadata shredding in financial institutions today?
Central banks and other enlightened actors know that the public will not accept an electronic payment system that allows governments to spy on them. This is a problem if central bank money is to be made available to consumers in electronic form.
Metadata can be incredibly revealing information. For example, the United Nations has stated that metadata can be more revealing than the content of a message itself. For example, end-to-end encryption (or short E2EE), as used by WhatsApp or Facebook Messenger, definitely does not prevent a collection of metadata. If a government can see who sent a message, who received it, when it was sent and from where it was sent, it can derive a lot of valuable information from it.
“The United Nations has stated that metadata can be more revealing than the content of a message itself.”
In your opinion, which country is leading in metadata-shredding and where do you see Germany in this development?
We see a great interest from countries all over the world. It always seemed to me that Germany was the place where the greatest sensitivity to the issue of state surveillance of the civilian population, combined with the clear legal structure, that blocks state interference in the private sphere, was found. One indication of this is the longest existing, officially sanctioned – i.e. officially approved – system for the destruction of metadata, which was developed at the time by Prof. Andreas Pfitzmann (University of Dresden).
We are determined to support Germany in playing a leading role in this development. The issue of data protection is high up on the agenda in Germany. Not only in the political arena, but above all in the social system as a whole. Especially in the financial sector. The protection of privacy in Germany is therefore a worth protecting, valuable asset.
It also seems to me that the German legal system is capable of ensuring a strong and comprehensive protection of human rights (probably much stronger than in most other countries, as far as I have seen). Alike, Germany has a very sophisticated information technology to automate all kinds of things, including fintech. In addition, Germany has a leading role in evaluating the security of systems, including financial ones, provided by a large, non-sanctioned community and by some particularly competent university and business organizations. As a pioneer in economic issues, I therefore highlight the opportunity and the possibility of a real leadership role for Germany.