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Canada plans to replace cash with digital MintChips -- can this work?

I happen to play a lot of pen-and-paper role-playing games with friends. When playing in a future-based world, especially one with a more cyberpunk setting like Shadowrun, a central theme is that paper money has been replaced with anonymous digital currency.

It makes for a neat idea because the ubiquitous, black-suited “Mr. Johnson” from some shadowy corporation can pay for your team’s nefarious services without any trail going back to him or his organization. He just hands you a credit chip.

I never thought I would see this start to happen in real life, but it seems the Canadian government wants to do just that. Canada would like to eliminate all paper money in exchange for anonymous credit chips that could be carried around on your smart phone, your computer or some other device.

The trick, if it is to act as real currency, is making the money both secure and untraceable, which should prove quite the challenge.

The Canadian Mint has issued just such a challenge to developers to see if such a system could be built. Called the MintChip Challenge, winners will divvy up $50,000 in gold bars from the mint, plus plenty of free publicity, so this is a seriously big deal.

One would assume that winners would also have a leg up should the government decide to move forward with the next steps of the program. The challenge certainly has attracted a lot of interest — so much, in fact, that the Canadian Mint has closed registration, which was originally to be open until July 18.

My first reaction to all this was that it couldn’t be true. I couldn’t understand why a government would want to implement a system whose primary beneficiaries could be money launders and terrorists.

I mean, it’s the choice payment in Shadowrun for a reason. Runners aren’t working the front offices. They’re hacking computers, assassinating targets, engaging in corporate espionage and other activities where there can’t be a money trail. My group even once rigged a futuristic football game. Even in the real world, Bit Coins, an untraceable digital currency, has been linked to the operations of organized crime.

But putting aside the reason why for a moment, I have to admit that I’m a bit skeptical at how such a system could really be done. The companies in the challenge will have their work cut out for them, that’s for sure.

First off, we all know that no system is unhackable. My PlayStation 3 account got hacked once. Credit card numbers have been stolen in mass. Government agencies have had their data compromised. Creating a credit chip whose data — the money on it — can’t be stolen is a huge deal if it can be done.

Not only would you have to prevent people from taking money that does not belong to them, but you’d also have to prevent them from creating fake money and filling up a credit chip with funds that don’t actually exist, a sort of futuristic counterfeiting.
 
And you’d have to do all that while creating an anonymous and fee-free way for legitimate users to spend their money. I don’t see how money is going to get onto the credit chips without a user verifying who they are first. And once that is done, it will be impossible to decouple that authorization from the chip. If you have to present your ID and your credit card or whatever to load up your anonymous chip, then you’ve created a trail that someone could follow.

The only possibility that I could see is if you had one chip that you loaded up with your money that was linked to you, and then you could transfer that money to any number of anonymous, generic chips that could then be used however you wanted. Those secondary chips would have to be smart enough to resist hacking, but dumb enough to reject any personal data whatsoever. Quite the challenge, indeed.

In the end, I think companies in this challenge will earn their Canadian gold bars. One thing to consider is that if Canada is successful in getting a system like this working, then pressure will fall on other governments to quickly follow suit. That could be a long ways off. But it also might be closer than you think.

About the Author

John Breeden II is a freelance technology writer for GCN.

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