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March 30, 2012

The ghost of cash

"It's not enough to speak well of digital money," Geronimo Emili said on Wednesday. "You must also speak negatively of cash." Emili has a pretty legitimate gripe. In his home country, Italy, 30 percent of the economy is black and the gap between the amount of tax the government collects and the amount it's actually owed is €180 billion. Ouch.

This sets off a bit of inverted nationalist competition between him and the Greek lawyer Maria Giannakaki, there to explain a draft Greek law mandating direct payment of VAT from merchants' tills to eliminate fraud: which country is worse? Emili is sure it's Italy.

"We invented banks," he said. "But we love cash." Italy's cash habit costs the country €10 billion a year - and 40 percent of Europe's bank robberies.

This exchange took place at this year's Digital Money Forum, an annual event that pulls together people interested in everything from the latest mobile technology to the history of Anglo-Saxon coinage. Their shared common interest: what makes money work? If you, like most of this group, want to see physical cash eliminated, this is the key question.

Why Anglo-Saxon coinage? Rory Naismith explains that the 8th century began the shift from valuing coins merely for their metal content and assigning them a premium for their official status. It was the beginning of the abstraction of money: coins, paper, the elimination of the gold standard, numbers in cyberspace. Now, people like Emili and this event's convenor, David Birch, argue it's time to accept money's fully abstract nature and admit the truth: it's a collective hallucination, a "promise of a promise".

These are not just the ravings of hungry technology vendors: Birch, Emili, and others argue that the costs of cash fall disproportionately on the world's poor, and that cash is the key vector for crime and tax evasion. Our impressions of the costs are distorted because the costs of electronic payments, credit cards, and mobile wallets are transparent, while cash is free at the point of use.

When I say to Birch that eliminating cash also means eliminating the ability to transact anonymously, he says, "That's a different conversation." But it isn't, if eliminating crime and tax evasion are your drivers. In the two days only Bitcoin offers anonymity, but it's doomed to its niche market, for whatever reason. (I think it's too complicated; Dutch financial historian Simon Lelieveldt says it will fail because it has no central bank.)

I pause to be annoyed by the claim that cash is filthy and spreads disease. This is Microsoft-level FUD, and not worthy of smart people claiming to want to benefit the poor and eliminate crime. In fact, I got riled enough to offer to lick any currency (or coins; I'm not proud) presented. I performed as promised on a fiver and a Danish note. And you know, they *kept* that money?

In 1680, says Birch, "Pre-industrial money was failing to serve an industrial revolution." Now, he is convinced, "We are in the early part of the post-industrial revolution, and we're shoehorning industrial money in to fit it. It can't last." This is pretty much what John Perry Barlow said about copyright in 1993, and he was certainly right.

But is Birch right? What kind of medium is cash? Is it a medium of exchange, like newspapers, trading stored value instead of information, or is it a format, like video tape? If it's the former, why shouldn't cash survive, even if only as a niche market? Media rarely die altogether - but formats come and go with such speed that even the more extreme predictions at this event - such as Sandra Alzetta, who said that her company expects half its transactions to be mobile by 2020 -seem quite modest. Her company is Visa International, by the way.

I'd say cash is a medium of exchange, and today's coins and notes are its format. Past formats have included shells, feathers, gold coins, and goats; what about a format for tomorrow that printed or minted on demand, at ATMs? I ask the owner of the grocery shop around the corner if his life would be better if cash were eliminated, and he shrugs no. "I'd still have to go out and get the stuff."

What's needed is low-cost alternatives that fit in cultural contexts. Lydia Howland, whose organization IDEO works to create human-centered solutions to poverty, finds the same needs in parts of Britain that exist in countries like Kenya, where M-Pesa is succeeding in bringing access to banking and remote payments to people who have never had access to financial services before.

"Poor people are concerned about privacy," she said on Wednesday. "But they have so much anonymity in their lives that they pay a premium for every financial service." Also, because they do so much offline, there is little understanding of how they work or live. "We need to create a society where a much bigger base has a voice."

During a break, I try to sketch the characteristics of a perfect payment mechanism: convenient; transparent to the user; universally accepted; universally accessible and usable; resistant to tracking, theft, counterfeiting, and malware; and hard to steal on a large scale. We aren't there yet.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series.

March 23, 2012

The year of the future

If there's one thing everyone seemed to agree on yesterday at Nominet's annual Internet policy conference, it's that this year, 2012, is a crucial one in the development of the Internet.

The discussion had two purposes. One is to feed into Nominet's policy-making as the body in charge of .uk, in which capacity it's currently grappling with questions such as how to respond to law enforcement demands to disappear domains. The other, which is the kind of exercise net.wars particularly enjoys and that was pioneered at the Computers, Freedom, and Privacy conference (next one spring 2013, in Washington, DC), is to peer into the future and try to prepare for it.

Vint Cerf, now Google's Chief Internet Evangelist, outlined some of that future, saying that this year, 2012, will see more dramatic changes to the Internet than anything since 1983. He had a list:

- The deployment of better authentication in the form of DNSSec;

- New certification regimes to limit damage in the event of more cases like 2011's Diginotar hack;

- internationalized domain names;

- The expansion of new generic top-level domains;

- The switch to IPv6 Internet addressing, which happens on June 6;

- Smart grids;

- The Internet of things: cars, light bulbs, surfboards (!), and anything else that can be turned into a sensor by implanting an RFID chip.

Cerf paused to throw in an update on his long-running project the interplanetary Internet he's been thinking about since 1998 (TXT).

"It's like living in a science fiction novel," he said yesterday as he explained about overcoming intense network lag by using high-density laser pulses. The really cool bit: repurposing space craft whose scientific missions have been completed to become part of the interplanetary backbone. Not space junk: network nodes-in-waiting.

The contrast to Ed Vaizey, the minister for culture, communications and the creative industries at the Department of Culture, Media, and Sport, couldn't have been more marked. He summed up the Internet's governance problem as the "three Ps": pornography, privacy, and piracy. It's nice rhetorical alliteration, but desperately narrow. Vaizey's characterization of 2012 as a critical year rests on the need to consider the UK's platform for the upcoming Internet Governance Forum leading to 2014's World Information Technology Forum. When Vaizey talks about regulating with a "light touch", does he mean the same things we do?

I usually place the beginning of the who-governs-the-Internet argument at1997, the first time the engineers met rebellion when they made a technical decision (revamping the domain name system). Until then, if the pioneers had an enemy it was governments, memorably warned off by John Perry Barlow's 1996 Declaration of the Independence of Cyberspace. After 1997, it was no longer possible to ignore the new classes of stakeholders, commercial interests and consumers.

I'm old enough as a Netizen - I've been online for more than 20 years - to find it hard to believe that the Internet Governance Forum and its offshoots do much to change the course of the Internet's development: while they're talking, Google's self-drive cars rack up 200,000 miles on San Francisco's busy streets with just one accident (the car was rear-ended; not their fault) and Facebook sucks in 800 million users (if it were a country, it would be the world's third most populous nation).

But someone has to take on the job. It would be morally wrong for governments, banks, and retailers to push us all to transact with them online if they cannot promise some level of service and security for at least those parts of the Internet that they control. And let's face it: most people expect their governments to step in if they're defrauded and criminal activity is taking place, offline or on, which is why I thought Barlow's declaration absurd at the time

Richard Allan, director of public policy for Facebook EMEA - or should we call him Lord Facebook? - had a third reason why 2012 is a critical year: at the heart of the Internet Governance Forum, he said, is the question of how to handle the mismatch between global Internet services and the cultural and regulatory expectations that nations and individuals bring with them as they travel in cyberspace. In Allan's analogy, the Internet is a collection of off-shore islands like Iceland's Surtsey, which has been left untouched to develop its own ecosystem.

Should there be international standards imposed on such sites so that all users know what to expect? Such a scheme would overcome the Balkanization problem that erupts when sites present a different face to each nation's users and the censorship problem of blocking sites considered inappropriate in a given country. But if that's the way it goes, will nations be content to aggregate the most open standards or insist on the most closed, lowest-common-denominator ones?

I'm not sure this is a choice that can be made in any single year - they were asking this same question at CFP in 1994 - but if this is truly the year in which it's made, then yes, 2012 is a critical year in the development of the Internet.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series.

March 16, 2012

The end of the beginning

The coming months could see significant boosts to freedom of expression in the UK. Last night, the Libel Reform Campaign launched its report on alternatives to libel litigation at an event filled with hope that the Defamation Bill will form part of the Queen's speech in May. A day or two earlier, Consumer Focus hosted an event at the House of Commons to discuss responses to the consultation on copyright following the Hargreaves Review, which are due March 21. Dare we hope that a year or two from now the twin chilling towers of libel law and copyright might be a little shorter?

It's actually a good sign, said the former judge Sir Stephen Sedley last night, that the draft defamation bill doesn't contain everything reform campaigners want: all bills change considerably in the process of Parliamentary scrutiny and passage. There are some other favorable signs: the defamation bill is not locked to any particular party. Instead, there's something of a consensus that libel law needs to be reformed for the 21st century - after all, the multiple publication rule that causes Internet users so much trouble was created by the 1849 court case Duke of Bunswick v Harmer, in which the Duke of Brunswick managed to get the 17-year limit overridden on the basis that his manservant, sent from Paris to London, was able to buy copies of the magazine he believed had defamed him. These new purchases, he argued successfully, constituted a new publication of the libel. Well, you know the Internet: nothing ever really completely dies, and so that law, applied today, means liability in perpetuity. Ain't new technology grand?

The same is, of course, true in spades of copyright law, even though it's been updated much more recently; the Copyright, Designs, and Patents Act only dates to 1988 (and was then a revision of laws as recent as 1956). At the Consumer Focus event, Saskia Walzel argued that it's appropriate to expect to reform copyright law every ten to 15 years, but that the law should be based on principles, not technologies. The clauses that allow consumers to record TV programs on video recorders, for example, did not have to be updated for PVRs.

The two have something else in common: both are being brought into disrepute by the Internet because both were formulated in a time when publishers were relatively few in number and relatively powerful and needed to be kept in check. Libel law was intended to curb their power to damage the reputations of individuals with little ability to fight back. Copyright law kept them from stealing artists' and creators' work - and each other's.

Sedley's comment last night about libel reform could, with a little adaptation, apply equally well to copyright: "The law has to apply to both the wealthy bully and the small individual needing redress from a large media organization." Sedley went on to argue that it is in the procedures that the playing field can be leveled; hence the recommendation for options to speed up dispute resolutions and lower costs.

Of course, publishers are not what they were. Even as recently as 1988 the landscape of rightsholders was much more diverse. Many more independent record labels jostled for market share with somewhat more larger ones; scores of independent book publishers and bookshops were thriving; and photographers, probably the creators being damaged the most in the present situation, still relied for their livelihood on the services of a large ecology of small agencies who understood them and cared about their work. Compare that to now, when cross-media ownership is the order of the day, and we may soon be down to just two giant music companies.

It is for this reason that I have long argued (as Walzel also said on Tuesday) that if you really want to help artists and other creators, they will be better served by improving contract law so they can't be bullied into unfair terms than by tightening and aggressively enforcing copyright law.

Libel law can't be so easily mitigated, but in both cases we can greatly improve matters by allowing exceptions that serve the public interest. In the case of libel law, that means scientific criticism: if someone claims abilities that are contrary to our best understanding of science, critique on that basis should be allowed to proceed. Similarly, there is clearly no economic loss to rightsholders from allowing exceptions for parody, disabled access, and archiving.

It was Lord McNally, the Minister of Justice who called this moment in the work on libel law reform the end of the beginning, reminding those present that now is to use whatever influence campaigners have with Parliamentarians to get through the changes that are needed. He probably wouldn't think of it this way, but his comment reminded me of the 1970s and 1980s tennis champion Chris Evert, who commented that many (lesser) players focused on reaching the finals of tournaments and forgot, once there, that there was a step further to go to win the title.

So enjoy that celebratory drink - and then get back to work!

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series.


March 9, 2012

Private parts

In 1995, when the EU Data Protection Directive was passed, Facebook founder and CEO Mark Zuckerberg was 11 years old. Google was three years away from incorporation. Amazon.com was a year old and losing money fast enough to convince many onlookers that it would never be profitable; the first online banner ads were only months old. It was the year eBay and Yahoo! were founded and Netscape went public. This is how long ago it was: CompuServe was a major player in online services, AOL was just setting up its international services, and both of them were still funded by per-minute usage fees.

In other words: even when it was published there were no Internet companies whose business models depended on exploiting user data. During the years it was being drafted only posers and rich people owned mobile phone, selling fax machines was a good business, and women were still wearing leggings the *first* time. It's impressive that the basic principles formulated then have held up well. Practice, however, has been another matter.

The discussions that led to the publication in January of of a package of reforms to the data protection rules began in 2008. Discussions among data protection commissioners, Peter Hustinx, the European Data Protection Supervisor, said at Thursday's Westminster eForum on data protection and electronic privacy, produced a consensus that changes were needed, including making controllers more accountable, increasing "privacy by design", and making data protection a top-level issue for corporate governance.

These aren't necessarily the issues that first spring to mind for privacy advocates, particularly in the UK, where many have complained that the Information Commissioner's Office has failed. (It was, for example, out of step with the rest of the world with respect to Google's Street View.) Privacy International has a long history of complaints about the ICO's operation. But even the EU hasn't performed as well as citizens might hope under the present regime: PI also exposed the transfer of SWIFT financial data to the US, while Edward Hasbrouck has consistently and publicly opposed the transfer of passenger name record data from the EU to the US.

Hustinx has published a comprehensive opinion of the reform package. The details of both the package itself and the opinion require study. But some of the main points are an effort to implement a single regime and the rights to erasure (aka the right to be forgotten), require breach notification within 24 hours of discovery, strengthen the data protection authorities and make them more accountable.

Of course, everyone has a complaint. The UK's deputy information commissioner, David Smith, complained that the package is too prescriptive of details and focuses on paperwork rather than privacy risk. Lord McNally, Minister of State at the Ministry of Justice, complained that the proposed fines of up to 2 percent of global corporate income are disproportionate and that 24 hours is too little time. Hustinx outlined his main difficulties: that the package has gaps, most notably surrounding the transfer of telephone data to law enforcement; that fines should be discretionary and proportionate rather than compulsory; and that there remain difficulties in dealing with national and EU laws.

We used to talk about the way the Internet enabled the US to export the First Amendment. You could, similarly, see the data protection laws as the EU's effort to export privacy rules; a key element is the prohibition on transferring data to countries without similar regimes - which is why the SWIFT and PNR cases were so problematic. In 1999, for a piece that's now behind Scientific American's paywall, PI's Simon Davies predicted that US companies might find themselves unable to trade in Europe because of data flows. Big questions, therefore, revolve around the business corporate rules, which allow companies to transfer data to third countries without equivalent data protection as long as the data stays within their corporate boundaries.

The arguments over data protection law have a lot in common with the arguments over copyright. In both cases, the goal is to find a balance of power between competing interests that keeps individuals from being squashed. Also like copyright, data protection policy is such a dry and esoteric subject that it's hard to get non-specialists engaged with it. Hard, but not impossible: copyright has never had a George Orwell to make the dangers up close and personal. Copyright law began, Lawrence Lessig argued in (I think it was) Free Culture, as a way to curb the power of publishers (although by now it has ended up greatly empowering them). Similarly while most of us may think of data protection law as protecting the abuse of personal data, a voice argued from the floor yesterday that the law was originally drafted to enable free data transfers within the single market.

There is another similarity. Rightsholders and government policymakers often talk as though the population-at-large are consumers, not creators in their own right. Similarly, yesterday, Mydex's David Alexander had this objection to make: "We seem to keep forgetting that humans are not just subjects, but participants in the management of their own personal data...Why can't we be participants?"


Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series.


March 2, 2012

Drive by wire

The day in 1978 when I first turned on my CB radio, I discovered that all that time the people in the cars around me had been having conversations I knew nothing about. Suddenly my car seemed like a pre-Annie Sullivan Helen Keller.

Judging by yesterday's seminar on self-driving cars, something similar is about to happen, but on a much larger scale. Automate driving and then make each vehicle part of the Internet of Things and suddenly the world of motoring is up-ended.

The clearest example came from Jeroen Ploeg, who is part of a Dutch national project on Cooperative Advanced Cruise Control. Like everyone here, Ploeg is grappling with issues that recur across all the world's densely populated zones: congestion, pollution, and safety. How can you increase capacity without building more roads (expensive) while decreasing pollution (expensive, unpleasant, and unhealthy) and increasing safety (deaths from road accidents have decreased in the UK for the last few years but are still nearly 2,000 a year)? Decreasing space between cars isn't safe for humans, who also lack the precision necessary to keep a tightly packed line of cars moving evenly. What Ploeg explains, and then demonstrates on a ride in a modified Prius through the Nottingham lunchtime streets, is that given the ability to communicate the cars can collaborate to keep a precise distance that solves all three problems. When he turns on the cooperative bit so that our car talks to its fellow in front of us, the advance warnings significantly smooth our acceleration and braking.

"It has a big potential to increase throughput," he says, noting that packing safely closer together can cut down trucks' fuel requirements by up to 10 percent from the reduction in headwinds.

But other than that, "There isn't a business case for it," he says sadly. No: because we don't buy cars collaboratively, we buy them individually according to personal values like top speed, acceleration, fuel efficiency, comfort, sporty redness, or fantasy.

To robot vehicle researchers, the question isn't if self-driving cars will take over - the various necessary bits of technology are too close to ready - but when and how people will accept the inevitable. There are some obvious problems. Human factors, for one. As cars become more skilled - already, they help humans park, keep in lanes, and keep a consistent speed - humans forget the techniques they've learned. Gradually, says Natasha Merat, co-director at the Institute for Transport Studies at the University of Leeds, they stop paying attention. In critical situations, her research shows, they react more slowly; in urban situations more automated means they're more likely to watch DVDs until or unless they hear an alarm sound. (Curiously, her research shows that on motorways they continue to pay more attention; speed scares, apparently.) So partial automation may be more dangerous than full automation despite seeming like a good first step.

The more fascinating thing is what happens when vehicles start to communicate. Paul Newman, head of the Mobile Robotics Unit at Oxford proposes that your vehicle should learn your routes; one day, he imagines, a little light comes on indicating that it's ready to handle the drive itself. Newman wants to reclaim his time ("It's ridiculous to think that we're condemned to a future of congestion, accidents, and time-wasting"), but since GPS is too limited to guide an automated car - it doesn't work well inside cities, it's not fine-grained enough for parking lots - there's talk of guide boxes. Newman would rather take cues from the existing infrastructure the way humans do. But give vehicles the ability to communicate and share information - maps, pictures, and sensor data. "I don't need a funky French car bubble car. I want today's car with cameras and a 3G connection."

It's later, over lunch, that I realize what he's really proposing. Say all of Britain's roads are traversed once an hour by some vehicle or other. If each picks up infrastructure, geographical, and map data and shares it...you have the vehicle equivalent of Wikipedia to compete with Google's Street View.

Two topics are largely skipped at this event, both critical: fuel and security. John Miles, from Arup argued that it's a misconception that a large percentage of today's road traffic could be moved to rail. But is it safe to assume we'll find enough fuel to run all those extra vehicles either? Traffic increased in the UK by 85 percent since 1980; another 25 percent increase is expected in just the next 20 years.

But security is the crucial one because it must be built into V2V from the beginning. Otherwise, we're talking the apocryphal old joke about cars crashing unpredictably, like Windows.

It's easy to resist this particular future even without wondering whether people will accept statistics showing robot cars are safer if a child is killed by one: I don't even like cars that bossily remind me to wear a seatbelt. But, as several people said yesterday, I am the wrong age. The "iPod generation" don't identify cars so closely with independence, and they don't like looking up from their phones. The 30-year-old of 2032 who knows how to back into a tight parking space may be as rare as a 30-year-old today who can multiply three-digit numbers in his head. Me, I'll wave from the train.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series.