Why a Digital Panopticon will Ultimately Collapse the Credit Industry (and worse)

in technology •  8 months ago

I was reading a story posted by @doitvoluntarily about Nebula Genomics paying in cryptocurrency to store your DNA (anonymously) on the blockchain. I’m personally hesitant of such projects because the downsides are grave. While this is supposed to be anonymous, I don’t see how that can be guaranteed. The potential abuses far outweigh the advantages in science.

We already have a digital panopticon that will effectively create permanent victims of identity theft to which authority’s answer is to use 2FA, 3FA, etc, but leaves you legally on the hook for damages that authority caused. Large scale hacks of centralized data such as the recent one of Equifax proves that such databases can never be adequately secured. Once compromised, it will be compromised forever and then you have to hope that businesses are careful enough to follow new security regulations.

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As a programmer now interested in game theoretical algorithms that incentivize good behavior on cryptocurrency networks, I can say that the incentives within the credit industry are not in favor of good behavior. The laws are written in such a way that allows unsecured debt to be unpaid.

If you’re a college student with a ton of student loan debt, it only makes sense to borrow as much money from credit cards as you can to pay off the student loans to become debt free then declare chapter 7 bankruptcy. Sure your credit will be shot. But this also means that thieves can no longer use your credit to open fraudulent accounts in your name. Playing by the rules in this situation is the best way to become a victim.

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James Altucher in his book Choose Yourself explains that college is a really bad investment these days. He’s absolutely right. I figured this out back by 1985 before things got really bad and paid off my student loans by 1990. James says that what anyone should do is travel for about a year and then start your own business. People aren’t evolutionarily prepared for rote jobs by nature, but are meant to exercise their entrepreneurial skills.

Why this is Happening

The reason this is happening is because the banking system was deputized about 50 years ago by Richard Nixon to become a system of law enforcement of money. Andreas Antonopoulos explains this in a talk he did last October in Vancouver…


(credit - Andreas Antonopoulos)

KYC (Know Your Customer) and it’s associated policies don’t actually work. Terrorist financing is most commonly done in untraceable USD, not bitcoin. Bitcoin is actually traceable on the blockchain which makes it less than optimal in hiding ones tracks for illegal activity. But authority still wants to keep the political illusion that it can do something to stop terrorism (while allowing their own money laundering activities to go undetected). This is because all such practices are not about public protection, but about control and power.

The correct way to handle such PII (Personally Identifiable Information) is to distribute it back to the source. A hacker should never be able to hack one computer and collect millions of compromised records. If this data was part of a public / private key security blockchain, the public data can be stored on the blockchain and the private keys that prove identity could be held on devices such as a hardware wallet of the type you see in bitcoin.

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One should never use biometrics directly because once compromised, they are compromised forever. Instead, these can become inputs for biocryptics, which is a method of hashing biometric inputs using a secure hashing algorithm.

Eventually people will become technically literate enough to realize the con job politicians are playing. But the danger of the digital panopticon is already present and claiming millions of victims. Eventually the data breaches will become so great that the system will collapse. Andreas explains why in the following video...


(credit - Andreas Antonopoulos)


Donations (public bitcoin address):
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3FwxQsa7gmQ7c1GXJyvDTqmT6CM3mMEgcv


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How do you feel about social security numbers in general? Some form of identification and numbering each US citizen? Since it is directly connected to credit, I wondered what you thought of having them? Especially since they are so easily hacked, and sometimes even incidentally (ie. illegals putting down a fake SS # to get a job and inadvertently stealing someone's # and possibly damaging it.)

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This...

Perhaps maybe Dan Larimer's vision could work (DPoS). I believe his heart is in the right place, but I'm very distrustful of putting PII in authorities hands. The reality now is that it is no longer necessary to secure ID through authority. PGP actually solved this with Phil Zimmerman back in the early 90's, but the state still want's its control over you. You have to ask what you're getting in return, and right now that return is a very raw deal.

great technology.
i like it.
thanks for share this post.
best of luck.

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