[taler-marketing] branch master updated: merge FR paper

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grothoff pushed a commit to branch master
in repository marketing.

The following commit(s) were added to refs/heads/master by this push:
     new d3d948e  merge FR paper
d3d948e is described below

commit d3d948e129d710be0bc42aa904849ab4e141d8a2
Author: Christian Grothoff <grothoff@gnunet.org>
AuthorDate: Fri Jan 14 13:58:01 2022 +0100

    merge FR paper
---
 2022-privacy/privacy.tex | 132 +++++++++++++++++++++++++++++++++++++++++++++--
 1 file changed, 129 insertions(+), 3 deletions(-)

diff --git a/2022-privacy/privacy.tex b/2022-privacy/privacy.tex
index 5069e29..40bb461 100644
--- a/2022-privacy/privacy.tex
+++ b/2022-privacy/privacy.tex
@@ -3,8 +3,9 @@
 \usepackage{url}
 \usepackage{enumitem}
 
-\title{Accounts Considered Harmful}
-\author{Christian Grothoff \and \"Ozg\"ur Kesim}
+\title{Accounts are an Unnecessary Evil}
+\subtitle{A critique of two papers}
+\author{Antoinne Aligny \and Emmanuel Benoist \and Christian Grothoff \and 
\"Ozg\"ur Kesim}
 \date{\today}
 \begin{document}
 
@@ -21,6 +22,13 @@ paper. We argue that an account-based design cannot meet the 
ECB's stated
 design goals and that the ECB needs to fundamentally change its mindset when
 thinking about its role in the context of the Digital Euro if it wants the
 project to succeed.
+
+Along the same lines, the French council scientific numerique published a
+report on ``Notes and Tokens, The New Competition of Currencies''.  Here, the
+authors fall for the same trap, but even go as far as stating that a CBDC is
+not possible without an E-ID system.
+
+
 % [oec] Shouldn't we also mention GNU Taler already here as an example for an 
alternative?
 }
 
@@ -118,7 +126,7 @@ digital subjects.
 % paper above. How does it related to the ECB paper? Is this a strawman going
 % down here? Should this section come at the end and formulate requirements
 % that should be taken into account for a CDBC?
-Token-based payments like GNU Taler offer an alternative, enabling the state
+Token-based payments like GNU Taler~\cite{dold2019} offer an alternative, 
enabling the state
 to ensure business is legal (and tax-paying) without infringing on the
 soverenity of private citizens.
 We recently extended this principle also into
@@ -180,6 +188,44 @@ risk, quite comparable to the risk of hoarding cash. By 
analyzing this risk,
 citizens and businesses would themselves determine appropriate individual
 limits for their CBDC holdings based on their actual cash needs.
 
+\section{Tokenization beyond CBDC}
+
+With electronic tokens it is possible to tokenize payment systems that are not
+CBDCs. For example, a Swiss group around Claudio Zanetti is considering
+launching an electronic payment system based on gold. Direct payments with
+physical gold are problematic, as giving change (the exact problem GNU Taler
+solves for Chaum's DigiCash~\cite{digicash1989}) is impractical with gold (as
+is the validation that the gold is pure). With eGold, Zanetti plans to
+establish a private competitor to the Swiss National Bank, that is not able to
+deflate economic crises by inflating the currency at the expense of the
+working class. It remains to be seen if this effective limitation on central
+bank policy making is ultimately beneficial, given the ecological cost of
+mining gold and the detrimental effect of rampant economic crises on the
+poor. However, we find this to be an interesting idea, as it may require
+politicians to take a more preventative stance against economic crises.
+
+Systems like Bitcoin and Ethereum that are based on distributed ledger
+technology are often confused with true token-based systems. In Bitcoin and
+Ethereum funds are still stored in accounts that have a value because of an
+incoming transaction, and not because some issuer backs the token.  With the
+Depolymerizer~\cite{\url{https://git.taler.net/depolymerization.git}} we have
+created an adapter that allows the tokenization of blockchain-based
+cryptocurrencies. Here, the cryptocurrency would be held in escrow by a
+trusted third party that backs the Taler tokens representing Bitcoin or
+Ether. By reducing the need for on-chain transactions, we expect that a
+Depolymerized DLT can in theory scale linearly with the available
+computational resources, primarily limited by the much slower transaction rate
+of the underlying DLT for inbound and outbound on-chain transacitons. The
+resulting system would also provide durable transactions within milliseconds,
+making cryptocurrency payments significantly more practical.
+
+For the conversion between fiat currency, e-gold and Taler-based
+cryptocurrencies it is likely that regulated payment service providers will be
+required to perform some kind of know-your-customer (KYC) procedure to
+identify their customers. However, this is no different from identification
+procedures required by banks today, and hardly predicated on the creation of a
+national or even global electronic identity platform with its associated
+dangers for democracy~\cite{helbing}.
 
 \section{Conclusion}
 
@@ -213,3 +259,83 @@ report in writing. We thank Ulrich Bindseil for listening.
 
 
 \end{document}
+
+
+Yet to integrate:
+
+
+In the section "Which modality of central bank digital currency?", the authors
+quote a report (Catenae, 2020) to say "it is difficult to envisage the
+creation of a retail central bank digital currency, and more specifically a
+"digital euro" without first creating a reliable, secure digital identity
+offering the necessary guarantees". The statement is hard to defend, since
+current cryptocurrencies work perfectly well without depending on a "trusted
+digital identity."
+
+When we need a digital identity for some of the actors in the digital currency
+production chain, we use certificates in the X509 standard format, which are
+already in common use on the Internet (they correspond to the s in https, for
+example). We can imagine a world in which a new "trusted digital identity"
+would exist and propose new algorithms for this world, but this is by no means
+a prerequisite to any work.
+
+Waiting for the creation of a "trusted digital identity" at the European level
+before creating a central bank digital currency is equivalent to postponing
+the decision indefinitely. This necessity is far from being proven by this
+report.
+
+
+In the section "The democratic risks of central bank digital currencies", the
+authors suggest that such a currency could allow "state surveillance of all
+transactions of every individual". There are many digital currencies that do
+not allow such surveillance (Monero or Taler, for example). The wording chosen
+suggests that monitoring would be a mandatory component of the system, which
+is scientifically false.
+
+In the rest of the section the authors take their assumption as fact "However,
+the centralization and data tracking of central bank digital currency projects
+leads to a loss of privacy that coupled with the programmability of the
+currency can have serious consequences." Using the indicative here is a very
+serious mistake. It is understood that any central bank digital currency leads
+to a loss of privacy, when this is false.
+
+Since this far-fetched assumption is taken as true, the conclusion of the
+first part is obviously flawed. The authors write "Should the objectives,
+mandate and governance of central banks be redefined?" implying that the
+management of a central bank digital currency would be impossible in the
+current state. This is obviously wrong. They should have written that central
+banks must give specifications corresponding to their missions, but not that
+their missions must be adapted to the specifications of existing systems. This
+is even more false when one knows that a system already exists that allows
+banks to respect both the privacy of citizens and to calculate the taxes of
+merchants (c.f. Chaum, Grothoff, Moser (2021)).
+
+Part two of the report is of a much better level, one should still note that
+the ontological difference between pure digital currencies and traditional
+currencies is not very well addressed.
+
+
+In the section on trust, the authors try to contrast natural trust in FIAT
+currencies with abnormal trust for cryptocurrencies. The sentence "While trust
+in money has long relied on a mechanical guarantee in gold or the role of the
+state, neither of these guarantees of trust exist for cryptocurrencies." The
+authors pretend to be unaware that the Euro is neither based on a mechanical
+guarantee in gold (first abandoned in France during the First World War and
+then definitively under the Popular Front almost a century ago) nor on the
+role of a state since the Eurozone has none of the prerogatives of a state
+(army, tax, foreign policy, or even government).
+
+Confidence in FIAT currencies is much more complex than what is described in 
the article and one must include the following elements
+- confidence in the non-inflationary nature of the currency (it can be hoarded 
without risk)
+- confidence in the stability of the exchange rate (it is safe to trade 
between two currencies)
+- confidence in the banking system (that assets will not disappear overnight).
+
+All these properties are currently those of the major European currencies,
+even if this has not always been the case. From this perspective, we can see
+that the large digital currencies also more or less respect these criteria
+(with some problems on the side of price stability).
+
+This report is very heterogeneous. While some sections are of a very good
+level and well documented, there are still too many approximations and very
+superficial statements about central bank digital currencies in this report.
+

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