Despite all the news headlines around data breaches, hackers and identity theft, it is a little known fact that since 2013 over 1 billion consumer records have been stolen by hackers. The estimated cost of this data theft is a staggering $5 billion dollars a year, which inevitably gets passed down to consumers and merchants in the form of higher prices and fees. No doubt, there is a global data security crisis, indeed a war being waged, that is getting harder and harder for the good guys to win.
The hackers only have to succeed a small percentage of the time to make a very big dent on our society. As a result, we are in an era where securing personal information requires more and more complex security and surveillance, by merchants, banks and the government agencies. The system of credit card processing introduced in the 1940s and 1950s and perfected in the 1970s and 1980s was just never designed for the 21st century, a century in which the Internet, the open source community and the dark web accelerate technology innovation at pace far more rapid than slow-moving merchant and banking infrastructure can keep up with. There is a need to address this global data security crisis, and this requires us to fundamentally rethink what it means for a consumer to spend money.
As it stands today, a simple trip to the grocery store or online gift buying at Christmas subjects hundreds of millions of people to potential fraud, identity and credit card theft — crimes that may affect consumers’ credit records, their finances and indeed their ability to work. Moreover, the current approach to addressing these problems (ring fencing, surveillance, detection and tracking) is leading us as a society down a very slippery slope. It’s an approach that means everything we do, every dollar we spend, our location, every one we talk to, relationships mapped and algorithms applied, all needs to be monitored and tracked, just to catch a very small number of bad actors causing a very large amount of damage.
There is, however, a better approach. An approach which, government agencies and consumer watchdog organizations need to start looking at to solve this crisis. In seeking out solutions for online data security, one first needs to recognize that at a fundamental level, online data can never be made totally secure. Never. Technology and innovation evolve too rapidly and information and knowledge travel too quickly, making yesterday’s high tech security the plaything of tomorrow’s hackers. So recognize that data available online cannot be made secure, and re-organize around that principle. Now Bitcoin and solutions like it solve these problems, because they do not require us to expose personal information just to go out to dinner or shop online. Every transaction is done with a bearer instrument that does not give the receiver any information that might be used or stolen to exact future payments or perform any fraud. It’s just like cash, only designed for the 21st century, designed for the world we live in now. It protects consumers from identity theft and fraud and reduces the massive costs associated with processing transactions, opening up global economies and bringing massive new consumer markets into an integrated 21st century economy.
Regulators and government agencies need to recognize the importance of consumer protection — the scale of the existing problems — and act. They should look toward the massive innovation that Bitcoin delivers and the security and protection it provides to consumers. As part of that research, they need to conclude that all the talk about money laundering and crime in the context of Bitcoin is in reality, a canard. Illegal activities are a tiny percentage of the global economy and will occur no matter what forms of currency are used. Regulators should be focused on protecting the consumers whose data today is stolen, traded and their money spent before they get home from Home Depot or Target or whatever restaurant they just ate at. The costs to the economy and to individual consumers is just too high, and the risks associated with the evolution of the Orwellian society designed to monitor and track everyone’s movements and habits just to secure a credit card purchase are not ones to be taken lightly.
We are living in an exciting time. The pace of technology innovation and the globalization of our economies have huge potential to lift millions out of poverty and create new and exciting businesses. As a society, we should foster that innovation and guide it so that it improves everyone’s lives. We have a huge opportunity to change direction and move away from large centralized repositories of data and control to a more decentralized, lower-impact approach. We should embrace this opportunity, because the current path leads us to a future that few would consciously choose.
