Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.
The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.
“Privacy is dead. Get over it.”
We hear that refrain a lot. So often, in fact, that it has (almost) become accepted wisdom for how the digital age must evolve. Sure, there’s concern about the relentless accumulation of data about our online lives. There are even some legislative efforts to hold it back, most notably in Europe.
But there’s an all-too common perception that such efforts are doomed, that the encroachment into our private lives can’t or shouldn’t be impeded. It’s a view that’s either framed by a glass-half-full position that the benefits of the Fourth Industrial Revolution outweigh the costs of lost privacy, or by its glass-half-empty alternative: that the data machines of our global economy can’t be stopped whether we’d like them to or not.
Yet the irony is that the torrent of information delivered by these machines frequently includes new items that make you stop and question this pervading fatalism. They remind us that lives are at stake, that we must take concrete measures to protect the private realm.
This Twitter post by Quartz reporter Mary Hui was one such item:
There is usually never a line at the train ticketing machines. Judging from an overheard convo, it appears that people are reluctant to use their rechargeable Octopus cards for fear of leaving a paper trail of them having been present at the protest. pic.twitter.com/s1rsgSnCqL
— Mary Hui (@maryhui) June 12, 2019
The setting, of course, is Hong Kong, where hundreds of thousands of people took to the streets last week to protest changes to extradition laws that many believe would open a back-door to mainland Chinese judicial oversight. The behavior shown here reflects fears that Beijing is already, in effect, using a backdoor to surveil and control Hong Kong’s citizens, in this case via payments technology. On Saturday, Hong Kong chief executive Carrie Lam announced that the extradition bill would be suspended, according to the New York Times.
Up until now, the Octopus card has been mostly hailed as a success story for the Hong Kong economy. The contactless stored value card, introduced by the Mass Transit Railway system just three months after Chinese sovereignty over the former British colony territory was restored in 1997, has evolved from simply a multi-ride MTR ticket into a widely accepted method of payment around the city. And by reducing the costs that banks impose on credit card payments, it has helped lubricate commerce in Hong Kong.
That was all fine until people began to realize that the Octopus network could also be a state surveillance tool, a concern that was, naturally, heightened by the ongoing encroachment of Chinese governance in Hong Kong’s affairs. So, as outlined in a follow-up report from Hui, many of the protesters resorted to the obscurity of cash-purchased MTR tickets instead of using their card. In fact, as others reported, many also went “dark” on social media, foregoing digital tools that had until recently been viewed as empowering the protest movement.
In a response to Hui’s post, my fellow CoinDesk advisory board member Dovey Wan showed how these actions in Hong Kong must be understood in the context of current digital life on the mainland. There, the pervasive use of mobile payment apps such as Tencent’s WePay and Alibaba’s Alipay has turned China into a virtually cashless society, one that has also given rise to losses of privacy and alternative workarounds to limit that loss:
In mainland cash is almost obsolete, most of economic activities are associated real identities : both Alipay and wechat are under real name system + bio metrics.
many important figures/celebs use others’ payment accounts all the time to keep names untraceable in the system https://t.co/66eWY473X8
— Dovey Wan 🦖 (@DoveyWan) June 13, 2019
Privacy as imperative for human dignity and economics
I’ve written elsewhere about the dangers of cashlessness if digital payment systems don’t respect privacy. What’s at stake is the fungibility of money itself. But this Hong Kong-versus-China story goes to something more fundamental: the protection of human free will, which also happens to matter enormously to the global economy.
A desperate desire to preserve this fundamental right is what drew the masses into the streets last week. They know of the “Black Mirror” implications of China’s “social credit” program for tracking and scoring individuals’ digital activity, which the State Council last week identified as a vital government objective. But while the protesters may not have expressed it this way, they were also fighting to preserve Hong Kong’s vital role in international commerce.
When Deng Xiaoping’s “One Country, Two Systems” principle defined how Hong Kong would maintain its own economic and political administration after the handover, it was an implicit recognition that property rights, freedom of the press and other basic rights were integral to the territory’s economy, which China had a strong interest in sustaining.
Such assurances then became critical to Hong Kong’s continued status as Asia’s financial hub. They meant the world’s banks could maintain their thriving regional headquarters inside the territory’s glittering office towers, allowing it to function as a kind of East-meets-West transition point. Banks and their clients could do business with China, but enjoy Western legal protections. Trade could thrive.
Since then, the formation of special economic zones in booming mainland cities like Shenzhen and Shanghai have drawn banks and other foreign companies into China and have slightly diminished Hong Kong’s clout as a financial hub. Nonetheless, with a trade war growing between the U.S. and China, Hong Kong’s politically and economically liberal status is as important as ever.
This is as much in China’s interest as the West’s. As China asserts its international influence through its massive Belt and Road Initiative, for example, we can assume that companies from that scheme’s 60-plus other countries will resist submitting to Chinese judicial oversight.
Hong Kong’s legal framework, with its proven respect for property rights, offers a compromise. (The territory was deliberately cited as the anchor jurisdiction for the Belt and Road Blockchain Consortium, which Pindar Wong, another CoinDesk advisor, founded to lay out a Belt and Road framework for arbitrating cross-border disputes over smart contracts.)
And while the bill itself has been delayed (but not withdrawn), if hardliners have their way in Hong Kong, it could ultimately set back the initiative and constrain global trade itself.
Hold the line
But let’s bring this all back to human beings, money and technology.
While we can debate, as four Consensus panelists did last month, whether a fundamental human right to transact exists, we can all agree that economic exchange underpins society and that, therefore, hindering it holds us all back. Orwellian digital surveillance is a particularly powerful hindrance. We must resist it.
This is why the pro-privacy principles that underpin early cryptocurrency ideas matter. It’s why coins such as Zcash and Monero, which aim to overcome some of bitcoin’s privacy limitations, are important. And it’s why other new pro-privacy initiatives, such as those enabled by secure multi-party computation, should be encouraged. Its why we should oppose over-reach by regulatory bodies like the Financial Action Task Force.
Above all, it’s why we must support Hong Kong’s protesters. There, but for the grace of God…
Hong Kong demo via Lewis Tse Pui Lung / Shutterstock.com