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Sleepwalking into Disaster? Requirements Engineering for Digital Cash (Position Paper)

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Security Protocols XXVIII (Security Protocols 2023)

Part of the book series: Lecture Notes in Computer Science ((LNCS,volume 14186))

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Abstract

Digital cash seems inevitable. But it’s not going to be bitcoin or the like, which will be regulated out of existence rather than being allowed to become mainstream currency. Central Bank Digital Currencies promise to eliminate crime but come with many of the problems that bitcoin set out to avoid. What do we actually need from digital cash? We had better figure it out before building and deploying unsuitable systems.

Author’s revision 45b of 2023-05-31 23:12:20 +0100 (Wed, 31 May 2023).

In Proc. Security Protocols Workshop 2023, Springer LNCS 14186.

BTW—I mumble to myself a lot. It’s OK to skip all these footnotes! .

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Notes

  1. 1.

    Or, a cynic might suggest, vice versa—since it’s ultimately the rich people who determine how currency works.

  2. 2.

    Interestingly, a term that was never actually used in the original bitcoin paper.

  3. 3.

    With more faith in working code than in meddling governments and Central Banks.

  4. 4.

    Of which they had conveniently stashed away the first few millions.

  5. 5.

    The smart contract idea predates Ethereum: it was originally put forward by Nick Szabo [18] in 1997, but Ethereum implemented it and made it popular.

  6. 6.

    Overestimating my competence, or flattering me, or both.

  7. 7.

    If we ignore the drug sales that my fictional Bob mentioned earlier and that actually happened on Silk Road, but which were still a tiny fraction of the overall bitcoin economy.

  8. 8.

    Insofar as you believe that a fiat currency like the dollar has any intrinsic value, which is in itself debatable—but that’s a separate story. Let’s suspend disbelief for the time being.

  9. 9.

    But bitcoin’s first mover advantage has prevented more efficient proposals, no longer based on proof-of-work, from overtaking it.

  10. 10.

    Although, after all, most of the speculators who buy bitcoin for dollars today do so in the hope of exchanging it for more dollars later, so they do still rely on the dollar being worth something to them.

  11. 11.

    Or: under coercion from the evil government that is after you as a political dissident.

  12. 12.

    The practice euphemistically referred to as “quantitative easing”.

  13. 13.

    The “reference” being the value of one unit of currency, which decreases if more units are introduced. Distorting the reference that is used for pricing goods is as destabilising and perverse as surreptitiously changing the length of the standard meter or the duration of the standard second.

  14. 14.

    Which, as a challenger to traditional banks and credit card companies, has a strong commercial incentive to be more convenient to the end user than the payment methods offered by the incumbents.

  15. 15.

    How likely is it that the child regularly took backups of the device? How frequently do adults back up their smartphone?.

  16. 16.

    But we already said what we think about claims of anonymity of digital cash, whether decentralised or CBDC.

  17. 17.

    Or reasons for....

  18. 18.

    Or, in China, AliPay and WeChat Pay—witness how Beijing dealt with that commercial competition [21].

  19. 19.

    If not (and, after all, why not?) of bitcoin itself!.

  20. 20.

    Those of us who believe in privacy will strongly resist attempts to create a society in which every payment is traceable: total and absolute transparency, especially if asymmetric, makes social interactions awkward. In small doses, plausible deniability and merciful white lies are necessary social lubricants, without which we lose freedom and control.

  21. 21.

    Which would probably not be a sound idea if the security of an entire currency system had to depend on that dubious axiom—bearing in mind the 1996 “cautionary note” of my colleagues Anderson and Kuhn [1], which hasn’t lost its value today.

  22. 22.

    Although Sharman [17] claims that anti-money-laundering policies have high costs but few practical benefits.

  23. 23.

    Something that physical cash disallows for reasons of scale, but that non-anonymous digital cash could make commonplace.

  24. 24.

    With the complicity of the fallacious “nothing to hide” argument, to which peaceful and unconcerned citizens subscribe until it’s too late.

  25. 25.

    Particularly when coupled with the ability to redefine or reset the value of individual items of currency.

  26. 26.

    See footnote 20.

  27. 27.

    And what would be a good compromise for this threshold? The value of a house? Of a car? Of a bycicle? How much should be allowed to sneak under the radar?.

  28. 28.

    Though they don’t quite say it in these words.

  29. 29.

    Its consensus mechanism, designed for grass-roots operation whereby individuals would run their own nodes and anyone could devote spare cycles to mining bitcoin, has evolved into something unrecognisably different. The system, designed to avoid a central authority, is now much more centralized than originally intended: mining has become a specialist activity that only a handful of powerful “mining pools” have the resources to engage in. Individuals have no chance of competing against such pools and don’t even try. Regular people don’t run their own nodes and don’t check the validity of the blockchain, delegating the management of their wallets to intermediaries (the exchanges) who host them on their behalf. The customers of these intermediaries rarely (if ever) bother to check the consistency of a block.

  30. 30.

    Fear Of Missing Out.

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Acknowledgements

I am grateful to the workshop attendees who engaged in the discussion during my presentation and whose comments appear in the transcript that follows this paper in the post-proceedings volume, as well as to Virgil Gligor, Harry Halpin, Adrian Perrig and Andrei Serjantov for further offline comments and references that allowed me to improve the paper. Nonetheless, all the opinions herein expressed, as well as any mistakes or omissions, remain my sole responsibility.

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  1. University of Cambridge, Cambridge, UK

    Frank Stajano

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    Frank Stajano

  2. Masaryk University, Brno, Czech Republic

    Vashek Matyáš

  3. University of Hertfordshire, Hatfield, UK

    Bruce Christianson

  4. Memorial University of Newfoundland, St. John’s, NL, Canada

    Jonathan Anderson

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Stajano, F. (2023). Sleepwalking into Disaster? Requirements Engineering for Digital Cash (Position Paper). In: Stajano, F., Matyáš, V., Christianson, B., Anderson, J. (eds) Security Protocols XXVIII. Security Protocols 2023. Lecture Notes in Computer Science, vol 14186. Springer, Cham. https://doi.org/10.1007/978-3-031-43033-6_1

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