[Dave Birch] Microsoft has been sponsoring the annual privacy-enhancing technology awards at the PETS Symposium for a few years now. This year the winning paper was written by Arvind Narayanan and Vitaly Shmatikov, researchers at The University of Texas, who looked into large publicly available anonymised data sets – and very quickly discovered a major privacy risk, as their experiments showed that such data sets could be used to re-identify individuals using efficient algorithms. All of which means that companies should be careful about storing masses of data on customer choices because, even if customers aren’t explicitly identified in the individual records, it doesn’t take much effort to identify them from the pool. Interesting stuff.

Runners-up, Cambridge University researchers Steven J. Murdoch and Piotr Zieliński, also focused on online anonymity. Their paper discusses and analyses, for the first time, the possibility of surveillance at internet exchanges (IXes) where Internet traffic crosses from one network to another. Because so much traffic passes through these, the research seems to indicate that a relatively small snapshot of the data in transit contains a lot of information about what is moving between which nodes.

I found the other runner-up paper especially fascinating because of my focus on the intersection of the digital money and digital identity worlds. The paper “Making P2P Accountable without Losing Privacy” (by Belenkiy et al, Brown University) posits the use of e-cash (that is, the original Chaumian e-cash) to add accountability to file sharing networks without giving up privacy. The idea is to balance between selfish users in a transparent way (and money is the most transparent of all ways) without sacrificing anonymity. Given some of the discussions about anonymity over on Digital Money, this is a timely addition to the debate and shows the accountability and privacy are not mutually exclusive.

Incidentally, their premise that fairness is essential to providing scalable incentives for greater participation seems right to me, as does there characterisation of “selfish peers” as agents in a virtual economy, but I’m not sure if e-cash is a necessary grease to make that work. The authors suggest that the money used in their scheme has five essential characteristics:

• It should be fungible (ie, no “different strokes” and everyone’s money can be used for everything in any combination).
• It should be integral to the fair exchange of money for goods/services. Because of my history in this space, I’m particularly interested in “shopping” protocols that include all of the steps in a transaction.
• The money must be unforgeable, obviously.
• The payment system must be efficiently implementable.
• Finally, users should be able to spend anonymously.

This is an axiom I think: it’s not clear to me from the paper whether they have some reason for thinking that anonymity will or will not make any difference to the performance of the scheme. Would anyone care?

As an aside, when discussing the economic issues raised by the paper, the authors say that under limiting conditions they can demonstrate the knowledge of bank balances (M1) can predict how much money can be added to the network without causing a crash. I hope the Chancellor reads up on their model!

By the way, a big thanks to the guys at Microsoft for sponsoring this valuable award.

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