Canada has a rich history of innovation, but in the next few decades, powerful technological forces will transform the global economy. Large multinational companies have jumped out to a headstart in the race to succeed, and Canada runs the risk of falling behind. At stake is nothing less than our prosperity and economic well-being. The Financial Post set out explore what is needed for businesses to flourish and grow. You can find all of our coverage here.
The outcry over Cambridge Analytica’s access to Facebook user data last year, followed by the U.S. Senate’s questions to Mark Zuckerberg on Capitol Hill, revealed a general lack of understanding of how the Internet works and how enterprise makes money on it. It boils down to this: If you’re not paying for a product on the Internet, you’re the product.
That’s a truism many critics of Quayside, a real estate project developed by Alphabet subsidiary Sidewalk Labs and Waterfront Toronto, have taken to heart. The project plan calls for a digital platform designed “into the physical environment from the start” in order to collect urban data “in a single place.” The end goal is to “enable a seamless interface between residents and service delivery.” In other words, a physical manifestation of what Alphabet’s Google does in cyberspace — which is extracting value from huge sets of user data.
Done right, this “smart city” could provide valuable insight into our public services, energy grids and municipal infrastructure and improve quality of life for citizens. It could also put yet another aspect of our privacy at risk. Privacy advocates have argued for government regulation of the use of our data. But regulation has yet to prevent hackers from cracking the central databases of Equifax Canada or Nissan Canada Finance, to name just two examples. Let’s face it: any centralized system is vulnerable to attack. There is no reason for corporations or governments to store, let alone own or control, our personal information.
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Innovation Nation: How smart cities may be too smart for their own good
IP and the Blockchain revolution
Fortunately, there is a third option, enabled by blockchain, the innovation underlying bitcoin and other cryptocurrencies. The same code that identifies each bitcoin as unique and secures the vast Bitcoin network (worth more than $85 billion) against hacking, could do the same for every person. It starts with a digital ID unique to each person, secured cryptographically with a private key pair, and comprised of multiple factors or data points. The more factors, the harder the identity is to fake or hack. Such an ID enables individuals to create and manage their own “digital black box” of private data.
A distributed ledger, accessible through a virtual black box, brings transformative self-sovereignty. Realizing this “Virtual You” through blockchain technologies could not only preserve our right to privacy and personal security but also restore our control over the data we create. In the case of Sidewalk Labs, for example, it would give Torontonians the power to decide who can use their data and how: They could volunteer or license its usage, or refuse to share it altogether.
As the Toronto-born co-founder of Ethereum and CEO of Consensus Systems Joseph Lubin has put it, “we should be establishing our own identities and bootstrapping ourselves into economic enfranchisement!”
How would such a system work? A number of startups already offer digital IDs through blockchain apps. uPort, for example, assigns each user a 20-byte hexadecimal string to serve as the address of a proxy contract, a piece of special purpose code that executes a complex set of instructions involving identity on the blockchain. The proxy contract is the ultimate mechanism through which a user can digitally sign and verify a transaction, an action, or a claim; manage cryptocurrencies or other digitized assets; link to a user’s off-chain data; and grant others temporary permission to read or write specific data files in exchange for value.
Such a system must be distributed among and maintained by the same people whose identities it protects — an identity commons not owned or controlled by any one company but accessible to anyone — so that users’ incentives align, and there are clear rights for them to steward their own identities, access (and allow others to access) and monetize their data, and participate in rule-making around the preservation and usage of the commons.
An identity commons would naturally need to exist independently from corporate, government or other institutions. It would need to outlive individual users so that it could enforce their right to be forgotten, to delete data. And it would need to employ distributed file storage systems that are censorship-resistant.
“Decentralization is important,” says Joseph Weinberg, a Toronto-based entrepreneur and chair of the Shyft Network, which is building a data transport protocol to give citizens more control over personal information. “If you get hacked, there’s a lot less to steal.”
The transition to secure digital IDs will take time. But if we reclaim the most fundamental human asset — our identities — we can begin monetizing our private data anywhere in the world. Though we can’t close the Pandora’s box of personal data that we’ve shared so far, we can build a future where individuals have greater control and economy agency over their data.
This new framework should complement innovation, along with progressive policies that allow for companies big and small, foreign and domestic, to push boundaries. Sidewalk Labs should be a welcome addition to Toronto — but let’s be smart about how we innovate. If private companies are going to have a say in public life and public infrastructure, they should abide by a new social contract for the digital age: one that affirms that the best guardians of privacy are not government or businesses but citizens themselves.
Alex Tapscott is co-founder of the Blockchain Research Institute and co-author of Blockchain Revolution, now translated into 15 languages. He is also an active investor in blockchain companies and projects.