The Canadian Mint is working on an interesting project called MintChip, described on their web site as “the evolution of currency”.
They go on to say…
“The past 10 years have witnessed significant growth in the electronic payments landscape with traditional and emerging players all vying for ways to respond to this rapidly changing and connected market. However, until now, there has been no electronic solution that cost-effectively addresses the very-low-value transaction markets, protects privacy, is available to everyone and emulates the characteristics of cash. MintChip works online and offline, at the physical Point-of-Sale, on mobile devices, and enables easy person-to-person payments.”
Well that’s certainly not something that I would expect to hear from a national mint. What would motivate a government mint to embrace electronic, private, cash like transactions? Well congratulations digital currency industry, the Canadian government has seen the writing on the wall and is trying to jump on the ‘Digital’ band wagon before it’s too late. However, as you would suspect, as innovative as this all sounds, it is based off of and supports fiat currency.
It’s good news none the less, as Bitcoin Magazine’s Vitalik Buterin explains in his April article on MintChip “Five years ago, no government would have even considered supporting a digital payment system with the level of privacy that the MintChip provides, and the project is a sign of how times have changed. … projects like Bitcoin have played a valuable role in keeping governments honest and ensuring that any system that they back at least pays lip service to concerns about privacy and centralization.”
MintChip would no doubt be an improvement to the current Canadian banking system. MintChip cuts out middle men by using a digital signature which means much lower transaction fees, payments are cash like and irreversible and Canadians will be able to purchase multiple MintChip devices without ID allowing for anonymous transactions. The Canadian Mint has made the system accessible to developers and is offering a $50K prize for the best payment application.
Personally, I find it very amusing that this is coming from the Mint, and the MintChip logo even appears to feature gold bars which gives the impression that it might be backed by gold. Again, congratulations Digital Gold Currency industry.
This may look and feel like a true innovation, and it would seem that that is no accident, but what it really is, is an upgrade to a very flawed system. Here are all the reasons you may not want to use MintChip:
- It’s a centralized, government run system.
- The system is very much reliant on a proprietary chip and chips such as these have proven to be hackable in the past.
- Everything needs to be done via the physical chip.
- The system can force upgrades which leaves the opportunity to introduce tracking features.
- While value on the Mint Chip can be denominated in a variety of currencies, as far as I can tell, all of the options are fiat.
Further information and analysis can be found in Vitalik Buterin’s April article.