A growing number of Central Bankers around the world are considering ways to develop and issue digital versions of national currencies, in response to and somewhat analogous to Bitcoin.
This raises a question in my paranoid pea-brain.
Many electronically delivered items, most ubiquitously music and books, but software programs, also, are delivered with DRM—Digital Rights Management—software embedded in them. These DRM thingies are used to limit, for instance, subsequent redistribution of the items without prior permission from the original seller.
Many electronically delivered items, primarily images here, although the concept need not be limited in practice, also have embedded in them malware, encrypted messages, and the like. This is what steganography is all about.
So: what’s to keep a nation’s Central Bank from embedding DRM and/or steganographic files in each unit of its digital currency? A couple of uses come to mind.
One use is simply to track the currency unit’s—a dollar, maybe—movement around the globe from the time of its initial issue. The economic information from such gloriously detailed information boggles the mind. The economic information made available to intelligence agencies about the inner workings of another country’s economy and government handling of that economy is equally boggling.
But think of a country with a large holding of a foreign currency as a reserve—the way the PRC’s renminbi, the US’ dollar, the EU’s euro, Great Britain’s pound, and Japan’s yen are used. Think further of a country whose foreign exchange holdings represent a significant fraction of that nation’s cash on hand.
Now think of the outcome if a file embedded in the particular units held were triggered, and all those units of the targeted digital currency were simple erased and ceased to exist as if they never were.
The mind reels.