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Bitcoin research is no sop to organized crime [Letter]

In his recent commentary, E.J. Fagan totally misrepresents our work on securing the privacy of Bitcoin transactions ("Bitcoin and international crime," Nov. 26).

Our interest in developing Zerocoin is to remedy a weakness in the Bitcoin technology that deprives users of the same privacy guarantees we take for granted in using credit cards and cash. And it can easily do so without barring police from investigating the illegal transactions that Mr. Fagan fears.

Bitcoin has many useful features and promises, for instance, to reduce the cost of international fund transfers. It may also facilitate banking services for the "underbanked," including Third World citizens. But its software design has one major weakness: individuals' Bitcoin spending habits are completely public. This means that anyone — including your neighbors, future employers and health insurers — may be able to see what you buy with Bitcoin.

Anyone could determine from your payments to a doctor, for instance, that you have a mental health issue. That might discourage people from seeking needed psychiatric care on the reasonable fear that they will be discriminated against.

Once marketing and advertising firms begin data-mining Bitcoin transactions in earnest, we can only imagine what other privacy intrusions they will dream up.

Worse, Bitcoin transactions could be used to identify individuals who have recently purchased expensive assets, and thus make them targets for kidnapping or extortion.

Our Zerocoin turns Bitcoin into the digital equivalent of cash, restoring user privacy. While the technical details are complex, the end result is simple: If we engage in a transaction with you, then only we and you should know what took place.

Mr. Fagan correctly observes that the anonymity of cash-like transactions can allow illegal activity and accuses us, in the strongest possible terms, of facilitating money laundering and international crime.

But Zerocoin can be used however we, as a democracy, decide it should be used. Once the technology exists, we as citizens can have a discussion about what degree of privacy is appropriate. For example, we might decide that transactions should be hidden from your neighbors — as they already are in traditional payment systems — but that the government should have access upon obtaining a valid warrant. If we make this decision, Zerocoin can easily be configured to accommodate that access.

But such decisions should be made by the people through their legislatures and courts. They should not be made by government agencies acting on their own, and they should certainly not be made, as Mr. Fagan proposes, by asking universities to terminate research into transaction privacy.

Matthew D. Green, Christina Garman, Ian Miers and Aviel D. Rubin, Baltimore

Messrs. Green and Rubin are professors in the Johns Hopkins University Computer Science Department. Ms. Garman and Mr. Miers are doctoral candidates in the department.

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