MintChip: 2012’s Bitcoin?

Canada’s Royal Mint is launching a digital currency called MintChip.  Its suppose to allow small or large, anonymous transactions.  Sounds familiar, no? The transaction has to take place between two specifically equipped hardware devices (potentially a microSD card) but that has not been fully worked out yet.  What has been worked out is a contest!  Developers can access the MintChip code to use in apps and the winner will get  one 10-ounce wafer of pure gold. MintChip is aimed at merchants and “brokers” in addition to developers.

Opinions abound:

Fast Company: “Details of the program are sparse–we reached out to the RCM, but haven’t heard back yet–but it appears users are given a MintChip ID, and allowed to top up their accounts with funds. Users can exchange value with each other, or pay merchants via MintChip. The value will be stored on MicroSD cards, USB sticks, or remotely in the cloud, all for use by smartphones running Windows, iOS, Android, Blackberry, or on desktop and mobile browsers–that is, once the apps are created. ”

MintChip works online and offline, at the physical Point-of-Sale, on mobile devices, and enables easy person-to-person payments.

Techcrunch: “The reliance on trusted, independent hardware seems like the weak link here, and all it will take is a few hackers (on their own or backed by bank and credit interests) to make public a tool that fools either brokers or merchants into thinking a transaction has taken place. Not a trivial task, but far from impossible. This gives the whole system a bad smell for anyone looking to adopt it. Credit card fraud is rampant, admittedly, but that’s more a function of the system’s widespread use and acceptance. MintChip doesn’t have the advantage of being accepted everywhere.”

Hacker News: “This is a big step backwards from the security of Bitcoin. All someone has to do is break open the hardware and extract its key (or take its key with a side-channel attack) and they can double-spend money. That’s problem one. Bitcoin’s entire byzantine protocol exists entirely to solve the double-spend problem, and it works, while this doesn’t.

Every MintChip has an ID, and every transaction is logged on both the sending and receiving device with the ID of the other device. This means that if someone takes your chip, they get a complete record of every transaction you’ve ever made. In other words, it’s not anonymous at all. That’s problem two. Bitcoin solves this by encouraging users to generate a new address/private key for every incoming transaction, so that matching up addresses to people is hard.

It’s tied to single physical devices which can be lost or damaged. This makes them unsuitable for storing savings. Bitcoin wallets, on the other hand, can be backed up securely.

Both MintChip and Bitcoin can be stolen if the attached device is compromised. Bitcoin is designed in a way that makes it possible to fix that, and developers are working on a fix: multi-signature transactions (so you have several computers, or a computer and a phone, and all of them must agree to any outgoing transaction). MintChip, however, cannot solve this problem in any way except with chargebacks, and the documentation given so far indicates that they aren’t supporting that.”

Something Awful: “are those canadian dollars or real dollars?”

About Daniel Davenport

Daniel is a digital media executive with internet and broadcast experience. Daniel is currently the executive strategy director at THINK Interactive.

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