 You're watching The Daily Decrypt. Welcome to currency competition, friend. I'm your host, Amanda B. Johnson, and today's episode is brought to you by BitShares. When we heard that the new Ubuntu phone would come with an Ethereum wallet in which the user's thumbprint could replace their password, we had to find out more. So we reached out to Christopher Josephson of BlockApps, the developer of this wallet, which is called Stratto. The biometric fingerprint reader is really just a way for you to not have to deal with the passcode. It doesn't give any information to the browser or the app on your phone about your fingerprint. It just gives you, is this the right fingerprint or no. So Christopher clarified for us that the Stratto wallet does not, in fact, utilize user's thumbprints to interact with the Ethereum blockchain itself. And in fact, the wallet works just as well without the thumbprint option enabled. But we were not ready to ditch the topic of identities online just yet. To discuss the use of identities in payments, we reached out to none other than security and blockchain expert Andreas Antonopoulos. Because we didn't have very good mechanisms for protecting financial instruments, programmable money, automated escrow, digital signing articles, and all of the things that we now have with Bitcoin and blockchain technology, the alternative was to attach identity to transactions for two reasons. The first one is to use identity as a weak proxy towards default risk. To say, well, if I know this person and this person has a certain history, we can deduce to a certain approximation their future behavior based on their past history. That's a very, very weak extrapolation of past history, and it leads to a lot of problems. But it's the best thing we had in the absence of programmatic security and solutions like escrow. The second one is really for recourse, which is if you do end up defrauding someone, then if they know who you are, they can take action against you. And again, this is a weaker form than collateralized security or escrow. Andreas notes that while identity-based payments can now be considered obsolete, there is another reason why one would find them undesirable. The bigger concern for me is the price that we pay for these solutions, because apart from the massive issue of identity theft that we've seen is now a built-in problem into the entire financial system. It leads to a broader issue, which is an issue of control and surveillance. These systems have now expanded to fulfill this dream of regulators to create completely closed controlled financial systems where every transaction can be surveilled. Andreas further notes that surveilled and permission-based payment systems have yet another drawback. In order for that false sense of security to justify this level of surveillance, we basically pay the price of leaving 4 billion people outside of the financial system. And quite honestly, I don't think that's a price worth paying. So if the tools now exist to remove identity from payment security entirely, why should anyone use them? Anonymous Finance has these two advantages. First of all, it doesn't have the problem of identity theft. Instead, we rely on programmatic security escrow assurance bonds and things like that in order to provide against credit and default risk, diversification of loans, peer-to-peer lending. All of these things can massively improve the risk profile. But it also means that we now give unfettered access to financial resources to the unbanked and underbanked. I think Anonymous Finance is something that is not only better, practically speaking, because it has better security, but it also leads to more freedom and better conditions for people around the world. You can find more of Andreas' writings and resources at his website at tenopolis.com. You can trade user-issued assets, as well as smart coins like BitUSD and BitBTC, all without having to give up control of your private keys to a centralized exchange. You can learn more about the currency and its ecosystem at bitshares.org. Follow the Daily Decrypt on Twitter if you tweet and or head on over to our Facebook page where we upload our videos completely separately so you can watch them without having to leave Facebook at all. You're welcome. Have a good day. The Daily Decrypt