GNU Taler: Ethical Online Payments for the Internet Age

Florian Dold (Inria), Christian Grothoff (Inria)

GNU Taler is a new digital payment system currently under development at
Inria. It aims to strike a balance between radically decentralized
technologies such as Bitcoin and traditional payment methods while
satisfying stricter ethical requirements such as customer privacy,
taxation of merchants and environmental consciousness through
efficiency. GNU Taler also addresses micropayments, which are infeasible
with currently used payment systems due to high transaction costs.

Addressing the problem of micropayments is urgent. The overwhelming
majority of online journalists, bloggers and content creators currently
depend on advertisement revenue for their income. The recent surge of
ad-blocking technology is threatening to destroy this primary source of
income for many independent online journalists and bloggers. Furthermore
the existing advertisement industry is based on the Big Data business
model, and users do not only pay with their attention but also with
private information about their behavior. This threatens to move our
society towards post-democracy [2]. Our goal is to empower
consumers and content creators by giving the choice to opt for
micropayments instead of advertisements.

Unlike many recent developments in the field of privacy-preserving
online payments, GNU Taler is not based on blockchain technology, but on
Chaum-style digital payments [1] with additional
constructions based on elliptic curve cryptography. Our work addresses
practical problems that previous incarnations of Chaum-style digital
payments suffered from. The system is entirely composed of free software
components, which facilitates adoption, standardization and community
involvement.

From the consumer’s perspective, GNU Taler’s payment model comes closer to
the expectations one has when paying with cash than with credit cards.
Customers do not need to authenticate themselves with personally
identifying information to the merchant or the payment processor.
Instead, individual payments are authorized locally on the customer’s
computing device. This rules out a number of security issues associated
with identity theft. We expect that this will also lower the barrier for
online transactions due to the lower risk for the customer. With current
payment solutions, the risk of identity theft accumulates with every
payment being made. With our payment system, the only risk involved with
each individual payment is the amount being payed for that single
transaction.

In GNU Taler, the paying customer is only required to disclose minimal
private information (as required by local law), while the merchant’s
transactions are completely transparent to the state and thus taxable.
Taxable merely means that the state can obtain the necessary information
about the contract to levy common forms of income, sales or value-added
taxes, not that the system imposes any particular tax code. When
customers pay, they use anonymized digital payment tokens to sign a
contract with the merchant. The digitally signed contract is proposed by
the merchant and is supposed to contain all the information required for
taxation – which typically excludes the identity of the customer. Later,
the state can obtain the contract by following a chain of cryptographic
tokens, starting from a token in the wire transfer from the GNU Taler
payment system operator to the merchant. The payment system operator
only learns the total value of a contract, but no further details about
the contract or customer.

To pay with GNU Taler, customers need to install an electronic wallet on
their computing device. Once such a wallet is present, the fact that the
user does not have to authenticate to pay fundamentally improves
usability. We already see today that electronic wallets like GooglePay
are being deployed to simplify payments online. However, the dominant
players mostly simplify credit card transactions without actually
improving privacy or security for citizens. GNU Taler is
privacy-preserving free software and both technically and legally
designed to protect the interests of its users.

We plan to use GNU Taler as the basis for future research that investigates
censorship-resistant news distribution in decentralized social networks.
In addition to online payments, we eventually want to adapt GNU Taler to
mobile payments with NFC-enabled devices. We hope that mobile Taler
payments will further the proliferation of local currencies (such as the
Abeille in France), which are currently popular in parts of Europe, but
suffer from practical problems such as easy counterfeiting and the
limitation to physical coupons.

GNU Taler was started at TU Munich in April 2014 and is now being
coordinated by the TAMIS team [4] at Inria Rennes, with contributions
from the free software community at large and the GNUnet project [4] in
particular. The initial research is being funded by ARED and the
Renewable Freedom Foundation [5], but we plan to launch a startup to
drive the commercial adaptation of the technology. We encourage readers
to try our prototype for GNU Taler at <https://demo.taler.net/>.

References:
[1] Chaum et al., "Untraceable electronic cash." Proceedings on Advances in cryptology. Springer-Verlag New York, Inc., 1990.
[2] Stallman, Richard, "How Much Surveillance Can Democracy Withstand?." Wired, Oct. 2013.

Links:
[3] https://www.inria.fr/en/teams/tamis
[4] https://gnunet.org/
[5] https://renewablefreedom.org/

Author contact addresses:

Florian Dold
+33 2 99 84 25 66
florian.dold@inria.fr

Christian Grothoff
+33 2 99 84 71 45
christian@grothoff.org