Big Data: use and abuse

Every day we all leave a gigantic digital footprint - and someone,somewhere is analizing it. To what extent is becoming clearer with implications for security (good and bad), privacy (all bad) and a brave new world of big brother with big information. This is from an investment newsletter of well above average quality.

"Why the struggle between digital privacy and technology regulation is poised to intensify. Who are the winners? In April we warned that governments were seeking more control of the Internet, and in August last year we explored the implications of the increasing asymmetrical advantage criminals and terrorists have in the accelerating global-technology arms race. Recent developments highlight an acceleration of these trends. The explosion of Big Data, and the ability to analyze it, is making anonymity mathematically impossible, and technology advances may ultimately make person-specific tracking from orbiting satellites a reality. However, recent moves by lawmakers to regulate disruptive technologies, such as Bitcoin, the digital currency, and 3D printers (following production of the world’s first 3D-printed handgun) may be futile. As the battle escalates, both data collection vendors and personal data protection companies may benefit.

In 1995, the European Union introduced privacy legislation defining “personal data” as any information that could identify a person, directly or indirectly. At the time, the legislators created the law with documents in mind that carried an identification number, or name. However, since then the law has become obsolete as the amount of data has exploded and new data analytical techniques have emerged, according to a recent Technology Review analysis.

The amount of data created in 2012 reached 2.8 zettabytes, which will double again by 2015, estimates IDC Corp. About 75% of the data is generated by individuals, with a typical American office worker producing 1.8 million megabytes annually. This is equivalent to about 5,000 megabytes per day, including downloaded movies, Word files, email, and bits generated by computers as the data moves through networks. The graph below helps illustrate the amount and types of digital information created each year.While most people think much of this data is invisible, it is not.
Modern data science can increasingly use nearly any type of data, similar to a fingerprint, to identify the person who created it. Examples include the choice ofmovies on Netflix, the location signals emitted from your cell phone, and the pattern of your walking as recorded by a surveillance camera.
Personal data, such as name, address, or credit card records, is already bought and sold by data brokers, such as Acxiom, which holds an average of 1,500 pieces of information on over 500 million consumers worldwide. Acxiom can analyze this data to predict 3,000 different propensities, such as how a person may respond to a particular product brand. Similarly, Facebook stores around 111 megabytes of photos and videos for each of its users. Recently, Facebook and Acxiom agreed to merge their data, linking real-world activities to Web activities. At a March investor meeting, Acxiom’s chief science officer said that its data could now be linked to 90% of U.S. social profiles.

Mobile phone companies also record users locations, strip out the phone numbers and sell aggregate data sets to merchants interested in demographic movements. While the data is sold as “anonymized”, it really isn’t. MIT researchers Yves-Alexandre de Montjoye and Cesar A. Hidalgo have demonstrated that with only four different data points about a phone’s position, it can usually be linked to a unique person.

Similarly, Adam Sadilek, of the University of Rochester, and John Krumm, of Microsoft, showed last year that they could predict a person’s approximate location up to 80 weeks in advance, with above 80% accuracy, using data sets from GPS readings on phones and vehicles. Sadilek and Krum imagine the commercial advertisement applications: “Need a haircut? In four days, you will be within 100 meters of a salon that will have a $5 special at that time.”

Big-brother surveillance capabilities are poised to increase as satellite tracking improves. A recent Thomas Frey analysis made the case that rapidly improving precision and awareness technologies combined with big data analytics will ultimately make it possible to distinguish a person’s identity from space. Advancing biometric analytics, such as “breathprinting”, and potentially one day identifying a person’s unique infrared signature, will be technology enablers. Although this type of surveillance tracking is frightening, it also has certain benefits, such as the ability to more quickly get help to people in life and death situations, like a heart attack, or kidnapping victim.

Offsetting technology advances that improve surveillance and tracking are disruptive technologies that reduce the power of governments. Last week, Cody Wilson, a libertarian law student at the University of Texas, made the world’s first 3D- printed handgun, using 15 plastic parts and a second-hand $8,000 Stratasys Dimension SST 3D printer. He then released the blueprints on his website, defcad.org, enabling anyone worldwide with access to a 3D printer to make a gun anonymously, without the need for background checks.
In response, New York Senator Charles Schumer, called for new legislation to ban 3D-printable guns: “A terrorist, someone who’s mentally ill, a spousal abuser, a felon can essentially open a gun factory in their garage.” The U.S. State Department then ordered Cody Wilson’s company to remove the 3D-printed gun blueprints from the Web.

However, Robert Cookson of The FT recently underscored: “With 3D printers getting cheaper and cheaper and a growing number of blueprints for guns freely available online, it is hard to see how regulators would be able to enforce any bans on printing weapons—just as they already struggle to enforce bans on creating home-made bombs and growing cannabis.”
The emerging virtual digital currency, Bitcoin, is also coming under regulatory scrutiny. Bitcoin was created four years ago by an anonymous hacker, and investors have bought up the currency as an alternative to traditional government-backed currencies. One bitcoin reportedly traded as high as $266 earlier this year, up from $20 in January, and is currently worth about $120. Presently, the currency is not controlled by a company or central bank, and can be used to make anonymous payments for any purpose. Unlike physical cash or banknotes, the peer-to-peer digital currency can be sent around the world instantly, without the need for a physical exchange.
Recently, the Financial Crimes Enforcement Network issued new guidelines on virtual currencies, including Bitcoin, in an attempt to regulate their exchange for dollars. The U.S. Commodity Futures Trading Commission also said recently it is “seriously” examining the currency, according to The Financial Times.

However, regulating digital currencies will be difficult. Last year, a European Central Bank study warned that Bitcoin could pose a challenge to the central bank’s control of the financial system, adding that there was no obvious way of extending its oversight to the virtual currency.
As the technology arms race advances and digital privacy continues to decline, both data vendors that monetize information for marketing, and personal data protection companies that help protect against identity theft are poised to benefit."

Lots to think and worry about....

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