The Pentagon has rejected the idea of tagging internet data with unique personal markers to make anonymous use impossible.
The idea, which was explored at a two-day workshop in California in August, created a fierce debate among computer scientists and policy experts over its implications for privacy.
According to the New York Times, the plan, known as eDNA, called for developing a new version of the internet that would include enclaves where it would be impossible to be anonymous while using the network.
The technology would have divided the internet into secure 'public network highways' where a computer user would need to be identified, and "private network alleyways", which would not require identification.
A Pentagon spokeswoman this week confirmed that the eDNA plan would not be financed.
Despite it being an intriguing idea, she said, there would be too much computing science research involved to create network capabilities providing the same levels of responsibility and accountability as the real world.
But the Pentagon's research agency is continuing to explore how to create a vast database of electronic transactions and analyse them for potential terrorist activity.
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