It seems like the hashing algorithm would be fine as long as Kobo never decoded the data and viewed it on their servers and forced the user to positively opt in -if they wished the service. No additional storage beyond a unique identifier and the page number should be required. ISBN scrambled might be the simplest.
Another way to do it would be for a Kobo device to generate a unique key upon user demand that would be used to scramble or encrypt an ISBN/page combo and only present that key to the user who would then enter it only on the devices (s)he wished synced in future. Once enabled future syncs would use the then pre-entered key.
You can project this sort of thing out ad nauseum, but at some point there are diminishing returns considering the low worth of the data encrypted.
Honestly, I couldn't care less if Kobo knows what titles I'm reading, but I'd like my books synced...
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