How many passwords are you trying to manage! Does your LinkedIn contact list connecting you to more than 4,000 individuals? Does Facebook, Instagram, and other social media websites inundating you with news and stories about your friends, colleagues and interesting people?
How many cookies have your computers accumulated? How many databases have more information about you than they need? If we search the dark web, how valuable is your data?
Cando seeks to help you manage your data, identity, assets, and relationships.
Philip lives on Sea Island with his 93-year-old father, the Doctor. They pursue travel and Philip keeps his head into what is happening in financial services, blockchain, authentication, digital identity, and, whatever else people seeking to understand the transformation; particularly those in the identity and payments space.
What is happening means we can unlock our hotel rooms, cars, and homes from our phones. Our security system iwill be another app we have to find on our phone.
Instead, we need an intuitive assistant seeking to simplify our lives by taking on repetitive tasks like driving, working inside a data table or simply opening up the house for the season.
Normalizing data and performing the analysis capable of earning value is the name of the game. Management is about stimulating a team to work in the mutual interest of the organization. Executives define the strategy and articulate the vision in a manner conducive to success.
Cando seeks to help you manage your assets and relationships. Assets those places and things you use doing your daily life and those interactions you have with people and entities seeking to serve, sell and partner with you.
Then there are friends who we expect to be part of our lives and therefore have privileges and access capabilities.
All of this with a target of selling integration services to the top million and simply assuring each person has an identity thus serving the bottom billion. ultimately earning $1 per year per user to simply be there when it all breaks and you wish to restore your digital life.
At the core, your digital security will be based on the use of cryptography and sophisticated matching algorithms designed to assure anyone that you are that one individual in the populatations of the universe.
- Artificial Intelligence
- Machine Learning
- Nature Language Interface
- Predictive Analytics
This technology called the Blockchain is built on the desire to create a new model to assure “trust”.
To establish trust between ourselves, we depend on individual third-parties.
Could there be a system where we can still transfer money without needing the bank?
This statement begs the question, What is a Bank. Is it simply an institution for recording the value we deposit with them and then allow us to move/transfer some portion of that value to another. This then means the loans a bank makes, based on the sum of the deposits we trust them with, is not part of what a bank does.
If the only role of the intermediary is to maintain a ledger capable of recording and facilitating the transfer to electronic facsimiles of something, then, yes a distributed ledger removes the need for the middle man the trusted intermediary. Instead of trusting a third party we agree to a methodology “The Distributed Ledger” to record these intangible assets or rights of ownership of a tangible asset in a manner where each of us has a copy of the ledger. The beauty of this concept is for someone to attempt to change a record in the ledger, recording the disposition of a tangible or intangible asset; 51% of us would have to agree to that alteration.
In the above-linked article, all of what happens can be summaries with this quote
Earlier the third-party/middleman gave us the trust that whatever they have written in the register will never be altered. In a distributed and decentralized system like ours, this seal will provide the trust instead.
While reading the recent document produced by the IMF I am compelled to wonder.
What is the difference between what they call Bank Deposits and e-money. My first question, ignoring the words bank deposit. Both are electronic accounts of value, recorded in someone’s ledger. These two diagrams extracted from a BIS paper offer a perspective.
They then speak to four attributed to the “means of payment”
- The Type, be it a claim or an object.
- The value, be it fixed or variable.
- If it is a claim who is liable?
- The technology, be it centralized or decentralized
- Central Bank Money (cash)
- Crypto-currency (non-Bank Issued)
As we think of the evolution of these object-based means of payment, we need to reflect on a new term “Central Bank Digital Currency” CBDC.
As a historian, I then wonder where things like Digi-cash and Mondex fit into the classification. The value was originated and then distributed into a personal and secure storage device (Wallet). Redemption or better said the guarantee, was provided by a party. Maybe not a bank or the central bank, yet, easily embraced by such an institution. Somehow history seems to lose sight of the origins of money and assumes the existence of a central bank. Here in the USA, the formation of a Central bank was one of many areas of political discourse.
- b-money (Bank issued)
- e-money (Privately issued)
- i-money (Investment funds)
The magic word behind all of these discussions is “Liquidity”. The bottom line does the receiver of the money appreciate the value of the unit of measure and is the receiver confident they will be able to convert that money into another form, of their preference
Let’s start at the beginning, the transaction, the distributed ledger entry. Think about the content of the transaction as the payload. Next think of the payload as the land deed, cryptocurrency value, record of ownership, journal entry, smart contract … marriage contract. Whatever two or more people seek to exchange and record. Another way to think about all of this is as a block of data, code or other digital representation of something duplicated in every participant’s copy of the current ledger.
A governance model is required
What is essential, before anyone can do anything.
The parties seeking to exploit a distributed ledger must define how it will work.
It is what the community or parties seek to represent and manage, using distributed ledger technology, agree.
The whole process of defining the payload begins when the community agrees to and sets off to publish the processes, procedures, rules, functions, and purpose of their application. It is this act of governance we use to define how and what will be conveyed in the payload to be stored and recorded on a blockchain. Which blockchain, protocol, and cryptographic processes; obviously is a decision of the community.
We should be clear before we can do anything with the payload. Ourselves and ultimately others will have initially and subsequently defined the mechanics and processes designed to assure the integrity of the blockchain, itself.
A Transaction is appended to the chain
There are two parties to each event recorded within these transactions. The agreed events, transactions and smart contracts are ultimately included in a block and properly extended onto the chain for everyone to see and read. More about Confidentiality in another post.
Once governance is established
People can now interact
Each party has an address and then addresses unique to each asset e.g. coin. The address, in most cases, is simply an asymmetric cryptographic public key.
- The individual, as is always the case with cryptography, has their own private key(s); they must retain, never lose and keep secret.
When the two parties decide to record an event; the sale or transfer of the title to a car.
- A formal record of a property, a transaction, ledger entry is created.
- The basic data.
- The seller’s public key
- the buyers public key
- the payload
- a hash
- the signature created by the seller using their private key.
The transactions are broadcast to the network. The nodes or miners continuously work to assemble a defined number of transactions and create the next block.
The chain’s role is to record the providence of an asset and the immutability of all the associated transactions.
These records and blocks of data include content: of, by and following the rules of the consensus process.
- Each active node or miner is attempting to create the next block.
- The mathematics involved and the use of hashes to bind this new block to the existing blocks in the chain is beyond the scope of this blog.
- Let us simply assume the mathematicians and cryptographers define as part of the original design of each chain an infallible solution to the issues of economics, security, integrity, and immutability.
- These specifications will define the hash game and how one adds the next block to the chain retaining the immutability of the present and the past
By being the first to calculate the cryptographic nonce
The winner receives a reward.
- Hopefully proportional to the cost of work or other discernable and agreed method of reward.
- The other active nodes then test to see if they agree the first got it right.
- If consensus is reached the new block is appended to the chain.
- This all assumes 51% or more of the miners or nodes reach consensus on the winner’s answer. And no one can control 51% or anything closer than 33%.
Around and around the game continues, as transactions are added and immutably recorded on the chain.
This whole process fundamentally assures history cannot be altered.
Chains split and fun things happen
If the process is not elegantly managed in full sight of all the participants.
Worth a listen
For some twenty plus years, I can remember hearing people speak of the dream of an economy without coin and paper money. A dream, driven by the desire to promote the use of electronic payments.
Over the last months, a number of articles focus on promoting the idea of a cashless society. They all speak to the advantages and attempt to promote the concept, arguing we can:
- Eliminate the concern of thugs insisting at gunpoint for the cash
- Reduce the risk of employee theft
- Stop paying people to count all those dirty coins
- Remove the need for an expensive safes
- Stop paying to have a specialist truck take the money to the bank
- Eliminate the grey market
The business case for a merchant to eliminate cash seems to be beneficial. Many have tried and succeeded to no longer accept cash.
At the same time articles report on the new regulations; various cities and states are implementing and considering. These regulations are intent on outlawing merchants from going cashless. The argument often focuses on how eliminating cash disadvantage the underbanked.
Then there is a reality! As a consumer, I recently have been surprised at the need to carry cash and the unsettling pleasure of finding out I still had cash in my leather wallet.
The first wake up to this reality took place while driving from St Simons, GA to the Orlando International Airport. In the trusting hands of Google Maps, I traveled down I-95, across I-4 and was directed to the FL-417. Suddenly a road sign informed me that I was on one of the various Florida toll roads. Above my head was a road sign indicating which lane, based on my preferred method of payment, to move into. Driving a car that was not mine and knowing it did not possess a PeachPass, my only option was cash.
Fortunately, I had cash and was able to continue my journey.
The following Friday my father and I went to The Lodge to play Sniff, a dominoes game. The game was competitive and cash was the only method to settle. With a bit of cash in my pocket, I was able to pay the few dollars I lost.
One Saturday a street vendor in front of the local Harris Teeter was selling spare ribs. When I went to pay they informed me, they only accepted cash. Once again I was fortunate, I had enough cash and was able to buy those delicious ribs for dinner.
On various Sundays, when the collection plate came around, I’ve had a check or a bit of cash and was able to leave my tithing.
On a number of occasions, the valet, tour guide or other service individual deserved a tip and I’ve had a few dollars in my wallet.
Two more events brought the reality of how society does not want cash to disappear.
One morning, I wanted to enjoy a pastry. Not having $2.75 to pay for the Danish, Sweet Mama’s, a local baker, charged me $0.50, an eighteen percent surcharge, simply to use a credit card
Finally, yesterday as a guest for lunch at the local Rotary Club, I was confronted with a series of cash only events. This time I did not have any cash and was not in a position to contribute to various worthy causes.
We dream of a cashless society. Yet churches, valets, toll booths, street vendors and the Rotary all continue to desire or require cash. Some are not even willing to accept anything but cash.
Looking at our society from two different angles, we must accept the continuing need for cash. Be it the underbanked, unable to acquire a credit or debit card; or those who carry many credit cards, both need to use cash simply to eat or enjoy life.
Later today I will have to visit the ATM and make sure I have a bit of cash in my wallet.
As we think about the world we are living in and the world we want to live in. We must balance friction and convenience against the potential risks which will emerge as technology blossoms and expands to touch ever part of our lives. This morning I got a text informing me of the 200 million cameras the Chinese had watching their citizens. I immediately remember the CATV system in London and
what parts of the City it covers. Its goal record everyone’s movements to protect against terrorists. Airlines are talking about ticketless travel and some are speaking of passport-less and ticketless airports. We wonder if Alexa is recording our every word and we know our PC, Tablet, Baby monitor & mobile phone cameras and microphones can be used by: who knows who, to watch who knows what, whenever they so please?
Is this the world we want to live in? Or would we prefer our cities to enact laws like those recently enacted in San Francisco. This law is meant to ban the use of these various cameras and listening devices from being used to identify everyone they see or hear.
This conversation then immediately bleeds into the question of our right to privacy. With all that the internet offers for free and what all these devices are capable of sharing; we’ve given our privacy away.
How often do you wonder why the ads you see seem to attempt to sell you exactly what you recent read about? How often do you wonder why you no longer can easily find the site you are looking for? Instead you have to filter through the search list to get past all the ads. How many of us even understand the information people can glean from what we do and were we are; when we use or carry our devices around?
On one side of the discussion is reality. As has been the case for as long as I can remember. TV, radio, newspaper, magazine, browser, social media, much web content and mobile app are funded by advertising dollars. Spent by those who want to convince some of us to buy what is on offer. It is these advertising dollars which pays for the content and ultimately decides what will survive the test of time. On the other side are the politicians, regulators, lobbyist and corporations who are focused on one thing. Helping people prosper or worse protecting some so they can continue to prosper.
The acquisition of wealth, the construction of infrastructure, the destruction of our enemies or the support for those without; is all about money.
If we seek to protect our privacy and be assured, we will not live in a surveillance state. We must be willing to read the fine print and be ready to pay for what is now free. We must be ready and willing to take the extra time to pull out our passport, enter our user name, present our boarding pass. We must insist on the necessary friction to protect our identity and our freedoms.
If convenience is what we insist on. Be assured, companies will happily build solutions to remove friction. Beware, removing friction, when it comes to your identity or privacy, means you will allow people and organizations to collect and store everything they can about you/ Their goal to identity you and without friction, with the purpose of serving you or better said profiting from your actions.
All of this is more than the Uber experience. Uber recognizes your phone and account not you.
This will be a world where the system behind the camera will see you, compare your face to all the faces on file and determines it is you. Therefore, knowing who you are, it can do what it is told to do; because it is you.
Cash is king let us never forget it. Cash has always been the primary form of payment. It was until very recently accepted everywhere. Most likely will once again be accepted everywhere especially given the need to make sure we do not disenfranchise the unbanked and underbanked will remain the default form of payment
This said, what always amazes me is how so many authors forget Apple Pay, Google Pay and the other NFC based mobile phone based payment solutions are simply another device capable of carrying your debit and / or credit card credentials.
What many of these authors are starting to remember is how much it costs a merchant to accept these alternate forms of payment. I wonder when they will also begin to appreciate how many if not all of these alternate forms of payment only work when the power is on. Our always on society assumes power never goes off. We dream of everything in our mobile phone and forget when we last could not use our phone because the battery was empty. Or the store clerk who could read your card because the power went down.
This is one of the redemining facts about cash. Cash exists without power and can be used whenever.
When I started to read this article, https://www.pymnts.com/news/b2b-payments/2019/wespay-corporate-faster-payment-adoption/ , my first thought, why would anyone in accounts payable want to pay a bill sooner than it is due. Clearly someone in accounts receivable, the CFO and the treasurer, is in need of a strong cash position. Therefore therefore, wants to bring cash in as fast as possible. This classic struggle between the buyer (accounts receivable) and the seller (accounts payable) begs the question – Who gains from faster payments and who loses?
Clearly the financial institutions are stuck in the middle.
- On one side their clients want moneys to flow into their accounts, oh so fast.
- While on the other hand those same companies would prefer moneys moved out of their accounts at a snail’s pace.
If the competition offers the service, then, the financial institution simply must decide if faster Payments creates a competitive disadvantage.
The question is not if – it is when.
Do we the consumer care? Today we have credit and debit cards which allow us to pace the movement of money. In the case of debit – today. In the case of Credit – some number of days after we get the bill. We can set up autopay facilities for those every month payments. We can schedule money transfers to occur on the day we desire.
From a business and technical perspective the movement of funds immediately upon instruction, makes good sense. We the receiver are assured those funds are good funds. We the sender know the moneys have been sent and received. Therefore, whatever subsequent result can be expected, now!
365/7/24 seems to be what instant gratification is all about. We want everything now and have lost the excitement of expectation.
All this said, there are risks we must consider when deciding to employ faster payments. There is no recourse. Once the moneys have been authorized the moneys are in the hands of the party you transferred them to. Only if they so desire, will you be able to recover from a mistake.
Worse still, if someone is able to assume your identity then an even greater risk exists. The funds are gone. The party receiving them will have no interest in addressing your lose.
Therefore Strong Authentication is the essential requirement.
I ran into this site today and am happy to see how Josh has offered a listing of sites, across multiple verticals, who have and have not embraced Multi-Factor Authentication.
What the primary factor is, is the key to the strength of authentication.
“What You Know” could be extremely secure, except we depend on the human to make sure they protect it, make it unique and complex.
“What You Are” can only be as secure as the quality and accuracy of the sensors and the algorithms used to match what is sensed now to what was registered then.
For me a “Restricted Operating Environment” capable of securing secret and private KEYS and use them to securely performing cryptographic functions, be they Symmetric and / or Asymmetric is the primary factor. The DEVICE(s) we use to access the service provided by the relying party simply needs to be registered, recognized and therefore the UNIQUE “What We Have” factor.
If we know the device is UNIQUE. Then the only outstanding question is, is the registered user using it, while not under duress. If the relying party is not comfortable with the presence of the registered user, then the Relying Party needs an additional factor to assure presence. Be it the “What You Know” and / or “What You Are” one adds to assure presence during the transaction or the authentication dialogue.
If the Relying party is comfortable the registered user is using their registered device, why add friction?
Prevention is what we need to focus on. Lock the door with strong keys . Detection is after the fact and necessary. Investigation helps to punish the evil doer and improve the quality of security.
We need to focus on making sure the methods used to allow someone onto the relying parties website or when they execute a transaction. Like in the physical world, it is about making sure the user’s KEY is unique and the right individual is in possession of the the key.
In other words. The user is present using a registered and recognized device.
Over the last couple of years the reality of fingerprint cards is a hot topic in conversation, white papers and press articles. It led me to think about the challenges and opportunities associated with this intriguing convergence of technologies.
My purpose is not to determine which solution is best or which companies are developing and selling them. My goal is simply to explore.
The first consideration begins when the card is constructed. Here we must ask the mechanical question relative to how the electronics are integrated into the strata of an ID-1 card. This then begs the question of making sure this new card conforms to the specifications dictated by Payment, Networks, Governments or other bodies who define the use of these branded cards. If we continue to think about the card manufacturing process we need to think about electronics and the use of heat in the typical lamination process or the inclusion of metallic materials used to create a particular look. One needs to think about the method of connecting the various internal components to the other electronic elements as the fingerprint scanner, antenna(s)m LEDs, batteries, the EMV chip or contact plate on the face of the card.
The second set of concerns must be related to the personalization of the card. First question is where will it be personalized? in a branch or within a bureau? How will it be personalized? With a thermal printer, laser engraver or embossing machine? Will any of the personalization processes adversely affect the electronic?. Similarly it will be appropriate to confirm whether any of the various card transport mechanisms will disrupt or damage the sensor and related electronics.
At some point in the processes the consumer must register their fingerprint and the resulting template must be instantiated into the card. How will this be done? Some speak of an in branch process. Others talk about some type of first time cardholder activation process performed when they receive the card in the mail.
Clearly there are a lot more questions the issuer, card manufacturer and personalization provider need to address. Let alone the method of making sure the cardholder knows how to use the card at the point of sale or ATM
The key question is the cost of the card, is it worth it?
Each morning I read trade articles on Blockchain, Faster Payments, Mobile Wallets, Authentication, Identity and other alerts & subjects of interest. Each day the writers leave me thinking about the future of society, howbwe will address cyber security, what we can do to funally eliminate fraud and which solutions will help us to mitigate risk. These then drives concern about where we will end up, as we drive to define effective means of identity and authentication, capable of supporting the individual desire for convenience and gratification.
Facial recognition deployed to speed up entry and exit to and from countries and through airports are here. The surveillance state is emerging at alarming speed. These same cabilities could potentially deliver a safer environment. Which will it be?
Physical and behavioral biometrics many feel should become the primary means of authentication. Yet, false acceptance and more importantly false rejection will result in inconvenience some expect the consumer to tolerate while other remember friction typically ends up with the consumer abandoning the journey.
The cost of payments, the escalating concern of the retail sector, remund us thatnpayments are sourcesnof revenue for some and friction for others.
Identity theft and the ability to create synthetic identifies are the fears of many. Consumers whose identity is stolen struggle to regain their standing.
In the end all we seek is:
- Pay for something
- Identify ourselves
- Protect our hard earned money
- Live a safe and productive life
- Be assured you are you and not someone else
When we consider our activity in cyber space and even in in person. The most important element is the relationships we develop.
If we consider the characteristics of a relationship, we need to think about the question from the perspective of each of the two parties.
- The relying party: be it a bank, merchant, club, government, employer or other operator of a website or facility; are interested in serving, selling and supporting the user
- The user: be it a individual, consumer, citizen or employee; are interesting in accessing information, exploring, shopping, browsing, communicating, sharing or otherwise enjoying something.
A relationship can then either be enduring or can be that of a guest.
- The user wants to know if the party they are attempting to engage with is who that party claims to be. Rely party simultaneously needs to believe the individual is who they claim to be.
- What the users identity is or better said what attributes of user’ identity are necessary is down to the objectives and longevity of the relationship.
Being assured of these truths is what proofing or identity verification is all about. Data privacy and need to know then filter into the conversation. This then needs to be balanced against risks the relying party and the user are taking,
With all of this in mind each party can decide what level of identity verification is required. This task is all about how one balances privacy, convenience, security and risk.
These articles cause me to think about the future and how the consumer will ultimately respond to the changes now taking place to how we Log-in to a website. Yesterday, or better said 10 years ago, we all understood that simple User Name password. A single screen with a reasonably consistent user interface. Sometime we might have to put up with two screens, One for the User name and the next for the password.
Today we are being confronted with a variety of methods to authenticate ourselves to the websites we frequent. Many register cookies on your machine and when your told they needs to be deleted, we are confronted with a second or even third layer of security and identity proofing. Often times we are then told to wait for an email sent to some email address we once registered or asked to enter the number we will receive in a text message to a mobile phone number we once registered. Some websites are using one of the various authenticators our mobile phones may now be hosting.
In my case, ignoring the various authenticators I have already deleted, I am using:
- Samsung Pass
- Google Authenticator
- Microsoft Authentication
- Norton Password Vault
- Samsung FIDO Certified “SIDF”, inside my Galaxy 7s phone
- email or text messages with a code I must type in
- Emails with a link as a means of verification
What is clear is there are start-ups and legacy technology companies busy trying to profit from authentication.
My concern is the consumer will be confronted with more and more as everyone claims they have a better widget capable of securing our digital world.
Why not come to consensus on a common approach to authentication?
The week of March 25, 2019 I had the opportunity to visit with a room full of community banks with assets in the 100 million to billion range. Organization with 25 to maybe 300 staff.
The presentations taught me more about the difference between what large International Organizations worry about and what these small community banks need to learn. Faster Payments, Zelle, same day ACH all new services these organizations must integrate into their organization, both technically and procedurally.
Things I have been exposed to are new challenges for these small town banks.
Words like liquidity risk clearly top of mind. Yet, as we move from over night settlement to real time settlement.
Phone fraud, risk mitigation all greater challenges not necessarily appreciated yet alone understood.
In the end what is clear these community banks exist because of the small towns they understand and work within. Do those of us exposed to a larger world understand what drives these communities banks, at least not I.
Another article published by PYMNTS.COM causes me to reflect on a discussion I had last we at the Payment Summit organized by the Secure Technology Alliance. When the US Faster Payments work groups where stood up on e of the working groups focuses on security, yet no particular drive exists to protect the consumer of the corporate treasure from their account being hacked into by some phishing, vishing or other criminal act. Account takeover will become a much more interesting attack vector. Moneys will irrevocably flow out of the hacked account and to whatever account the criminal so directs them.
Key word real time gross settlement and faster payments depend on the irrefutability of the funds. once executed they instantaneously transfer to the receiving party. What is required is a concerted effort to implement strong multi-factor authentication, at least at the time the transaction is authorized by the sending party. Some will say the risk is no greater than what exists today when a consumer or treasurer executes a Wire Transfer or any form of transfer between two financial institutions. This maybe true. the availability and assumed convenience will as the article described lead to heightened risk.
As I have written in other blogs we need to embrace strong Multi-Factor Authentication. The standards exist, the security of the device in many case is present. Relaying parties need to decide security is worth the investment. They need to recognize the value of satisfying the consumers’ need to have access to their funds properly protected.