What has this world come to

When we listen to the news we must think first of the bias of the reporter. This unfortunate truth is troubling in a world where the leader of the United States speaks of fake news and uses Twitter to stir up the masses. This body of citizens struggles with truth and is easily bent to believe what the leader says.

This particular charismatic leader, like many others in the past, is able to cause people to believe anything. The challenge these same people will follow both those with hi morals and those with any.

Jesus Christ, Siddhartha Gautama, Confucius, Laozi and a few others spoke wisely and became spiritual leaders many continue to follow.

Hitler to name one well remembered is like the one now President of this great country spreads lies and ferments hatred.

How can we rise above when so many are unwilling or is it unable to see the truth and rise above the madness these charismatic immoral individuals ferment.

That is the concern I have felt since first I looked upon the control the church exerts upon the mass.

Digital Identity and Authentic Relationships

When we think of investing in various businesses the goal, of course, is revenue. One of the keys to such success is loyalty. Loyalty is all about the relationship companies create with their customers and the revenue these relationships assure.

If the buyer has something the seller wants, in exchange for the good or service they desire, then a transaction occurs. The challenge is simple, each party defines the value of what they are providing or exchanging and presto the trade occurs.

When society grows and the complexity of what each of us produces and when our needs are not aligned to this process called barter, a means of monetization is established. Society creates a trusted means of exchange – pebbles, coins, money, a promissory note or now even, some would argue, cryptocurrencies.

In other words, society created an answer to enable the exchange of goods and services between parties, who do not have the goods and services the other party seeks.

With cash, coins or other tangible representations of value, commerce is easy. When society does not develop a secure and trusted means of facilitating the exchange of things commerce, innovation and a good life cannot be achieved. To this end, paper money is imbued with ‘value’ based on the integrity of the party issuing the physical or now electronic ‘money’. The addition of the word ‘electronic’ brings technology, computers, and networks into the conversation. One network, typically referred to as the Automated Clearing House ‘ACH’ allows banks to electronic instruct the movement of ‘money from an account at one bank to an account at another.

The addition of the word ‘electronic’ brings technology, computers, and networks into the conversation. One network, typically referred to as the Automated Clearing House ‘ACH’ allows banks to electronic instruct the movement of ‘money from an account at one bank to an account at another.
In the 1958 Bank of America created Visa Inc., in 1964 the Wallenberg family created Eurocard, and then in 1966 a collection of banks banded together to create the Interbank Card Association, Mastercharge and now MasterCard.

These payment networks, by necessity, add complexity. They create the need to establish a two sided market. On one side the relationship with the buyer, consumer, or cardholder. On the other side if this market the seller, merchant, or retailer.

Issuance and Acceptance. Two words to describe the two sides of a network. It’s only when the two sides of the market have sufficient participants. Only at the tipping point, when critical mass exists, can one claim to have created a self-sustaining network. A network of people promoting use to buyers and a network of merchants willing to accept payment based on the terms and conditions defined by the network. Beginning at this tipping point, the network and it’s Brand blossoms. If either side of the market does not achieve critical mass, the network collapses.

Relationships – The oil of commerce

Any two entities familiar and trusting in the Brand, or each other, can easily establish a temporary relationship with entities associated with the brand. If one or more of the entities require anonymity increases the level of trust and recognition the Brand must establish with these participants.

In a digital environment, we are in need of mechanisms to share and establish trust across trillions of electrons. The two sides of a relationship, in other words, the market, will not take the time to understand or appreciate the need for network and endpoint security; until the risk exceeds a threshold understood by the participants.

The Artifact of Trust

When a mutually trusted set of parties gives the citizen, consumer, employee or courtier a letter, card, device or any uniquely registered object, and provides every acceptor with a reader capable of recognizing the trusted thing. Then the two parties are in a position to establish “trust”. The consumer has a thing which is recognized and trusted by the acceptor. This is often referred to as “What You Have”.

Once the thing is recognized by the acceptor, then, the process of identification and authorizations (the transaction) can take place. The object – the artifact – carries an identifier. It possesses unique characteristics. The object also possesses a means of assuring the acceptor the presentation of that identifier represents a unique representation of that identifier.

The simplest artifact of establishing “trust” is a handheld thing, be it a key, fob, card, watch, pendant, phone, earpiece. It does not matter what it is, all that counts is that the merchant recognizes it and that the consumer is willing to carry and present it.

Trust, for the merchant, means they can, according to defined procedures, recognize and authenticate the thing. They are then in a position to pursue a temporary and trusted relationship. What can be achieved during the time the relationship of trusted is bounded, is constrained by an additional layer. In this layer the consumer, the acceptor and any third parties address which the rights and privileges are to be granted or pursued. This is when the exchange, sale, conversation, tranaction, event or access is granted.

The Card Was and Is Only a Credential Carrier

Cash is here to stay – cards are the true dinosaurs

This question of the extinction of the payment card is misleading. 

What is a payment card?  It is the carrier of a set of credentials, A means of Identification offering financial Attributes capable of being authenticated by a party seeking to sell something to the individual or entity presenting the credential as a mechanism to assure payment.

Back when credit cards were designed, the goal was to offer merchants a guarantee of payment and anonymous consumers a means of paying.  Behind this means of payment, a financial institution, the issuer, provides the consumer with a “Line of Credit”.

On the merchant side, another financial institution buys these guaranteed receivables from the merchant and charges the merchant a “merchant discount”.  Later that day the Issuing Institution advances payment to the Acquiring Institution based on an agreed set of terms and operating rules. Terms and conditions the involved financial institutions collectively agreed upon.

For this method of payment to be effective, a large number of consumers and merchants had to agree to participate; hence the financial institutions came together and formed what we now know as MasterCard and Visa.

Given the state of technology at the time it was essential this new mechanism work without the burden and expense associated with the merchant, supported by the acquirer, contacting the issuer to receive approval, or, in stronger terms be assured of a guarantee of payment.  To achieve this result, the merchant needed something to acquire the necessary information to submit a request for payment.  For both the merchants and financial institutions,, there had to be a means of authentication. Designed to assure the responsible parties of the authenticity of the person or entity to present their payment credentials.

To accomplish this goal, just like with money, physical security features are integrated into the payment card designed to allow the merchant to authenticate the uniqueness of the card carrying the payment credential, thus assuring the merchant of the authenticity of the card.

Overtime criminals successfully counterfeited these security features.

As these features were compromised additional features had to be added.

Today, a computer has been embedded inside the card, in order to assure the authenticity of the payment card credentials being presented to the merchant.

These computers embedded onto the front of a payment card exploit the power of cryptography.  Cryptographic certificates and digital signatures are created by and for these computers, allowing:

    • The Issuer (symmetric cryptography) to support Online Authentication
    • The merchant (asymmetric cryptography) to support Offline Data Authentication

These two mechanisms prove to the merchant and issuer that the card is unique and the data, credentials, and digital signature it contains or produces are authentic.

Once all the merchants have are capable of reading the data from the chip card, the security features of the card become redundant. 

As these features become redundant and the merchants embrace Near Field Communications, based on the ISO 14443 standard, the issuer can replace the card form factor with anything equipped with the necessary computational capabilities and ability to communicate with the terminal over the NFC interface.

This is exactly what Apple Pay and Google Pay have done.  They replaced the card with a device.  Yes, the Payment Card may become redundant.  But, the Payment Credentials they contain, remain.

What we know as card payments, is fundamentally an account-based solution. Money, through the defined settlement process, ultimately move from the line of credit or deposit account of the buyer, through a series of accounts with the participating financial institutions, to the account of the merchant.

Card-based credential payments
simply become
Device-based credential payments

 

In the Digital world certificates replace so many things

What is a certificate? A certificate as defined by Merriam Webster

certificate noun

1: a document containing a certified statement especially as to the truth of something
specifically: a document certifying that one has fulfilled the requirements of and may practice in a field

2: something serving the same end as a certificate

3: a document evidencing ownership or debt

certificate verb

: to testify to or authorize by a certificate

When we designed the EMV specification we employed a cryptographic mechanism to assure the merchant and ultimately the issuer of the presence of a uniquely issued payment card.  The goal, address the weakness of the security features then present on a physical payment card.

For the merchant – a local mechanism capable of allowing the device – the point of sale to attest to the membership of that card to the family of cards issued under one of the Payment Network brands.

For the Issuer – a mechanism where the card signed transaction details the merchant would forward a digital certificate – the cryptogram – to the issuer for authentication.  This cryptogram included in the message sent to the issuer assured the issuer, the card they issued; was presented to the merchant as a means of payment, for the transaction.

What is a payment card? – It is a certificate, issued by a financial institution, designed to guarantee the merchant will be paid – if they follow the agreed payment brand rules.

What is a ticket? – It is a certificate, issued by the movie theater, or a designated vendor, granting access to some venue or event.

What is a license? – It is a certificate, issued by some authority identifying your right to be or the ability to do something.

In the digital world, certificates are strings of characters, such as 2FG%4T678&b23, created, using some mechanism, by an Authority.  The readers, of these characters, use the certificate to Authenticate the uniqueness and Authority associated with the presentation of this certificate by someone or thing to something or someone.

 

To Identify or to Authenticate what is the difference?

Today I read an article on LinkedIn

 ‘Identification’ is to give an answer to the question of ‘Who is he/she?’, while ‘Authentication’ is to answer ‘Is he/she the person who he/she claims to be?’

This distinction for me is clear.  Yet, based on this article, and personal observation, people do not appreciate the unique difference between these two words.

For those who remember the film War Games, the two young adults were able to access the game simply by learning tidbits about the author of the program.  “Joshua” is the critical fact our young hackers unveiled.  This single word was both the identifier and the password.  A simplistic form of Identification which some may confuse with Authentication.

Our driver’s license number, credit card numbers, passport number, social security number, employee number, email address or other aliases; are identifiers.  These values are and should have remained, simple means of linking someone to the person who initially registered on a web site.

We then link these identifiers to a means of Authentication, an Authenticator.  We then use the authenticator combined with the identifier to assure Identification.  The recent NIST  800-63 standard defines the strength of an Authenticator.  The simple reality the authenticator can be a combination of things you know, things you have, and things you are.  Combining these factors create different strengths of Authentication.

Back in the day, a password, if properly constructed, was a very strong means of authentication.  Unfortunately remembering numerous and unique passwords is unmanageable.

One of the issues we face is how so many entities, companies, and other enterprises have taken the identifier and allowed it to also become a means of Identification, a secret.

As soon as a simple number or string of letters designed as public information, to be shared with others; became a means of Identification we created an untenable situation.

The Surveillance State Exists for Profit

I hope we all understand the data collected on each of us

https://www.nytimes.com/interactive/2019/opinion/internet-privacy-project.html

https://www.nytimes.com/interactive/2019/12/19/opinion/location-tracking-cell-phone.html

As a technologist, the revelation of what is available did not surprise me. I understood how location can easily be captured from all of the electronic devices I use. Be it the GPS chip, the triangulation of Cell Towers or the IP address of the router I am using to access the Internet. Where I am is easily acquired by any application or server I am employing.

What bothered me is that “We the People” have not pushed our governments to regulate the capture and use of this very personal information and data. What bothers me is that most of the citizens of this country or this world do not take the time to read the terms and conditions or the privacy statements provided to us and so often simply consented to them without a thought. And, if they did read them, most of us would not appreciate the language and therefore the meaning of these legal documents.

The surveillance state is real. Marketing companies, employers and so many others are buying the data and using it to improve their delivery of services, advertisements and so much more.

https://www.linkedin.com/pulse/i-hope-we-all-understand-data-collected-each-us-philip-andreae/

 

Is Identity Dead – The answer is Authentication

Today 2019-12-12 I found my way to the following article and associated podcast.

https://diginomica.com/fall-event-highlight-steve-wilson-says-digital-identity-dead-so-where-do-we-go-here 

https://www.constellationr.com/blog-news/identity-dead

Below is a flow of thought as I read and listened. to Jon Reed and linkedin.com/in/lockstep Stephen Wilson discuss this most interesting topic.

Surveillance Capitalism – So many are taking advantage of our data!

We need to evolve through the pony express stage of data management, and get to a point where there are responsible data intermediaries who are being held to account.

Identity management, for me, is about proving things about myself. I want to log onto a bank and prove that I have a particular bank account. Sometimes I want to log on and prove that I am the controller of a multi-party bank account with my wife. And sometimes I want to log onto a health service and prove my health identity. So this is all about proving things about me in different contexts.

In the podcast, they beg the question “Why is the Digital Identity problem still any issue”?  This leads one to think about the scale and expectation so many have surrounding this idea of “DIgital Identity”!

They then go on to ask the question What is two-factor authentication and remind us that our phone is a two-factor device, exactly what the standards FIDO Alliance worked to develop.  They remind us of the reality that people look after their phones.  We know when our phone is not with us.

Why not simply bind my identity to my phone.

Mr. Wilson sees the phone as the second factor.  I would suggest our devices, bond to our identity, is the primary factor.

Mr. Wilson reminds us that Identity is all about Verifying Claims. We claim to be someone and the relying party seeks to confirm that I am who I claim to be.  Or, when I seek to log back into a website, the relying party needs to make sure it is I – the same person who the relying party originally proofed, registered and agreed on an identifier and an associated means of authentication.  

Attributes are more interesting than Identity

Attributes are what matters in the various relationships we have when we interact with another.  As we think about our data we need to think seriously about what other parties need to know about us and what we wish to share with them.  Efforts in Europe to institute GDPR and the efforts in California to implement CCPA

As I continued to read and follow the thread I ended up at a W3C working group working on “Verifiable Claims” and found the following:

Abstract

verifiable claim is a qualification, achievement, quality, or piece of information about an entity’s background such as a name, government ID, payment provider, home address, or university degree. Such a claim describes a quality or qualities, property or properties of an entity which establish its existence and uniqueness. The use cases outlined here are provided in order to make progress toward possible future standardization and interoperability of both low- and high-stakes claims with the goals of storing, transmitting, and receiving digitally verifiable proof of attributes such as qualifications and achievements. The use cases in this document focus on concrete scenarios that the technology defined by the group should address.

The truth is that Identity Providers, as imagined, can’t deliver. Identity is in the eye of the Relying Party. The state of being identified is determined by a Relying Party (RP) once it is satisfied that enough is known about a data subject to manage the risk of transacting with them.

We are expecting people to be better than smarter than the crooks.  This is an interesting thought that begs the question.

How do “we the people” trust anything we hear, read or otherwise come across.

How does each of us keep up with all of the various products, standards, specifications and other efforts to develop stuff capable of securing our “IDENTITY”?

I am a firm believer in the work the FIDO ALLIANCE and W3C’s work on Web Authentication and recommend its adoption and use based on authenticators capable of adhering to a level of security certification commensurate with the associated risk of the acts, transactions, information, and services offered by the relying party to the user.

Identity – A Most Complex Thought

The idea of my identity, your identity, and our identity took me on a journey into social norms, physical realities, spiritual considerations, psychological consideration, and philosophy.  Starting with the classic approach of learning the definition of a word takes us to the dictionary.  What then assured the complexity of my quest is each of several definitions is similar, but, not the same.

I then found an interesting quote:

G.K. Chesterton once observed that the “special mark of the modern world is not that it is skeptical, but that it is dogmatic without knowing it.” His point was that moderns have forgotten that they are assuming what they believe to be a given. “In short,” he concludes, “they always have an unconscious dogma; and an unconscious dogma is the definition of a prejudice.”

With this thinking in mind on definition stood out:

identity n.

          1. an individual’s sense of self defined by (a) a set of physical, psychological, and interpersonal characteristics that is not wholly shared with any other person and (b) a range of affiliations (e.g., ethnicity) and social roles. Identity involves a sense of continuity, or the feeling that one is the same person today that one was yesterday or last year (despite physical or other changes). Such a sense is derived from one’s body sensations; one’s body image; and the feeling that one’s memories, goals, values, expectations, and beliefs belong to the self. Also called personal identity.
          2. in cognitive development, awareness that an object is the same even though it may undergo transformations. For example, a coffee cup remains the same object despite differences in distance, size, color, lighting, orientation, and even shape. Also called object identity.

I then thought of the various ways people expand on this word Identity and began to build a list.

        • Brand Identity
        • Cultural Identity
        • Digital Identity
        • Ego Identity
        • Emotional Identity
        • Ethnic Identity
        • Family Identity
        • Gender Identity
        • intellectual Identity
        • Material Identity
        • Moral Identity
        • National Identity
        • National Identity
        • Official Identity
        • Organizational Identity
        • Personal Identity
        • Physical identity
        • Political Identity
        • Psychology Identity
        • Racial Identity
        • Sexual Identity
        • Social Identity
        • Spatial Identity
        • Visual Identity

I am convinced my list is not complete.  What I can say is each item can be found in an article, definition or other written material produced by others.

As a final thought
Understand our identity leads one to wonder
“Who am I”
an Existential question
we each must answer for ourselves

The Identifier should not be the Authenticator

I was asked to look into the value of the EMV Secure Remote Commerce Specifications.  In the first section they wrote:

“1.1 Background … While security of payments in the physical terminal environment have improved with the introduction of EMV specifications, there have been no such specifications for the remote commerce environment. …”

This statement caused a bit of angst.  It caused me to think of the work to create SET and Visa’s efforts to promote the original version of 3D-Secure.  I was further reminded of how difficult it has been to find the balance between convenience and fraud and how merchants are more worried about abandonment than they are about the cost of fraud. Ultimately, it caused me to wonder about the goal of the EMV 3-D Secure specification.

“To reflect current and future market requirements, the payments industry recognised the need to create a new 3-D Secure specification that would support app-based authentication and integration with digital wallets, as well as traditional browser-based e-commerce transactions. This led to the development and publication of the EMV® 3-D Secure – Protocol and Core Functions Specification. The specification takes into account these new payment channels and supports the delivery of industry leading security, performance and user experience.”

The keywords found in the last sentence “the delivery of industry leading security, performance and user experience” suggest these two specifications are searching to solve the same problem.

According to the Oxford dictionary

Security is

    • “The state of being free from danger or threat.”
    • “Procedures followed or measures taken to ensure the security of a state or organization.”

Authentication is

    • “The process or action of proving or showing something to be true, genuine, or valid.”
    • Computing The process or action of verifying the identity of a user or process.

On this same page, the authors go on to make the following statement

“… there is no common specification to address the functional interactions and transmission of data between the participants.”

This then causes me to wonder about the original ISO 8583 specification, the current ISO 20022 specification, and the subsequent concept of the three-domain model within the 3D-Secure specification.  All three of these specifications define the interaction between the participants while not restricting the method of transmitting the data.  It seems the authors of the SRC specifications have forgotten history.  Or, are they trying to rewrite history.

At this stage, Authentication seems to the most important part of what EMV is attempting to address.  But,  the focus seems to be more about rewriting history that solving the fundamental problem.  We seem to have this desire to take public identifiers and convert them into secrets.

“An industry transition from a dependency on Consumer entry of PAN data can be accomplished by providing an SRC specification that meets the needs of all stakeholders involved.”

These intriguing contradictions beg the question.  Why did the authors of the Secure Remote Commerce specification not reference the good work of those that created the 3D-Secure specification and propose an approach unlike EMV?  They all are part of the same organization!

Is the goal not to address authentication and Security of the payment transactions, be they instore or on the Internet.  I would argue

We allowed the PAN, the payment card identifier, to become a means of authentication

This use of the PAN as both an identifier and an authenticator; reminds me of a hearing of the United States House Committee on Ways and Means May 17th, 2018 hearing on “Securing Americans’ Identities: The Future of the Social Security Number”.

“House Ways and Means Social Security Subcommittee Chairman Sam Johnson (R-TX) announced today that the Subcommittee will hold a hearing entitled “Securing Americans’ Identities: The Future of the Social Security Number.” The hearing will focus on the dangers of the use of the Social Security number (SSN) as both an identifier and authenticator, and examine policy considerations and possible solutions to mitigate the consequences of SSN loss or theft.”

All the witnesses and most of our members of congress accepted and understood the problem.  We allowed a simple government-issued identifier to become a means of authentication, in other words, an authenticator.  Like allowing the social security number and now also the PAN to become part of how we authentic someone’s identity.  We caused these publically available identifiers to become valuable and sensitive PII data.

Cardholder Authentication and Consumer Device Identification

What is clear, as one continues reading the SRC specifications, is the goal is to reduce the frequency of presenting payment credentials on merchant websites.

“Minimising the number of times Consumers enter their Payment Data by enabling consistent identification of the Consumer and/or the Consumer Device”

A very different approach to what the payment schemes do with the EMV based payment process.  The authors of EMV saw the PAN as public data, they architected something designed to assure the uniqueness of the card and the ability to positively verify cardholder.  Card Authentication and Cardholder Verification.

Why not simply think and focus on the same architecture?  Simply change the word “card” to “device” and focus on Device Authentication and Cardholder Verification or as everyone is promoting Multi-Factor Authentication.  We simply need to make sure the thing is genuine and the right individual is using the thing.  The thing is what the cardholder has – The “what you have” factor.  Add a pin/password or better still a biometric to be the second factor the “what you know” or “what you are” factor.

EMV 3D-Secure creates the ability to exploit the “what you have” factor by offering Device fingerprint data to the issuer’s authentication process.

 

It is time to move to Multi-Factor Authentication built on a Restricted Operating Environment

Passwords should become a thing of the past. Here’s why

This morning one of my Google alerts found a blog coming from the World Economic Forum.  It reminds us of the inventor of the password Fernando Corbato.  In an interview with the Wall Street Journal, he said passwords have become “a nightmare”.

The open question is how do we solve for the nightmare of password management we have created that is both effortless and secure.

This article calls for private enterprise and our governments to find answers.  I hope in finding these answers capitalism and profit do not become the reason to act.  I hope social responsibility and community action drive all to find answers that are affordable, convenient, secure and more importantly consumer-friendly.

We Keep Talking About It, When Will We Solve For Identity in the Digital Space

This morning I read an article in the Financial Times The real story behind push payments fraud.  What is disturbing, the acceptance of fraud and the focus of bankers on adding fees (like Interchange) to help cover the cost of fraud.  This article speaks to Push Payments and how liability shifts from the merchant back to the Issuer and ultimately the consumer.  It makes reference to Pull Payments and the use of debit cards where the fraud liability, unless online, is the merchants’.

To address card payment fraud in the physical world the payment schemes developed EMV.  In the digital or eCommerce realm everyone accepted allowing the merchants to not attempt to authenticate the cardholder and simply ask the consumer to provide openly available data {cardholder name, PAN the account number, expiry date, and address details}; if they, the merchant, would accept liability for any fraud.

As the world moves to embrace “Faster Payments” and Real-Time Gross Settlement ‘RTGS’, instead of focusing on assuring the identity of the sender and the recipient; we assume fraud will occur.

Why not focus on solving the problem?  Solving for Digital Identity solves for Card Not Present fraud, RTGS fraud, Faster Payment fraud, and so much more.

 

 

Where are we

Today.

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.

What You possess, What You Are, What You Claim … Your Certificates

NCCOE NIST Multi-Factor Authentication

What you Possess — The Thing

What you Are — You

Your Relationships

Responsibilities

Authority

Advice

— Secrets

My Certificates

 

 

 

 

 

 

 

 

Seven Words

World Wide Web Consortium

FIDO Alliance

Global Platform

The Trusted Computing Group

Future interests

  • Artificial Intelligence
  • Machine Learning
  • Nature Language Interface
  • Predictive Analytics

Another short description of Blockchain

WTF is The Blockchain? The ultimate 3500-word guide in plain English to understand Blockchain.

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.

 

Review of the IMF The rise of Digital Money

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”

  1. The Type, be it a claim or an object.
  2. The value, be it fixed or variable.
  3. If it is a claim who is liable?
  4. The technology, be it centralized or decentralized


They then speak to the five ‘Means of payment”.

Object-Based

  1. Central Bank Money (cash)
  2. 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.

Claim-Based

  1. b-money (Bank issued)
  2. e-money (Privately issued)
  3. 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

 

 

Blockchain made simple

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.

Biometrics are great as long as we understand.

Biometrics are probabilistic, therefore not 100% accurate every time

They should not be shared in central databases. If they are there must be safeguards and strict privacy policies associated with their use

The better approach is to use the biometric to unlock your device or prove you are present.

Your device should then be cryptographically authenticated by the relying party.

The relying party should maintain a list of devices (Authenticators) you register.

The device proves uniqueness.

The Biometric proves presence on that unique device at that moment in time.

Frictionless authentication of the device.

Active verification when the risk demands assurance of the individual who is authorizing or instructing.

Biometrics – Do we end up in a surveillance state

http://www.planetbiometrics.com/article-details/i/10211/desc/guest-post-experience-a-seamless-lifestyle–idemia/

https://www.aclu.org/other/whats-wrong-public-video-surveillance

https://www.govtech.com/policy-management/Study-Surveillance-Cams-Worth-Money.html

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

CCTV Camera technology on screen display

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.