Van Buren v United States

Date & Time:
Tuesday, June 29th, 2021
10:30 AM PT | 1:30 PM ET

Explained: A Legal Perspective on the Future of Cybersecurity Research

The Supreme Court’s Van Buren decision earlier this month aimed to clarify the ambiguous meaning of “exceeding authorized access” in the Computer Fraud and Abuse Act, the federal computer crime law.

In the context of protecting critical infrastructure from hackers, this particular ruling will define how we manage, report, and handle unauthorized access.

It also raises some foundational questions that, if weighed carefully, have the potential to foster a collaborative relationship between researchers and companies. How should good-faith researchers conduct themselves? Does this redefine the relationship between companies and hackers? Is every researcher considered to be in violation of CFAA if they’ve not sought permission to access a system?

Jared L. Hubbard and Christopher Hart have followed this ruling closely and worked on amicus briefs to aid the Court in this matter. They will discuss the case and answer questions.

Speakers:

Jared L. Hubbard, Partner, Fitch LP
Christopher Escobedo Hart, Partner, Co-Chair, Privacy & Data Security Practice – Boston, FoleyHoag LLP


Register on Eventbrite


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Copyright © 2021 Voatz. All rights reserved.

Thinking Voting

Today we seek to ensure each citizen eligible to vote can vote. Issues like location, geography, education are all elements of the values we must embrace as we work to assure the citizens ability to vote.

The first question of voter and eligibility takes us into the realm of who or how elections are managed. Candidates, contests, question are all elements of what is presented to the voter as a ballot. According to practices and rules, contests involve selecting candidates. While questions focus on yes/no answers or a score.

Anonymity creates a need to construct a mechanism to assure one vote per voter while preserving the privacy of the voters identity. This one requirement solved reduces the risk landscape significanttly and complicates the angle of attack.

Adhering to a security first continous improvement principles and integrating prevention and detection into the design of the source code.

I believe Voatz has solved the most challenging task and embraced best of breed components and partners to build a secure immutable record of each unique anonymously signed ballot.

The rest, as long as vendor certification mechanisms and coherent standards exist, has been done over and over again in: financial services, government services, defense, health, and retail. With sound software design and release procedures, built on quality principles inherent in the companies ethos

All we need is the right to improve democracy.

What is a DAO and how do we govern tomorrow

Distributed autonomous organizations, a DAO.

When we think of governance and how we control society, we immediately must consider the realities of people in the tribes they belong to.

Recently the emergence of bitcoin, the understanding of the power of a distributed ledger, the use of a hash chain, the power of cryptographic processes, and the security of the devices we carry establishes a foundation for a brave new world.

What is governance? It is the method processes and mechanisms a society puts in place to establish order and ensure harmony?

The ancient Turks, Greeks, slave spoke of democracy, the idea that each member of the tribe, the town, the city, or the state could assemble and determine new laws, regulations, and best practices. We then evolved into Republican governments the concept of a group of people representing a larger number of citizens.

Influence and power define what shall evolve. In my lifetime, the idea of being able to plug the handset of your telephone into the back of a terminal and establish a connection to a computer somewhere out there was a novelty. For my father it is Time in Geneva when Aryanism stood out as a challenge, opportunity or threat. Telephones were just emerging and radios were available. TV was still not present. Paper books and libraries surrounded the environment we will call Geneva.

City on the Lake, what is this thing place in his history his is as relevant as your or mine.

One question why anonymity at the profound process of engagement. When you are something called anonymous I am not sure I want to play. If your anonymous is mandatory; I don’t want to play.

The innovative spiritual and the. Nurturing essence of life.. How this evolves involves countless engagements.

Each sublime note to the fabric of the virtual environment we present to the public is.

And, all of us form the fabric of the public.

He answered them, “And why do you break the commandment of God for the sake of your tradition? 4 For God said,* ‘Honor your father and your mother,’ and, ‘Whoever speaks evil of father or mother must surely die.’ 5 But you say that whoever tells father or mother, ‘Whatever support you might have had from me is given to God,’* then that person need not honor the father.* 6 So, for the sake of your tradition, you make void the word* of God. 7 You hypocrites! Isaiah prophesied rightly about you when he said:

8 ‘This people honors me with their lips,

but their hearts are far from me;

9 in vain do they worship me,

teaching human precepts as doctrines

“Listen and understand: 11 it is not what goes into the mouth that defiles a person, but it is what comes out of the mouth that defiles.”

What shall we do? Simple honor the one Jesus answered, “The first is, ‘Hear, O Israel: the Lord our God, the Lord is one; 30 you shall love the Lord your God with all your heart, and with all your soul, and with all your mind, and with all your strength.’ 31

You commit to what you believe in with a robust desire to adhere to the moral imperatives. The one God is the same God written about in so many different ancient lore.

The second is this, ‘You shall love your neighbor as yourself.’ There is no other commandment greater than these.” 32

32

Who is your neighbor?

Anyone you engage in an event. An event is is anything we all seek to record. By the way any unit of one can record as long as all parties are aware. It is our contracts and promises. Those such as payment, voting, identity and influence.

See you next time.

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.

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.

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.

Are we in Need of Faster Payments – a question of speed and instant gratification

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.