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From cyberwar to digital encryption, security issues to state sovereignty
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PayPal withdraws from Libra as others now "reconsider"

PayPal withdraws from Libra as others now "reconsider" | Digital Sovereignty & Cyber Security | Scoop.it

PayPal is withdrawing from Facebook’s Libra Association, the company announced Friday.

“PayPal has made the decision to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations,” PayPal said in a statement.

David Marcus, who leads the project at Facebook, was previously the president of PayPal. PayPal said it is still “supportive of Libra’s aspirations” and that it will continue to partner with Facebook in the future.

Dante Disparte, head of policy and communications for the Libra Association, said in an emailed statement, “We recognize that change is hard, and that each organization that started this journey will have to make its own assessment of risks and rewards of being committed to seeing through the change that Libra promises.”

Libra was greeted with widespread criticism after the cryptocurrency was announced in June. Facebook’s involvement caught the attention of senior congressional finance committee members, global regulators, former lawmakers and industry insiders who questioned Facebook’s motives.

Federal Reserve Chairman Jerome Powell said this summer that libra raises “serious concerns regarding privacy, money laundering, consumer protection, financial stability” and the Fed had launched a working group to examine it.

Rep. Maxine Waters, D-Calif., chairwoman of the House Financial Services Committee, told CNBC in June that “it’s very important for them to stop right now what they’re doing so that we can get a handle on this” and Congress would “move aggressively” to deal with it.

Facebook has tried to mitigate lawmakers’ fears of libra in part by assuring them that Facebook would not have unilateral control of the currency.

The Libra Association had been made up of 28 corporate backers, including Facebook, who are meant to help govern libra. All founding members were expected to invest a minimum of $10 million to fund the operating costs of the association and launch an incentive program to drive adoption, according to Facebook’s initial announcement of the project, but those investments had not yet been made.

PayPal’s public defection could indicate the alliance is starting to fray.

On Wednesday, The Wall Street Journal reported that Visa, Mastercard and other financial partners that signed on are “reconsidering” involvement following a backlash from government officials.

Rep. Sylvia Garcia, D-Tex., a member of the House Financial Services Committee, said on a call with reporters Friday that PayPal’s decision to back out is “a clear indication that something’s amiss.” Garcia said she already had concerns about the members of the association, since Facebook seemed to be able to select its founding members.

“If I’m doing the inviting, then that’s controlling the entire agenda,” she said.

Lawmakers in the House Financial Services Committee are now seeking to bring Facebook’s top executives back to Capitol Hill to testify on libra, CNBC reported Friday. Two sources familiar with the situation told CNBC that the committee has been in talks with Facebook about bringing COO Sheryl Sandberg to testify this month, but that the hearing would be contingent on CEO Mark Zuckerberg’s agreement to appear before the committee.

Philippe J DEWOST's insight:

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Crypto 2.0 Musings - Of Quantum Computing and Blockchain(s)

Crypto 2.0 Musings - Of Quantum Computing and Blockchain(s) | Digital Sovereignty & Cyber Security | Scoop.it

A few weeks ago I was on a blockchain panel, organised by the World Economic Forum, discussing amongst many things use of blockchains as a digital identity store, when someone from the audience asked me about the implications of quantum computing on confidentiality of data stored on blockchains.

My answer was somewhat under par. Indeed, quantum computing will break many existing cryptographic algorithms - making today's secret data public, but with quantum computing comes quantum cryptography, or more precisely quantum key distribution, which is immune to quantum computing attacks.

After the panel was over, the lady who asked me that question came over, thanked me for being on the panel, and asked a follow up question - what would happen to all that data encrypted with quantum un-safe algorithms already stored on blockchain?

A big thank you to her for being so polite and not embarrassing me on the panel because I suspect the answer was obvious to her, and yet it's implications escaped me. Data already stored on blockchain with current quantum un-safe algorithms will become public, even if all data encrypted with quantum  safe techniques will be kept secure going forwards.

Cryptography relies on scrambling data using a very long secret random number, and the only way to unscramble that data is by knowing that secret. There are no mathematical tricks to shortcut the working out of that number, so the only way to un-scramble the data is to guess, in a brute force fashion, the secret number - impractical using today's computers, as secret number range is so big that that it takes almost an infinite amount of time to guess it.

However, how do you safely share that secret safely over a public network? To solve this problem, public key cryptography was invented. You create two keys, public and private, which are mathematically linked - any data encrypted with a private key can only be decrypted with public key and vice versa.

If you keep the private key safe, and send out your public key, then people can send you confidential messages by encrypting data with your public key, safe in the knowledge that only you, as the sole keeper of the private key, can read that message i.e. no need to secretly pre-share a key over some private transfer method that reduces the risk of eavesdropping.

However, this link between private and public key introduces a tiny vulnerability - there is now a mathematical shortcut that allows you guess the linked private key much more quickly that when trying to guess a random secret key. 

Using today's computers though it still takes almost an infinite amount of time to guess the private key, even with the shortcut. However, quantum computing relies on many different states of quantum particles to perform millions of calculations all at once, allowing you to guess the private key in short enough time compared to today, breaking confidentiality. On the hand, even with quantum computers, it is still likely to take unpractically long time to guess a shared secret key, as there is no public key to exploit.

Lucky for us, quantum key distribution, an implementation of quantum cryptography, uses the same very principles that allows super fast calculations to break today's popular public-key cryptography algorithms for a different purpose - you can do away in some cases with public and private keys and simply share quantum-safe secret keys over public networks without a possibility of interception, as it is impossible to copy quantum encoded data and any eavesdropping changes the state of data, making intrusion highly detectable. This may go some way to mitigating against quantum attacks.

Philippe J DEWOST's insight:

Are you quantum-safe ? Long yet instructive post by Alex Battlin that introduces the notion and applies it to Blockchains

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How the blockchain will enable self-service government (Wired UK)

How the blockchain will enable self-service government (Wired UK) | Digital Sovereignty & Cyber Security | Scoop.it

When a baby boy was born on August 4, 1961, the local newspaper announced his birth, as it did many others. More than a declaration of happy news by his parents, those few lines of information were part of a long-lasting tradition -- using the local daily to register, at a set point in time, the addition of a new person to society. Seemingly inconsequential timestamps like these occur every day and, as it turns out, play a key role in ensuring more fair and just societies. 

It's not just limited to births. Kidnappers take photos of hostages holding the front page of a recent newspaper to act as proof that they are still alive. Governments often require entrepreneurs to publish the establishment of their new company in a local newspaper. Beyond newspapers, a postmark confirms to a government that taxpayers filed their taxes on time. A patent helps inventors to prove that they developed an invention first.

But when we depend on private companies to manage this task, we have the potential for exposing ourselves to abuse. Manipulation of the chronological order -- as when banks process a customer's largest cheque first rather than their most recent to increase the likelihood of it bouncing -- creates a less just world.

Similar to the internet's facilitation of instant, global communication, a combination of time-stamped and digitally signed transactions hosted on an accessible ledger could play an important role. They could help governments reduce friction and increase transparency associated with important transactions.

How might this be accomplished? Ironically, Bitcoin, an idea that was once thought to be anti-government, could end up a key platform for governments to achieve these goals.

Philippe J DEWOST's insight:

Another well written text piece if you want to embrace the blockchain in its genericity

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