Sunday, 19 November 2017

POST It's going to get worse before it gets better

Identity fraud is absolutely out of control in the UK and there is, so far as I can see, no prospect of any form of infrastructure coming into place to deal with the problem. Whether we look at scammers going through Facebook to perpetrate dating fraud or going through LinkedIn to perpetrate corporate fraud or going through the Land Registry to perpetrate property fraud or going through Companies House to perpetrate corporate fraud, we can draw only one conclusion: identity is broken. Until we fix identity, we can’t attack fraud. And since it’s going to take a while to fix identity, even if we start now, that means that fraud is going to carry on getting worse. Don’t believe me? Then listen to a bank:

[Barclays] is predicting that online festive fraud will be at its highest ever levels in December 2017 and could cost shoppers more than £1.3bn.

From Barclays warns of unprecedented online fraud this Christmas

Merry Christmas one and all. The truth is that we are under attack. It isn’t script kiddies and casual card counterfeiters any more, it’s organised crime. The Callcredit Annual Fraud & Risk Report surveyed over a hundred fraud professionals and found that more than three-quarters of them rated organised cybercrime as the biggest fraud threat to their organisations in the coming year. Given that current projections are that the damage from cybercrime with double from $3 trillion last year to $6 trillion in 2021, their fears are well-founded.

Yet when those same fraud professionals were asked what their priorities were for the coming year, nearly nine in ten put regulatory compliance at the top of their list.

 

Is there any cause for optimism? Well, I think the answer to that is yes. Remember Callcredit’s white paper on “Credit, Fraud and Risk in the Age of Machines” in which their data scientists explored the use of machine learning. I think they are right to be optimistic about these new technologies. The answer seems to be that they are, and that there may be light at the end of the tunnel. If we look at what kinds of AI are being deployed in the banking sector and what they are being used for, we see this optimism reinforced. It’s time for a change: if we are going to defend ourselves against the next generation of criminals, we need the next generation of technology to do it.

Friday, 17 November 2017

Art and science in Bristol

Well, that was fun. I had the great honour of being invited on to a panel at the Festival of Economics, part of the Bristol Festival of Ideas. Professor Steve Keen, Daniela Gabor, Tatiana Cutts and stand-in chair Romesh Vaitilingam who did a great job moving things along. We had a great audience and they gave us a wide variety of topics to deal with in the Q&A. All in all, an excellent event.

One of the topics that came up, naturally, was whether Bitcoin was a form of cash or not. Remember that US IRS Ruling about Bitcoins being a commodity, so that traders would have to track the buying and selling price of each individual Bitcoin in order to assess their tax liability? No? Here’s a reminder…

the real lesson from the IRS Bitcoin ruling is that for a currency--or any payment system--to work, its units must be completely fungible.

[From Bitcoin Tax Ruling - Credit Slips]

Fungible (from the Latin “to enjoy”) is a great word. One of my favourites, in fact. In this context, money, it means that all tokens are the same and can be substituted one for another. You owe me a pound. It doesn’t matter _which_ pound coin that you give me. Any will do. Any pound coin can substitute for any other pound coin because they are all the same: no-one can distinguish one pound coin from another. This isn’t true of Bitcoins. They are all different. and because they are all different, their history can be tracked through the blockchain.

The digital currency Bitcoin has a reputation for providing privacy. But a new analysis of the public log of all bitcoin transactions suggests it could be surprisingly easy for a law enforcement agency to identify many users of the currency.

[From Tracing Bitcoins May be Easier Than Criminals Think | MIT Technology Review]

The idea of money that isn’t fungible but that can be tracked, traced and monitored reminded me of Nitipak Samsen’s winning entry in the Consult Hyperion 2011 Future of Money Design Award, an example that I include in my book. I mentioned this on stage and a couple of people came up afterwards to ask more about this entry and the competition nin general, so if you are one of them and you’d like to learn more, check it out here.

Have you ever wondered where the money in your pocket had come from? Who was the previous owner? Who was the owner before that? Might it be a famous celebrity?…

[From Money Trailer – Future of Money]

It is interesting to me to see these different perspectives (Nitipak's artistic imagination about the bastard child of Facebook and Bitcoin, and the more technical ideas about fungibility) coming together and, to my mind, again illustrates just why the FOM Design Award became such a popular session in the Tomorrow’s Transactions Forum. We (technologists) need artists to help us to imagine alternative futures.

So. TL:DR…

Bitcoin isn’t cash, because cash is fungible. If we want something to be cash, we need to make it fungible. But do we want cash? I’m always ready to listen to informed views, but right now my general feeling is that the costs outweigh the benefits.

Tuesday, 14 November 2017

Central banks should embrace digital currencies, Axel Weber says

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Less clear cut, however, are likely to be arguments over digital currencies issued by central banks. Like cash, which they could eventually replace — but unlike bitcoin — they would be backed by monetary authorities, so they would also act as a store of value as well as widely accepted means of payment.

From Central banks should embrace digital currencies, Axel Weber says

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Sunday, 12 November 2017

net.wars: Regulatory disruption

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The financial revolution due to hit Britain in mid-January has had surprisingly little publicity and has little to do with the money-related things making news headlines over the last few years. In other words, it's not a new technology, not even a cryptocurrency. Instead, this revolution is regulatory: banks will be required to open up access to their accounts to third parties.

From net.wars: Regulatory disruption

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Tuesday, 7 November 2017

Apple plans to share some iPhone X Face ID data. Uh oh.

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Police can’t force you to turn over your passcode, but they can, theoretically, force you to unlock the phone with your face.

From Apple plans to share some iPhone X Face ID data. Uh oh.

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Flaw crippling millions of crypto keys is worse than first disclosed | Ars Technica

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On Friday, Estonia's Police and Border Guard suspended an estimated 760,000 ID cards known to be affected by the crypto vulnerability.

From Flaw crippling millions of crypto keys is worse than first disclosed | Ars Technica

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The country is now issuing cards that use elliptic curve cryptography instead of the vulnerable RSA keys, which are generated by a code library developed and sold by German chipmaker Infineon.

From Flaw crippling millions of crypto keys is worse than first disclosed | Ars Technica

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Monday, 6 November 2017

Shanghai shops refusing cash are illegal: authority - Global Times

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Reporters found that, in Shanghai, some shops even ask consumers to apply for a membership card if consumers want to use cash, and others hang "no cash" signs on their doors, Laodong Daily reported Thursday.

From Shanghai shops refusing cash are illegal: authority - Global Times

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