Group items tagged

Researchers have calculated that it would require 13 × 106 physical qubits to break the Bitcoin network's 256-bit elliptic curve key encryption within one day. In other words, no time soon because IBM's largest superconducting quantum computer is just 127 physical qubits.

The Bank for International Settlements (BIS) announced the first batch of six new projects in its 2024 Innovation Hub work program including experimentations on digital payments cyber security and central bank digital currencies (CBDCs). Project Leap starts its phase II, aiming to "quantum-proof" payment systems, after successfully establishing a quantum-safe communication channel between the central banks of France and Germany in its first phase. Project Aurum enters a new phase in which it will study the privacy of payments in retail CBDCs. The recently started Project Promissa tests the feasibility of tokenizing promissory notes, financial instruments that help fund multilateral development banks and other international financial institutions. All these new initiatives will be added to existing projects that various Innovation Hub Centres will continue to develop this year:  FuSSE, Gaia, Mandala, mBridge phase III, Nexus phase III, Pyxtrial, Rio and Viridis. https://www.bis.org/about/bisih/about.htm

"Not all in the crypto security world are convinced by the urgency of the matter. In some quarters, an active debate is being had about whether quantum computing will ever be strong enough to break standard encryption protocols. The question is of particularly relevance to those active in the cryptocurrency sphere, since so much of the sector depends on secure cryptography to retain its value. Opinions, however, remain hugely divided."

"Project Leap, launched by the BIS Innovation Hub's Eurosystem Centre together with Bank of France and Deutsche Bundesbank, the project partners within the Eurosystem, seeks to build quantum-resistant IT environments for the financial system."

"Eventually, the major economies will not dare take the risks involved in adopting crypto technology to produce state digital currencies, but will build robust, flexible, sustainable quantum randomness-based digital currencies. "

Central banks need to realise that it is impossible to prevent distribution of counterfeit coins that are transacted in an offline mode when a cryptographic dialogue is carried out between payer and payee. This vulnerability relates to most known secure elements/devices, stored-value cards, universal access devices and Tamper Resistant Elements (TRE), such as smart cards, SIM cards, embedded secure elements and so on, that are already being tested for offline clearing and final settlement capabilities. It derives from realizing that any cryptographic dialogue that convinces a payee offline may be emulated by a resourceful counterfeiter. If you wish to execute payments between two parties in offline mode when there is no internet connection, with no risk of counterfeit money to be distributed by adversaries, you need to have a physical procedure (not cryptographic) that enables a fast, instant, simple and secure (up to being quantum-safe) validation process and payment transaction, with finality of payment.

"The financial institutions that have invested in Fnality know liquidity management and settlement processes must take a quantum leap to rein in the current inefficiencies, market fragmentation and counterparty risks. These banks accept the need for change and are exploring the potential of technology, by holding tokenised assets on a blockchain to trade and settle with near-instant finality. "

The aim of this St. Louis Fed paper is to provide a comprehensive fintech literature survey with relevant research studies and policy discussion around the various aspects of fintech. It also discusses policy implications, such as those related to open banking policy, ethical use of consumer data, and whether a cashless economy is expected in the near future. It concludes that it is debatable whether the future mainstream financial technology will be blockchain and DLTs, quantum computing, or something else - and how the industry and policymakers can best be prepared to keep pace with evolving technologies and the new adoption.

This paper organizes the latest research and views on cyber-risk management to enable insights into frequency and severity of cyber-risk events, the magnitude of cyber-risk losses, and the best practices methods and frameworks for organizing and implementing a cyber-risk management program. This paper also describes cryptographic best practices and the evolving research on protection of cyber-attacks in the coming Quantum computing era.

Distributed ledger technology (DLT) is one of 20 focus areas on the U.S. National Security Council (NSC) shortlist of critical and emerging technologies. The NSC's strategy calls for investing in, developing, adopting and promoting the priority technologies. Also on the shortlist: AI, data science, quantum computing and "space technologies," weapons of mass destruction mitigation technologies, and others. https://www.whitehouse.gov/wp-content/uploads/2020/10/National-Strategy-for-CET.pdf

The BIS Innovation Hub's Swiss Centre launched Project Tourbillon to explore how to reconcile central bank digital currency (CBDC) design trade-offs between cyber resiliency, scalability and privacy. For example, higher resiliency against cyber-attacks requires additional cryptography, which can slow down payment processing. Privacy must be weighed against the need to counter money laundering, terrorism financing and other illicit payments. Project Tourbillon aims to reconcile these trade-offs by combining proven technologies such as blind signatures and mix networks with the latest research on cryptography and CBDC design suggested by David Chaum and Thomas Moser in a 2021 Swiss National Bank working paper. The conclusions of this project will be relevant for both wholesale and retail CBDC systems. The goal is to finish the prototype by mid-2023.

This study focuses on the development of a CBDC protocol that ensures privacy and security for offline payments. Its foundation makes use of blind signature technology, a method that keeps a message's content secret from the signer and upholds the privacy of transaction Data. The zk-SNARK (Zero-knowledge Succint Non-interactive Argument of Knowledge) protocol, which assures that transactions are both private and verifiable without necessitating interaction between the prover and verifier, provides a complement to this. By leveraging blind signature technology and the zk-SNARK protocol, we explore how to overcome privacy-related challenges in retail CBDC while ensuring resilience against quantum attacks.

Where the relationship between citizens and the state has a trust deficit to begin with, technology may offer better solutions than institutions. One such idea comes from the world of polling. The election officer (read, the monetary authority) signs a sealed envelope that carries your secret ballot (the payment details); carbon paper (cryptography) carries the signature to the vote inside. So when the envelope is opened (the payee is credited), all that the receiver's bank sees is the signature attached to the ballot, not where the vote (the funds) came from. You, however, will know what you did or didn't intend to do. If a terror financier steals your wallet, you'd go to law enforcement to show them where your tokens are. You might even get them back.

A group of Chinese researchers have just published a paper claiming that they can-although they have not yet done so-break 2048-bit RSA. This is something to take seriously. It might not be correct, but it's not obviously wrong. One of the issues with the algorithm is that it relies on a recent factoring paper by Peter Schnorr. It's a controversial paper; and despite the "this destroys the RSA cryptosystem" claim in the abstract, it does nothing of the sort. Schnorr's algorithm works well with smaller moduli-around the same order as ones the Chinese group has tested-but falls apart at larger sizes. At this point, nobody understands why. If that's true, the techniques in this Chinese paper won't scale either.