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Nick Weaver on Regulating Cryptocurrency

Nicholas Weaver wrote an excellent paper on the problems of cryptocurrencies and the need to regulate the space—with all existing regulations. His conclusion:

Regulators, especially regulators in the United States, often fear accusations of stifling innovation. As such, the cryptocurrency space has grown over the past decade with very little regulatory oversight.

But fortunately for regulators, there is no actual innovation to stifle. Cryptocurrencies cannot revolutionize payments or finance, as the basic nature of all cryptocurrencies render them fundamentally unsuitable to revolutionize our financial system—which, by the way, already has decades of successful experience with digital payments and electronic money. The supposedly “decentralized” and “trustless” cryptocurrency systems, both technically and socially, fail to provide meaningful benefits to society—and indeed, necessarily also fail in their foundational claims of decentralization and trustlessness.

When regulating cryptocurrencies, the best starting point is history. Regulating various tokens is best done through the existing securities law framework, an area where the US has a near century of well-established law. It starts with regulating the issuance of new cryptocurrency tokens and related securities. This should substantially reduce the number of fraudulent offerings.

Similarly, active regulation of the cryptocurrency exchanges should offer substantial benefits, including eliminating significant consumer risk, blocking key money-laundering channels, and overall producing a far more regulated and far less manipulated market.

Finally, the stablecoins need basic regulation as money transmitters. Unless action is taken they risk becoming substantial conduits for money laundering, but requiring them to treat all users as customers should prevent this risk from developing further.

Read the whole thing.

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Posted on March 3, 2023 at 10:58 AM • View Comments

Side-Channel Attack against CRYSTALS-Kyber

CRYSTALS-Kyber is one of the public-key algorithms currently recommended by NIST as part of its post-quantum cryptography standardization process.

Researchers have just published a side-channel attack—using power consumption—against an implementation of the algorithm that was supposed to be resistant against that sort of attack.

The algorithm is not “broken” or “cracked”—despite headlines to the contrary—this is just a side-channel attack. What makes this work really interesting is that the researchers used a machine-learning model to train the system to exploit the side channel.

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Posted on February 28, 2023 at 7:19 AM • View Comments

Banning TikTok

Congress is currently debating bills that would ban TikTok in the United States. We are here as technologists to tell you that this is a terrible idea and the side effects would be intolerable. Details matter. There are several ways Congress might ban TikTok, each with different efficacies and side effects. In the end, all the effective ones would destroy the free Internet as we know it.

There’s no doubt that TikTok and ByteDance, the company that owns it, are shady. They, like most large corporations in China, operate at the pleasure of the Chinese government. They collect extreme levels of information about users. But they’re not alone: Many apps you use do the same, including Facebook and Instagram, along with seemingly innocuous apps that have no need for the data. Your data is bought and sold by data brokers you’ve never heard of who have few scruples about where the data ends up. They have digital dossiers on most people in the United States.

If we want to address the real problem, we need to enact serious privacy laws, not security theater, to stop our data from being collected, analyzed, and sold—by anyone. Such laws would protect us in the long term, and not just from the app of the week. They would also prevent data breaches and ransomware attacks from spilling our data out into the digital underworld, including hacker message boards and chat servers, hostile state actors, and outside hacker groups. And, most importantly, they would be compatible with our bedrock values of free speech and commerce, which Congress’s current strategies are not.

At best, the TikTok ban considered by Congress would be ineffective; at worst, a ban would force us to either adopt China’s censorship technology or create our own equivalent. The simplest approach, advocated by some in Congress, would be to ban the TikTok app from the Apple and Google app stores. This would immediately stop new updates for current users and prevent new users from signing up. To be clear, this would not reach into phones and remove the app. Nor would it prevent Americans from installing TikTok on their phones; they would still be able to get it from sites outside of the United States. Android users have long been able to use alternative app repositories. Apple maintains a tighter control over what apps are allowed on its phones, so users would have to “jailbreak”—or manually remove restrictions from—their devices to install TikTok.

Even if app access were no longer an option, TikTok would still be available more broadly. It is currently, and would still be, accessible from browsers, whether on a phone or a laptop. As long as the TikTok website is hosted on servers outside of the United States, the ban would not affect browser access.

Alternatively, Congress might take a financial approach and ban US companies from doing business with ByteDance. Then-President Donald Trump tried this in 2020, but it was blocked by the courts and rescinded by President Joe Biden a year later. This would shut off access to TikTok in app stores and also cut ByteDance off from the resources it needs to run TikTok. US cloud-computing and content-distribution networks would no longer distribute TikTok videos, collect user data, or run analytics. US advertisers—and this is critical—could no longer fork over dollars to ByteDance in the hopes of getting a few seconds of a user’s attention. TikTok, for all practical purposes, would cease to be a business in the United States.

But Americans would still be able to access TikTok through the loopholes discussed above. And they will: TikTok is one of the most popular apps ever made; about 70% of young people use it. There would be enormous demand for workarounds. ByteDance could choose to move its US-centric services right over the border to Canada, still within reach of American users. Videos would load slightly slower, but for today’s TikTok users, it would probably be acceptable. Without US advertisers ByteDance wouldn’t make much money, but it has operated at a loss for many years, so this wouldn’t be its death knell.

Finally, an even more restrictive approach Congress might take is actually the most dangerous: dangerous to Americans, not to TikTok. Congress might ban the use of TikTok by anyone in the United States. The Trump executive order would likely have had this effect, were it allowed to take effect. It required that US companies not engage in any sort of transaction with TikTok and prohibited circumventing the ban. . If the same restrictions were enacted by Congress instead, such a policy would leave business or technical implementation details to US companies, enforced through a variety of law enforcement agencies.

This would be an enormous change in how the Internet works in the United States. Unlike authoritarian states such as China, the US has a free, uncensored Internet. We have no technical ability to ban sites the government doesn’t like. Ironically, a blanket ban on the use of TikTok would necessitate a national firewall, like the one China currently has, to spy on and censor Americans’ access to the Internet. Or, at the least, authoritarian government powers like India’s, which could force Internet service providers to censor Internet traffic. Worse still, the main vendors of this censorship technology are in those authoritarian states. China, for example, sells its firewall technology to other censorship-loving autocracies such as Iran and Cuba.

All of these proposed solutions raise constitutional issues as well. The First Amendment protects speech and assembly. For example, the recently introduced Buck-Hawley bill, which instructs the president to use emergency powers to ban TikTok, might threaten separation of powers and may be relying on the same mechanisms used by Trump and stopped by the court. (Those specific emergency powers, provided by the International Emergency Economic Powers Act, have a specific exemption for communications services.) And individual states trying to beat Congress to the punch in regulating TikTok or social media generally might violate the Constitution’s Commerce Clause—which restricts individual states from regulating interstate commerce—in doing so.

Right now, there’s nothing to stop Americans’ data from ending up overseas. We’ve seen plenty of instances—from Zoom to Clubhouse to others—where data about Americans collected by US companies ends up in China, not by accident but because of how those companies managed their data. And the Chinese government regularly steals data from US organizations for its own use: Equifax, Marriott Hotels, and the Office of Personnel Management are examples.

If we want to get serious about protecting national security, we have to get serious about data privacy. Today, data surveillance is the business model of the Internet. Our personal lives have turned into data; it’s not possible to block it at our national borders. Our data has no nationality, no cost to copy, and, currently, little legal protection. Like water, it finds every crack and flows to every low place. TikTok won’t be the last app or service from abroad that becomes popular, and it is distressingly ordinary in terms of how much it spies on us. Personal privacy is now a matter of national security. That needs to be part of any debate about banning TikTok.

This essay was written with Barath Raghavan, and previously appeared in Foreign Policy.

EDITED TO ADD (3/13): Glenn Gerstell, former general counsel of the NSA, has similar things to say.

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Posted on February 27, 2023 at 7:06 AM • View Comments

Putting Undetectable Backdoors in Machine Learning Models

This is really interesting research from a few months ago:

Abstract: Given the computational cost and technical expertise required to train machine learning models, users may delegate the task of learning to a service provider. Delegation of learning has clear benefits, and at the same time raises serious concerns of trust. This work studies possible abuses of power by untrusted learners.We show how a malicious learner can plant an undetectable backdoor into a classifier. On the surface, such a backdoored classifier behaves normally, but in reality, the learner maintains a mechanism for changing the classification of any input, with only a slight perturbation. Importantly, without the appropriate “backdoor key,” the mechanism is hidden and cannot be detected by any computationally-bounded observer. We demonstrate two frameworks for planting undetectable backdoors, with incomparable guarantees.

First, we show how to plant a backdoor in any model, using digital signature schemes. The construction guarantees that given query access to the original model and the backdoored version, it is computationally infeasible to find even a single input where they differ. This property implies that the backdoored model has generalization error comparable with the original model. Moreover, even if the distinguisher can request backdoored inputs of its choice, they cannot backdoor a new input­a property we call non-replicability.

Second, we demonstrate how to insert undetectable backdoors in models trained using the Random Fourier Features (RFF) learning paradigm (Rahimi, Recht; NeurIPS 2007). In this construction, undetectability holds against powerful white-box distinguishers: given a complete description of the network and the training data, no efficient distinguisher can guess whether the model is “clean” or contains a backdoor. The backdooring algorithm executes the RFF algorithm faithfully on the given training data, tampering only with its random coins. We prove this strong guarantee under the hardness of the Continuous Learning With Errors problem (Bruna, Regev, Song, Tang; STOC 2021). We show a similar white-box undetectable backdoor for random ReLU networks based on the hardness of Sparse PCA (Berthet, Rigollet; COLT 2013).

Our construction of undetectable backdoors also sheds light on the related issue of robustness to adversarial examples. In particular, by constructing undetectable backdoor for an “adversarially-robust” learning algorithm, we can produce a classifier that is indistinguishable from a robust classifier, but where every input has an adversarial example! In this way, the existence of undetectable backdoors represent a significant theoretical roadblock to certifying adversarial robustness.

Turns out that securing ML systems is really hard.

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Posted on February 24, 2023 at 7:34 AM • View Comments

Cyberwar Lessons from the War in Ukraine

The Aspen Institute has published a good analysis of the successes, failures, and absences of cyberattacks as part of the current war in Ukraine: “The Cyber Defense Assistance Imperative ­ Lessons from Ukraine.”

Its conclusion:

Cyber defense assistance in Ukraine is working. The Ukrainian government and Ukrainian critical infrastructure organizations have better defended themselves and achieved higher levels of resiliency due to the efforts of CDAC and many others. But this is not the end of the road—the ability to provide cyber defense assistance will be important in the future. As a result, it is timely to assess how to provide organized, effective cyber defense assistance to safeguard the post-war order from potential aggressors.

The conflict in Ukraine is resetting the table across the globe for geopolitics and international security. The US and its allies have an imperative to strengthen the capabilities necessary to deter and respond to aggression that is ever more present in cyberspace. Lessons learned from the ad hoc conduct of cyber defense assistance in Ukraine can be institutionalized and scaled to provide new approaches and tools for preventing and managing cyber conflicts going forward.

I am often asked why where weren’t more successful cyberattacks by Russia against Ukraine. I generally give four reasons: (1) Cyberattacks are more effective in the “grey zone” between peace and war, and there are better alternatives once the shooting and bombing starts. (2) Setting these attacks up takes time, and Putin was secretive about his plans. (3) Putin was concerned about attacks spilling outside the war zone, and affecting other countries. (4) Ukrainian defenses were good, aided by other countries and companies. This paper gives a fifth reason: they were technically successful, but keeping them out of the news made them operationally unsuccessful.

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Posted on February 23, 2023 at 7:27 AM • View Comments

A Device to Turn Traffic Lights Green

Here’s a story about a hacker who reprogrammed a device called “Flipper Zero” to mimic Opticom transmitters—to turn traffic lights in his path green.

As mentioned earlier, the Flipper Zero has a built-in sub-GHz radio that lets the device receive data (or transmit it, with the right firmware in approved regions) on the same wireless frequencies as keyfobs and other devices. Most traffic preemption devices intended for emergency traffic redirection don’t actually transmit signals over RF. Instead, they use optical technology to beam infrared light from vehicles to static receivers mounted on traffic light poles.

Perhaps the most well-known branding for these types of devices is called Opticom. Essentially, the tech works by detecting a specific pattern of infrared light emitted by the Mobile Infrared Transmitter (MIRT) installed in a police car, fire truck, or ambulance when the MIRT is switched on. When the receiver detects the light, the traffic system then initiates a signal change as the emergency vehicle approaches an intersection, safely redirecting the traffic flow so that the emergency vehicle can pass through the intersection as if it were regular traffic and potentially avoid a collision.

This seems easy to do, but it’s also very illegal. It’s called “impersonating an emergency vehicle,” and it comes with hefty penalties if you’re caught.

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Posted on February 22, 2023 at 7:30 AM • View Comments

The Insecurity of Photo Cropping

The Intercept has a long article on the insecurity of photo cropping:

One of the hazards lies in the fact that, for some of the programs, downstream crop reversals are possible for viewers or readers of the document, not just the file’s creators or editors. Official instruction manuals, help pages, and promotional materials may mention that cropping is reversible, but this documentation at times fails to note that these operations are reversible by any viewers of a given image or document.

[…]

Uncropped versions of images can be preserved not just in Office apps, but also in a file’s own metadata. A photograph taken with a modern digital camera contains all types of metadata. Many image files record text-based metadata such as the camera make and model or the GPS coordinates at which the image was captured. Some photos also include binary data such as a thumbnail version of the original photo that may persist in the file’s metadata even after the photo has been edited in an image editor.

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Posted on February 21, 2023 at 7:14 AM • View Comments

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Sidebar photo of Bruce Schneier by Joe MacInnis.