Many DCI Team members presented at the Crypto Economics Security Conference: Unitize Online Event July 6-10th, 2020.
View their presentations here
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DCI James Lovejoy and Gert-Jaap Glasbergen presented during this past weeks Crypto Economic Security Conference: Unitize Online Event July 6-10th, 2020. Their Proof-of-Work presentation combines Gert-Jaap’s work on Pool Detective and James’s work on 51% Attacks.
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Gert-Jaap was interviewed by Bitcoin Magazine NL about the new security project “Pool Detective”. Listen to the full podcast to learn more. Podcast is in Dutch.
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Director Neha, Software Developer Gert-Jaap, Phd student Daniel M. (Harvard) and recent MIT DCI MEng Graduate James discuss Proof-of-Work; and the Digital Currency Initiative’s recent projects around Proof-of-Work. Including Monitoring Pool Mining (Gert-Jaap), Double Spend Attacks (Daniel M. and Neha) and 51% Attacks (James).
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Here is the first livestream in a new series from the Digital Currency Initiative. During this episode, meet some of our team and find out more about the DCI and what we do.
Read MoreQuick Take
Bitcoin’s third-ever block halving is set to take place next month
But from a network perspective, what exactly happens?
The cryptocurrency world is abuzz with speculation about the potential impact of next month's bitcoin halving, when for the third time in the network's history, the reward for mining a block will be divided by two.
Much of the discussion revolves around what will happen to the price. But we'll have to wait until after the thing actually happens - around May 12 - to know that. In the meantime, let's explore a different question: What exactly changes under the hood during the halving?
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The United States financial system can be restructured by giving universal direct access to credit risk-free central bank money. In the 10 years since the financial crisis, technological advancements and regulatory tools have laid the foundation for Central Bank Digital Currencies to emerge as this economic resolution. Our paper analyzes similar economic cases and contends that introducing Central Bank Digital Currencies (CBDCs) can improve financial stability without degrading credit availability in the long term. We illustrate this by focusing on similar market shifts, namely in the U.S. student loan market and the New Zealand agribusiness sector. Our analysis showcases that by introducing CBDCs, market participants can subsequently remove certain market subsidies that promote poor risk practices and improper pricing. This subsidy to financial institutions is both explicit in the form of FDIC deposit insurance and implicit in the stipulation of taxpayer funded bailouts that materialized in 2008. We calculate the effect of introducing CBDCs by focusing on historical market examples when similar fundamental market shifts happened. Our conclusion is that CBDCs may diminish credit availability, but this effect is ameliorated as financial stability improves in subsequent years. Accordingly, we recommend a roadmap for rolling out CBDCs in the least disruptive fashion.
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For central bankers, the game changed last summer when Facebook unveiled its proposal for Libra. Many have responded by seriously exploringwhether and how they should issue their own digital money.
Arguably, though, the more fundamental change is more than a decade old. It was Bitcoin that first made it possible to transfer digital value without the need for an intermediary, a model that competes directly with the traditional financial system. The network’s resilience against attackers suggests there is another way of setting up the system.
Last weekend at the MIT Bitcoin Expo held on campus in Cambridge, Massachusetts, I sat down with experts familiar with central banking as well as cryptocurrency. We discussed the practical concerns central bankers should be considering as they begin to design their own digital money systems. One common theme: central bankers have plenty to learn from Bitcoin.
Read MoreMember Company: Boston Consulting Group (BCG)
Project Group: Healthcare Applications
Executive Summary
Over the past decade, significant breakthroughs in DNA sequencing have accelerated our capacity for genetic research and created new disciplines of precision medicine, promising a generation of novel therapies for previously incurable ailments. However, with an influx of vast amounts of genetic data, another challenge arose: the problem of data stewardship and governance. As of today, an individual who has their DNA analyzed through consumer-focused products like 23andMe or Ancestry.com, or through their personal healthcare provider has no promise of knowing where the genetic data goes or how it will be used. This historical lack of transparency has had cascading consequences across the industry- from disincentivizing participation in programs that would benefit from sharing genetic or health data, to driving a profound lack of genetic diversity in clinical trials. We believe that a blockchain tool, leveraging non-fungible tokens, can enable a degree of transparency and traceability to allow individuals to become informed stewards of their own genetic data. By doing so, we strive to build guardrails for privacy and security around the exchange of genetic data, thereby regaining the trust of participants, and encouraging our community to drive a thriving genetic data marketplace for the greater good of society.
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Proponents say payments with a digital dollar would be faster and easier. Opponents say it would be costly and inefficient.
The nature of money is changing, and central banks around the world are debating whether they need to change with it.
As electronic payments take off and private cryptocurrencies such as bitcoin seek to gain traction, governments are exploring whether to issue digital versions of their national currencies that could be used as a universal form of payment in the way physical cash is today. These conversations gained urgency for some last year when Facebook Inc.announced plans to launch a cryptocurrency called libra, sparking concern that one of the world’s most powerful technology firms could become even more powerful by operating its own digital money.
So far, few countries have implemented a digital currency, though China reportedly is close and several countries have done or plan tests. Considering the dollar’s key role in global markets, should the U.S. commit to such a project?
Proponents say a digital dollar managed on a single network would facilitate faster, cheaper payments and protect the Fed’s ability to conduct monetary policy in a changing world. Opponents say Fed-controlled digital currency would be costlier and less efficient than many expect, and it would harm privacy by giving government the ability to track all dollar spending.
Neha Narula, the director of the Digital Currency Initiative at the Massachusetts Institute of Technology’s Media Lab, makes the case for digitizing the U.S. dollar. Lawrence H. White, a professor of economics at George Mason University and a senior fellow of the Cato Institute’s Center for Monetary and Financial Alternatives, argues against.
Read More“In recent years, there has been a growing interest in using internet and mobile technology to increase access to the voting process. At the same time, computer security experts caution that paper ballots are the only secure means of voting.
Now, MIT researchers are raising another concern: They say they have uncovered security vulnerabilities in a mobile voting application that was used during the 2018 midterm elections in West Virginia. Their security analysis of the application, called Voatz, pinpoints a number of weaknesses, including the opportunity for hackers to alter, stop, or expose how an individual user has voted. Additionally, the researchers found that Voatz’s use of a third-party vendor for voter identification and verification poses potential privacy issues for users.”
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“This course is for students wishing to explore blockchain technology's potential use—by entrepreneurs and incumbents—to change the world of money and finance. The course begins with a review of Bitcoin and an understanding of the commercial, technical, and public policy fundamentals of blockchain technology, distributed ledgers, and smart contracts. The class then continues on to current and potential blockchain applications in the financial sector.”
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This paper shows several connections between data structure problems and cryptography against preprocessing attacks. Our results span data structure upper bounds, cryptographic applications, and data structure lower bounds, as summarized next.
First, we apply Fiat–Naor inversion, a technique with cryptographic origins, to obtain a data structure upper bound. In particular, our technique yields a suite of algorithms with space S and (online) time T for a preprocessing version of the N-input 3SUM problem where S3 ·T = O(N6). This disproves a strong conjecture (Goldstein et al., WADS 2017) that there is no data structure that solves this problem for S = N2−δ and T = N1−δ for any constant δ > 0.
Secondly, we show equivalence between lower bounds for a broad class of (static) data struc- ture problems and one-way functions in the random oracle model that resist a very strong form of preprocessing attack. Concretely, given a random function F : [N] → [N] (accessed as an oracle) we show how to compile it into a function GF : [N2] → [N2] which resists S-bit prepro- cessing attacks that run in query time T where ST = O(N2−ε) (assuming a corresponding data structure lower bound on 3SUM). In contrast, a classical result of Hellman tells us that F itself can be more easily inverted, say with N2/3-bit preprocessing in N2/3 time. We also show that much stronger lower bounds follow from the hardness of kSUM. Our results can be equivalently interpreted as security against adversaries that are very non-uniform, or have large auxiliary input, or as security in the face of a powerfully backdoored random oracle.
Thirdly, we give lower bounds for 3SUM which match the best known lower bounds for static data structure problems (Larsen, FOCS 2012). Moreover, we show that our lower bound generalizes to a range of geometric problems, such as three points on a line, polygon containment, and others.
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DCI’s Neha Narula was part of a panel ‘Creating a Credible and Trusted Digital Currency’, Forbes reporter Robert Anzalone covers the story in ‘Crypto Thoughts From Davos: Encouraging, But Beware Unintended Consequences’
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DCI’s Neha Narula was interviewed by CNBC whilst she was participating at the World Economic Forum in Davos. The article titled ‘Calls for a US ‘digital dollar’ rise as China powers ahead with a digital yuan’ and was published on Jan 23rd 2020.
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A zero-knowledge proof or protocol is a cryptographic technique for verifying private data without revealing it in its clear form. In this paper, we evaluate the potential for zero-knowledge distributed ledger technology to alleviate asymmetry of information in the asset-backed securitization market. To frame this inquiry, we conducted market data analyses, a review of prior literature, stakeholder interviews with investors, originators and security issuers and collaboration with blockchain engineers and researchers. We introduce a new system which could enable all market participants in the securitization lifecycle (e.g. investors, rating agencies, regulators and security issuers) to interact on a unique decentralized platform while maintaining the privacy of loan-level data, therefore providing the industry with timely analytics and performance data. Our platform is powered by zkLedger (Narula et al. 2018), a zero-knowledge protocol developed by the MIT Media Lab and the first system that enables participants of a distributed ledger to run publicly verifiable analytics on masked data
Read MoreIntroduction
In a 2019 speech, Bank of England governor Mark Carney said that “Technology has the potential to disrupt the network externalities that prevent the incumbent global reserve currency from being displaced.” Certainly one of the most interesting places where technology is disrupting payments and finance is in cryptocurrencies. Cryptocurrencies have emerged from open source development communities in large part because electronic transaction systems are too expensive and they have not evolved fast enough to keep pace with the demand for retail online digital payments and more sophisticated types of financial transactions. The wide variety of experimentation in cryptocurrencies is causing technologists and central bankers to rethink the interface to money and explore a digital form which can be held by users and companies directly. This could lead to a financial system with a simplified institutional structure, capable of serving the public at a much lower cost. Though there has been much discussion about the policy design for central bank-issued digital currency (CBDC), there are important technical points missing from the conversation: CBDC should not be a direct copy of existing cryptocurrencies with exactly the same design and features but there are things we can learn from their emergence - the usefulness of programmability in money and the importance of preserving user privacy.
Cryptocurrency technology, in some instances, can provide an important feature: Anyone can participate and build applications with financial transactions to a standard, which creates a free-entry market that enables competition. These rules are set and maintained by users of the system, not by a coalition of companies or other large market participants. This is due in large part to the fact that many participate in observing, auditing, and validating the creation of money and the legitimacy of payments by observing a highly replicated audit trail of activities.
The cryptocurrency ecosystem should be viewed as a laboratory where developers are inventing different technologies, monetary policies, governance strategies, and reward systems which are competing. The space is still in its infancy, but make no mistake -- successful ideas from this area will eventually find their way into the more conservative world of fiat digital payments. Libra and other stablecoins are the latest prominent example of these ideas breaking through. There will be more.
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Cash is gradually dying out. Will we ever have a digital alternative that offers the same mix of convenience and freedom?
by Mike Orcutt Jan 3, 2020
Think about the last time you used cash. How much did you spend? What did you buy, and from whom? Was it a one-time thing, or was it something you buy regularly?
Was it legal?
If you’d rather keep all that to yourself, you’re in luck. The person in the store (or on the street corner) may remember your face, but as long as you didn’t reveal any identifying information, there is nothing that links you to the transaction.
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A decentralized internet was hailed as a way to dethrone Twitter and Facebook. But to the tech giants, the idea could unload some of their burdens.
By Nathaniel Popper Dec. 18, 2019. The New York Times.
SAN FRANCISCO — Not so long ago, the technology behind Bitcoin was seen in Silicon Valley as the best hope for challenging the enormous, centralized power of companies like Twitter and Facebook.
Now, in an unexpected twist, the internet giants think that technology could help them solve their many problems.
The chief executive of Twitter, Jack Dorsey, said last week that he hoped to fund the creation of software for social media that, inspired by the design of Bitcoin, would give Twitter less control over how people use the service and shift power toward users and outside programmers.
Read the full article here
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This post is part of CoinDesk's 2019 Year in Review, a collection of 100 op-eds, interviews and takes on the state of blockchain and the world. Gary Gensler is a professor at the MIT Sloan School of Management, Co-Director of MIT’s Fintech@CSAIL and Senior Advisor to the MIT Media Lab Digital Currency Initiative. He was formerly Chairman of the U.S. Commodity Futures Trading Commission, Under Secretary of the Treasury, and a partner at Goldman Sachs.
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