Source: National Cyber Security – Produced By Gregory Evans The mysterious research group Intrusion Truth has unleashed a new series of reports claiming that 13 businesses based in the southern island province of Hainan, China are collectively a front for reputed Chinese state-sponsored hacking group APT40. The alleged front companies all purport to be science and […]
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U.S. and China Announce Agreement on Phase One Trade Deal
On Dec. 13, President Trump announced that the U.S. and China had agreed to a “Phase One” trade deal. Under the agreement, the U.S. will roll back tariffs on Chinese goods in exchange for more U.S. goods purchases and structural reforms from the Chinese side. According to Trump, he will sign the deal on Jan. 15 with Chinese representatives at the White House. If the signing goes as planned, it will represent the U.S. and China’s first agreement to reduce import duties since the two countries began implementing bilateral tariffs in July 2018.
So far, most details of the agreement have not been made public. But as for U.S. commitments, Trump on Dec. 13 already canceled new 15 percent duties scheduled to hit $160 billion of Chinese exports on Dec. 15. Additionally, the Office of the U.S. Trade Representative (USTR) has confirmed that the U.S. will reduce tariffs on $120 billion of China’s exports from 15 percent to 7.5 percent. According to Chinese Vice Commerce Minister Wang Shouwen, the Trump administration will make these cuts in phases, though neither side has specified a timeline. Tariffs of 25 percent will remain, meanwhile, on $250 billion of Chinese goods.
As for China’s commitments, China has already cut tariffs on a slew of agricultural products and commodities. The USTR also reports that China will raise its imports of U.S. goods to $200 billion above 2017 levels—though China has yet to commit to import quantities for specific goods, like agricultural products. China has further pledged to heighten intellectual-property protections, end forced technology transfers and liberalize its financial services; however, the deal does not touch Chinese government subsidies to domestic firms. The deal also includes a process by which the U.S. may impose punitive tariffs if China does not adhere to its promises.
The Phase One deal has handed outsize benefits to U.S. and Chinese tech companies. Technology products (along with other consumer-retail goods) were disproportionately represented among the imports originally scheduled for new tariffs on Dec. 15. U.S. tech companies like Apple that produce in China will no longer see foreign-manufactured goods like phones and computers slapped with tariffs. And as analysts at Morgan Stanley have noted, following the deal, technology companies in China will likely experience the largest valuation increases among Chinese firms. Foreign financial firms may also be winners from the deal. Both sides have represented that, as part of the trade agreement, China will for the first time allow foreign companies to enter its financial sector without a joint venture. (China had already announced in July 2019 that it planned to abolish this joint-venture requirement.) This forthcoming change may also expand financing opportunities for firms raising funds in China.
Business groups in the U.S. have widely praised the deal as a positive step, and U.S. stocks rallied on news of the deal. Some commentators have argued that the Phase One agreement—which had remained in doubt for months—signifies a thaw in U.S.-China tensions and sanguine prospects for future agreements. Chinese negotiators are, reportedly, already attempting to work with the Trump administration in hammering out the next phase of the deal.
Still, reactions in the U.S. to the substance of Trump’s deal have been mixed. Although U.S. officials have touted the deal’s impact on the American economy, commentators have criticized it for resulting in few tangible concessions—particularly on structural reforms—that China had not previously been willing to make. And many remain skeptical that, even with this deal, the two sides will reach further trade agreements before November’s presidential election. Reports also suggest that Chinese leaders consider the deal a huge victory—and one that justifies a hardline approach to future U.S. trade talks.
State Department Steps up Efforts to Block Chinese Tech Imports, But Faces Mounting Opposition
Reporting broke in December that the State Department has, in recent months, attempted to stop American companies from purchasing Chinese technology components. The State Department’s Under Secretary for Economic Growth, Energy, and the Environment Keith Krach has led the initiative, which asks firms to sign a set of principles titled the Global Digital Trust Standard (GDTS). The GDTS would, in effect, commit firms not to buy products from Huawei and possibly other Chinese companies. Krach has reportedly approached thirteen business entities—including telecom carriers AT&T and Verizon, as well as chip manufacturers—about signing the GDTS. None appear to have signed.
The GDTS—by covering U.S. purchases, not sales—represents a more expansive attempt to influence U.S. supply chains than many past government actions against Huawei. But it also builds on recent steps in this direction by the Trump administration. On Nov. 26, the Commerce Department proposed a process for reviewing, and possibly prohibiting, information-technology acquisitions from “foreign adversar[ies].” These measures are widely considered to target Chinese companies like Huawei (although they have yet to take effect). Last month, the Federal Communications Commission (FCC) also labeled Huawei and ZTE national-security threats. This categorization bars purchases of their products through an FCC fund subsidizing rural telecom services.
The State Department’s requests, however, have met significant resistance from U.S. companies. Corporate leaders worry that signing the GDTS will commit them to anticompetitive behavior, exposing them to antitrust lawsuits. Concerned about higher costs and supply-chain disruption, businesses are also increasingly rebuffing Washington’s broader efforts to regulate tech imports, with many pushing back against the Commerce Department’s Nov. 26 purchase-review proposal. Unease about that rule change—and the review process’s complexity—led many trade associations on Dec. 6 to request a two-month extension to the rule’s comment period.
Chinese opposition to U.S. restrictions on Huawei has likewise grown more forceful, which may portend rising tensions on tech issues between the two countries. On Dec. 18, the Chinese state-owned paper China Daily published an editorial condemning U.S. efforts “to put Huawei out of business” as “dangerous” and “nothing but protectionism.” Huawei, meanwhile, has lately tried to market itself to American allies as more faithful than the U.S. to shared western values. And Huawei announced plans in December to sue the FCC for deeming it a national-security threat without due process. This legal challenge may compound U.S. firms’ fears about antitrust lawsuits should they cease importing Huawei goods.
It is not yet clear how the pushback will affect the Trump administration’s import-regulation efforts. Trump has continually ramped up restrictions against Huawei since May 2019, when he placed Huawei on a blacklist—still just partially implemented—that precludes it from purchasing U.S. components. However, there are some signs that regulators are open to tweaking such policies in response to feedback. Throughout November and December, the Commerce Department has issued export licenses to certain companies applying for exceptions from the ban against selling to Huawei.
In Other News
Reports emerged on Dec. 15 that the U.S. expelled two Chinese diplomats last September for suspected espionage after the two officials drove onto a military base in Virginia. At least one of the diplomats, U.S. officials suspect, was an undercover Chinese intelligence officer. The decision represents the first espionage-related expulsion of Chinese diplomats in over thirty years. After reports of the event broke, China denied that the embassy officials engaged in any wrongdoing and urged the U.S. “to correct its mistake.” The expulsions come amidst growing concerns among intelligence agencies worldwide that China is conducting espionage on a “mass scale.” Shortly after reports of the expulsions emerged, separate reporting indicated that a Chinese student had stolen research materials from a lab in Boston as an act of suspected biotechnology espionage.
Beijing last month reprimanded tech giants Tencent and Xiaomi for violating users’ data privacy with certain applications—including Tencent’s instant-messaging app QQ. Specifically, the government alleged that these apps violated national laws against collecting and selling personal data, such as through the use of designs that make it hard for users to delete accounts. In response to the transgressions, China’s Ministry of Industry and Information Technology (MIIT) on Dec. 19 published the names of dozens of problematic apps; it also threatened “punishment” if their problems were not addressed by end-2019. The crackdown gives force to an MIIT campaign announced last November to rein in mobile-app privacy violations, particularly among apps with high user volumes. Still, this campaign contrasts with Beijing’s recent efforts to scale up the government’s own data collection, which includes a Dec. 2 law requiring anyone registering a mobile number to undergo facial-recognition scans. Following the government’s announcement, Tencent issued a public pledge to amend its privacy statements.
On Dec. 8, the Financial Times obtained information that the Chinese government has ordered that all foreign-made hardware and software be removed from state institutions within three years. The substitutions will occur steadily through 2022—30 percent in 2020, 50 percent the next year and 20 percent the final year—and they complement similar moves by the U.S. to restrict Chinese tech imports. Analysts suspect executing the replacement will be difficult, because Chinese substitutes for some foreign products fall well below those foreign products’ levels of sophistication and developer support. China has wanted to remove foreign tech from key government operations since at least 2014, and doing so fits in with its objective of technological self-reliance under its “Made in China 2025” program. Still, the announced three-year timeframe is faster than expected, and the shift may harm some U.S. tech companies, which generate an estimated $150 billion in annual revenue from total sales to China. Some analysts expect, however, that major tech firms have anticipated and prepared for a move such as this.
Commentary
Paul Krugman argues in the New York Times that the “Phase One” trade deal achieves few of Trump’s objectives, while Max Boot contends in the Washington Post the benefits it will bring the U.S. are speculative. Writing for Foreign Policy, Peter E. Harrell predicts that the next phase of U.S.-China trade disputes will center on export and investment controls rather than tariffs. Michael Ivanovitch argues in CNBC that a Phase One deal will do little to end the U.S.-China trade deficit and forestall future trade spats.
Henry Paulson writes in the Washington Post that the U.S. needs to catch up with China on developing 5G technologies. For Project Syndicate, Ngaire Woods questions whether Huawei really poses a greater security threat to the U.S. than companies like Facebook. Yukon Huang and Jeremy Smith discuss for the Carnegie Endowment for International Peace why the U.S. and China should resolve their technology disputes in multilateral forums.
For the New York Times, Ian Johnson examines how the Chinese Communist Party is incorporating traditional Chinese values into its governing strategy, and Roger Cohen explores the origins of political unrest in Hong Kong. In the Diplomat, Remco Zwetsloot and Dahlia Peterson argue that China’s immigration practices hold it back from competing with the U.S. in tech.
For Lawfare, Christopher C. Krebs discusses how the Cybersecurity and Infrastructure Security Agency can tackle U.S. cybersecurity vulnerabilities. Richard Altieri and Benjamin Della Rocca explore potential U.S. executive and legislative responses to Xinjiang internment camps. Tom Wheeler explains how Trump administration policies have set the U.S. back in its competition with China on 5G technologies.
TikTok
secretly transferred user data to China without obtaining consent, according to
a lawsuit filed by a college student in the Northern District of California.
Misty
Hong claimed the viral video service culled off her personal videos and
information, then funneled it to servers in China.
“Allegations that TikTok has been accumulating data about U.S. consumers – including personally identifiable information – and extracting it back to servers in China are unsurprising,” said Ray Walsh, a digital privacy advocate at ProPrivacy. “Despite TikTok’s previous claims that it was not extracting data back to China – a healthy amount of skepticism existed among privacy advocates surrounding this Chinese company’s data practices.”
Calling Big Data a valuable currency that
the service accumulates, Price maintained that “it always seemed highly
probable that the international branch of TikTok would be sending masses of
data back to its masters in China.”
He noted that the services like TikTok aren’t designed “just to profit from advertising revenue within the platform, but also to gain access to valuable data and insights about consumers.” As with all apps developed overseas, “consumers need to be aware of the risks that their data may be extracted and used in accordance with foreign privacy policies and regulations,” Price said. “This means that any data accumulated from U.S. citizens on those platforms could potentially be used to identify, track and profile them” not only now but well into the future.
“The potential that the app is
surreptitiously collecting user content via TikTok – even when users do not
publish those videos to the platform – is extremely concerning and rings very
serious alarm bells,” said Price. “Users ought not to have to worry about draft
videos being hoovered up by the company because if these allegations turn out
to be true TikTok is potentially accumulating all kinds of insights that
consumers believe they are ultimately deciding not to share.”
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Perhaps no one is more involved in turning Ethereum into a new way of doing business than Joe Lubin, an Ethereum cofounder along with Vitalik Buterin and others, and the founder of ConsenSys, a company that largely consists of interconnected startups building every aspect of what they call the Global Computer. After skyrocketing to a leadership position in 2015 in the blockchain world, thanks to the founding of ConsenSys and his willingness to see potential in far-fetched ideas, Lubin and his amorphously-governed company suffered a setback at the end of 2018 when he had to lay off more than 10% of his staff thanks in part to longer than expected time to build the technology, and slower than expected adoption.
Now Lubin says ConsenSys has returned to a state of equilibrium and is slowly starting to hire again. In a rare in-depth interview with Forbes Crypto & Blockchain Advisor, Lubin waxed poetic about his willingness to work with the Chinese government to teach them the benefits of a public blockchain, shared his thoughts on Facebook’s Libra, chatted about blockchain consortium Hyperledger’s largest project to date, and meticulously laid out his master plan for the next phase of Ethereum, which he and others working on the open-source project have dubbed Ethereum 2.0. Lubin’s work could end up laying the foundation for a new world order or prove to be a pipe dream.
Excerpted from Forbes CryptoAsset & Blockchain Advisor.
Forbes: How much of your work is focused on enterprises?
Joe Lubin: ConsenSys or my personal work? Well, my personal work is ConsenSys, so ConsenSys itself is probably 65% focused on public mainnet. But almost everything we do is applicable in private permission context. We really see the distinction falling away increasingly over time. We’ve been saying that for a long time, so that’s been the vision.
I spend a lot of time on the enterprise side in different nations, speaking to different businesses about business blockchain networks that we are standing up in ways that we can build on the public mainnet, or ways that we can link a business blockchain network into another business blockchain network. Such as Komgo—a group of companies using blockchain to streamline trade commodity finance and other applications—and some other network down into the base trust layer for collusion resistance or increased trust levels. I pay lots of attention to Ethereum 2.0. So, we’ve got a lot of people at ConsenSys, and are very close with many of the other groups around the world that are driving that effort.
Forbes: What is Ethereum 2.0?
Lubin: It is the natural extension of the Ethereum 1.0 platform. It will be realized as a separate network, but there will be a smooth evolution from Ethereum 1.0, both in terms of developer experience and in terms of how activity will flow from Ethereum 1.0 directly onto Ethereum 2.0 in the form of moving tokens and having smart contracts across the two systems that speak to one another. Pretty soon after phase zero of Ethereum 2.0 is stood up, the proof-of-stake mechanism for Ethereum 2.0—what we call the beacon chain—will be able to finalize blocks on Ethereum 1.0. So, there will be this cross linkage and a bunch of interdependency early on.
Forbes: Can you give us specifications for Ethereum 2.0?
Lubin: Ethereum 2.0 will be composed of three major phases: phase zero (the beacon chain), phase one where you hang 1,024 different shards off the beacon chain [this will allow transactions to settle in groups instead of on the entire Ethereum blockchain], and phase two where you turn those shards into not just storage but execution environments, just like the smart contract machine systems on Ethereum 1.0.
Phase zero and phase one are not driven by user or developer experience. It’s a bunch of incredibly smart people solving very deep, distributed computing issues. Phase two is very much driven by developer experience. We have a team that’s building something called Quilt, which is focused first on what the users might want to see in a development environment.
There’ll be different kinds of execution environments so Ethereum 2.0 won’t be homogeneous in its execution environment—we’ll build some of the early execution environments essentially, and they will be very pleasant to use because we’re focusing on that early. It’ll enable us to build a much more scalable system in time and enable us to build different kinds of focused execution environments for different kinds of problems. Different architectures are more efficient for different problem domains.
Forbes: Who are the users?
Lubin: Software developers. But we also have many software developers that build products and services, and so their users are actual customers, whether they’re enterprise, or government, or bank, or central bank customers, or whether they’re game players or people working on journalism platforms or music platforms.
Forbes: How is enterprise demand changing things at the ones and zeros level?
Lubin: Enterprise demand is just starting to change things at the ones and the zeros level. Ultimately this is all being built in the context of building out the decentralized worldwide web—evolving web 2 to web 3. That involves public permissionless blockchains and it involves lots of other blockchains that link into those things.
It also involves decentralized storage, bandwidth and heavy compute, among other things. We started with the toughest thing—the public permissionless blockchain, where anybody could attach byzantine environments. We solved that problem in effectively a not very scalable way, but it’s turning out to be remarkably scalable because we can build interesting solutions at layer two. This basic trust foundation so revolutionized trust on the planet, from subjective trust to automated trust, and guaranteed execution of agreements or objective trust upon that layer, that we’re now building what looks like the financial plumbing for the emerging decentralized economy. So, all that stuff is going on while at the same time all these businesses figure, “hey, we have this new trust tool so that we can collaborate much better.”
Projects like PegaSys (formerly Pantheon)—it’s really the only project that spans that whole range where it’s implementing the enterprise specs. It’s an excellent client at the public mainnet level. And it has all the permissionless, or the permissioning systems, and the privacy confidentiality that businesses need. So, we now have this component that’s situated in three really interesting places. It’s situated in the public Ethereum space; it’s situated in the enterprise Ethereum space; and now it’s situated in the Hyperledger space. Now enterprises are driving the evolution of the product.
Forbes: Are you seeing enterprises getting comfortable with the idea of having to spend gas (pricing value required to conduct a transaction or execute a contract on the Ethereum blockchain platform) to take advantage of these decentralized systems?
Lubin: Whenever you build out a revolutionary new technology you don’t focus on ease of use, you focus on demonstrating the principles and showing why it’s revolutionary. The Ethereum public machine has a whole bunch of gears and pulleys and sharp edges exposed, and you have to get in and turn cranks manually, etc.
Paying gas as a user is not a good element if you care about onboarding a whole bunch of users. But if I’m a software developer and I’m releasing a game or any other application, I’d pay a huge amount for infrastructure. And so, somebody’s paying for that. There is the potential for certain use cases for users to pay miners or validators in the future for the infrastructure. Businesses already incur lots of those costs in the form of paying gas.
Forbes: What is the Ethereum gas station network?
Lubin: It’s a tool that’s getting a bunch of usage now, which basically flips things. It makes use of a technology called metatransactions, where you can just interact with a decentralized application (dapp). Anytime anything needs to be sent into the network and gas would have to be paid, the gas station network basically takes care of that. And that would usually be paid so there’d be a bunch of people who set up software to monitor those things and send them in and they would usually be paid by the developers. So, it gets smoothed, and it avoids the scourge of the internet, which is relying on advertising to power all these applications.
Forbes: Five years ago, did you think gas was going to be such a big obstacle to adoption?
Lubin: I think we knew that user experience was problematic. We were looking at long strings of hexadecimal digits, so we knew we had to build the machine before painting it and covering it over with nicely shaped enclosures.
Forbes: Has it been more difficult than you expected?
Lubin: I’m kind of a stunned by how much progress has been made in such a short time. If you look at all the previous massive societal revolutions—mobile phones, the internet itself, the web, cars, electricity—they all took a lot longer. We’re not really ten years into the decentralized web revolution or evolution, we’re more like five years into it. Because bitcoin was a very narrow implementation and smart contracts were really invented about five years ago. And so, it’s astonishing how many big companies, startups and just people care and think it’s going to be important.
Forbes: Can you unpack the business component of reimagining the web on a blockchain?
Lubin: It’s not just on a blockchain; it’s on decentralized protocols. Blockchain is just one of them, but you need other ones like storage and bandwidth. What is the decentralized worldwide web? It’s all the services we care about realized in collaborative networks that we can trust. Because they’re not owned by a single or subset of actors that are controlling the whole thing.
Forbes: How important is the burgeoning network of 5G support going to be?
Lubin: It’s really important. We’re looking into decentralized bandwidth. There’s WiFi Aware, which is a technology that can enable us to link our phones to one another without anybody being able to shut down over pretty sizable distances now. Blockchain networks and tokenization will enable us to build those networks and enable us to share resources and pay each other with different tokens.
Forbes: When you see what’s going on with the global race to 5G and China’s willingness to build a firewall to try to prevent its citizens from using competing cryptocurrencies, where does Ethereum fit into this sociopolitical turmoil?Lubin: It depends how good deep packet inspection gets; it depends how focused places like China are on controlling its digital borders because it can do it if it wants to. It may get more interesting as we have these satellite constellations—OneWeb, SpaceX and a couple others—and as we can do mesh networking, across borders, potentially. Ultimately, I feel like the ideas are so powerful. Essentially the internet woke up so much of the world by just enabling free access to information. I think it’s been complicated, but very largely positive for the planet.
And if you see the potential of a new trust infrastructure and a new collaboration infrastructure and tokenization because you can have digital scarcity—and again, that’s dependent on trust—companies within nations like China are going to start to build on that, and it’s a powerful concept. Lots of people will say, “What if?” and “Why not?” and “Why isn’t this?”
So, I think in terms of getting the ideas out, the ideas are pretty powerful. Ultimately, unless everybody owns decent amounts of the infrastructure on which they live their lives, things will be unstable. So, if we can build a society maybe in the Western world where it’s an ownership society, a stakeholdership society—and proof of stake is interesting, because we will be holding all these tokens that power the networks we live our lives on. You’re going to have to erect some pretty opaque, tall walls to keep that promise out. And unstable societies where a broad swath of the population isn’t benefitting probably won’t last.
Forbes: Years ago, there was this mentality that there was almost no such thing as bad adoption. Like, anybody using anything blockchain or anything crypto was good. Companies that were committing horrendous crimes on the weekends were dropping press releases on the weekdays about how awesome blockchain is for transparency. Are you worried that China could subvert the benefits of blockchain?
Lubin: I would love to help China get expert in Ethereum technology. One reason is if the Belt and Road Initiative [a program trying to connect Asia with Africa and Europe via land and maritime networks] uses one of the weaker technologies and it sort of mandates that those networks be built in that technology, maybe it won’t be as interoperable. But the main idea is that Ethereum is the strongest of the blockchain technologies and it’s a very positive virus to implant in people’s minds.
Forbes: China has made it very clear that it wants to increase transparency and wants to prevent anti-money laundering. It’s saying all the things we’ve been saying for years about what blockchain could do. But when it’s a notoriously oppressive regime talking about it, we start wondering, “How is it going to define money laundering, and what are they going to do with that transparency?”
Lubin: China is a business that writes its own rules and has an enormous customer base—1.4 billion people. That’s a tough economic force to compete with. I do think there’s an instability. I think leaders are constantly terrified of revolution, so they have to keep the people relatively happy at some baseline level.
Forbes: Do you assume that China’s cryptocurrency is going to be interoperable with other cryptocurrencies?
Lubin: I assume it is going to be exactly what Chinese leadership thinks is most beneficial to Chinese leadership. Hopefully that’s also open and we can interoperate with it, but I don’t know. The country could do the calculation and decide there needs to be a firewall around it, or it could do the calculation and decide, “hey, this is an incredible vector for destroying the American reserve currency status,” which is probably my guess.
Forbes: Do you see a world where people might be spending crypto yuan on bread in Nebraska?
Lubin: Have you seen Alipay in American airports?
Forbes: Yes, I have. But isn’t it still U.S. dollars? I think that’s an important difference, isn’t it?
Lubin: It is. But what’s it going to be next year and five years from now? China has the vector and it will do what it can as quickly as it can.
Forbes: Is there a technological development that is not blockchain that is capturing your attention right now?
Lubin: Lots of decentralized stuff is really interesting. Many years ago, I had deep expertise in neural nets or deep learning. It should have been called shallow learning back then. So, I’m paying much more attention to that again. I’ve been in the financial world. I was pretty well-read on finance and economics 10, 15 years ago, and haven’t been paying too much attention there until recently.
In the last year or so it’s become clear that what I’ve been saying for a long time, that our global financial and economic systems are essentially bankrupt, and the central bankers have been kicking the can down the road for a long time, and now that yield curves are flattening we may not have enough dry powder in the central banks to kick the can down the road and this recession could be really problematic. So, I’ve been talking about potential cascading collapses if certain contagions happen.
Forbes: What happened that got your attention to your old career in finance again?
Lubin: We’ve been building and hoping that central bankers could keep kicking the can down the road so that we could build alternative infrastructure—sounder foundations that enable more-sustainable growth on these systems. We’re not there yet; we need more time because the technology isn’t mature enough. Hopefully we get out of this one and it isn’t a horrendous recession; no matter how deep it is, it’ll be called a recession, I think.
What I’ve been paying attention to is the intersection of our ecosystem with the transition from the current economic regime on the planet, and the current monetary regime on the planet, because our monetary systems are end-of-life’ing right now. Facebook’s Libra is an interesting project—not based on who’s going to run it—if it does end up launching. But the idea that we could have cryptocurrency essentially with underlying baskets of currencies or nation-state bonds or commodities—that’s really, really interesting.
Forbes: Going back to the concept of, “there’s no such thing as bad adoption,” do you think this is progress or are you scared about Libra?
Lubin: I don’t mind Libra at all. I don’t think Libra will be implemented because its biggest asset is its biggest liability. Lots of people should be able to sit up there on business blockchain networks with their own currencies. JPMorgan’s doing it, Signature Bank, etc. That’s all good. But linking its 1.3 billion global Facebook citizens through Collibra into all this, is pretty scary.
And essentially giving Mark Zuckerberg control over monetary politics of lots of small nations is concerning. So, I do think that we should have lots of these systems; there should be choice and I think that lots of smaller countries would really benefit from the currency stability and being able to buy stuff frictionlessly across borders.
I think those are great systems and as long as we have a bunch of them, providing choice, providing different underlying baskets, I think that’s going to be our new dominating monetary regime. And I think governments are going to like that because they’re going to be able to sell their debt into those systems.
Forbes: You talked about the central banks kicking the can, is this an improvement, or is it just kicking the can down further?
Lubin: I think it’s an improvement. I think it’s borne of a really broken system that’s end-of-life’ing. But I think conceptually—if implemented well—it’s great. It’s optionality, it’s money. It is kind of dumb that a capitalist society controls the price of money. These systems will behave like businesses and they will succeed or fail based on how they serve their customers.
Forbes: In the time since Libra was announced, we’ve confirmed three interesting central bank concepts: the Libra concept, the People’s Bank of China concept and the idea that Mark Carney floated about a basket of currencies that the central banks willingly participate in. Do you have a favorite?
Lubin: My favorite is optionality. I’d like to see lots of different experiments.
Forbes: Is China’s cryptocurrency a threat to the U.S. dollar?
Lubin: I don’t think so. Lots of things are threats to the U.S. dollar. China and Russia are making lots of effort to do business without using U.S. dollars, and other countries following suit. There are lots of reasons why American influence is shrinking and will probably continue to shrink. That may not be a bad thing but in some ways, it’ll be a bad thing. China’s particular cryptocurrency I don’t think is a major factor.
Forbes: My colleague Jeff Kauflin wrote an article a while ago about ConsenSys and its job situation. How is the slightly more-slender version of ConsenSys, progressing? Are you hiring again yet?
Lubin: We’ve probably hired 100-150 people since December.
Forbes: Since the culling is there a net growth?
Lubin: Pretty steady state. We’re at 1,000.
Forbes: Where is the growth coming from with respect to zero knowledge proof?
Lubin: Our own Pegasus Group is doing some breakthrough work there. You’re aware of Ernst & Young’s activities on that front so it’s doing some cool stuff. And we have a portfolio company that we work really closely with called Aztec, which is building out a whole bunch of zero knowledge components that you’ll be able to stack together and compose in two different kinds of solutions, so like Lego blocks.
Forbes: What do you think about the work currently underway at Hyperledger where a number of giant companies are trying to work together to build the Trusted Compute Framework, which would move computational trust off-chain?
Lubin: That’s an even bigger stew of different technologies. Trusted computing involves hardware and software, and trusted execution environments and secure enclaves. Even within narrow categories like zero knowledge proofs, there are many different approaches, usually varying depending on the setup of the system—whether it’s trusted, or whether there’s one big setup where you have to do it a bunch of times. And how much computation is required to essentially do the encryption, and how much to verify it? It’s a very young technology, and lots of different groups are employing it.
Forbes: How is this going to be done successfully? There’s a lot of different people trying to build the Trusted Compute Framework at the same time. It’s open-source; it’s part of the foundation. It feels like a Frankenstein monster, but it might be beautiful.
Lubin: It’s a Frankenstein monster, just like the internet and the web are Frankenstein monsters. It’ll be built through merit, through lots of different really talented people exploring the solutions base, openly collaborating—not 100% openly—but collaborating a lot. And the best there won’t be one best technology because there will be different technologies that are suited to different use cases. It’s moving fast and if you read or are aware of the cathedral in the bazaar, it’s not being built in a top down, control-like fashion. That wouldn’t be as effective as a whole lot of brilliant ants scurrying around and getting collective work done.
FILE PHOTO: The logo of Apple is seen at a store in Zurich, Switzerland January 3, 2019. REUTERS/Arnd Wiegmann/File Photo
HONG KONG (Reuters) – The Chinese Communist Party’s official newspaper, the People’s Daily, lashed out on Tuesday at Apple Inc for allowing an app on its app store that tracks the movement of police around Hong Kong and is used by protesters in ongoing and sometimes violent demonstrations.
In a commentary the newspaper did not mention the name of the location app, but it decried what it said was Apple’s complicity in helping the protesters and questioned whether Apple was “thinking clearly”.
One such map that is available on the Apple app store, the HKmap.live app, has become a lightning rod on Twitter for criticism and support of the protests. The developer did not immediately respond to a request for comment. On Saturday in a tweet they said that Apple had “many business considerations” but had “make thing(s) right.”
Apple is the latest foreign company to catch heat in relation to the pro-democracy protests in Hong Kong, which have lasted four months.
The National Basketball Association (NBA) and U.S. sports brand Vans also have become embroiled in controversies over the protests.
The piece on the website of the People’s Daily said Apple did not have a sense of right and wrong, and ignored the truth.
Making the App available on Apple’s Hong Kong app Store at this time was “opening the door” to violent protesters in the former British colony.
“Letting poisonous software have its way is a betrayal of the Chinese people’s feelings,” the paper said.
Apple did not respond to a request for a comment.
Reporting by Twinnie Siu in Hong Kong and Stephen Nellis in San Franisco; Editing by Peter Henderson and David Gregorio
Media captionWATCH: Satya Nadella on Microsoft’s work in China
Microsoft does more research and development in China than it does anywhere else outside the United States. But, as US-China relations continue to sour on issues of trade and cyber-security, the decades-long ties Microsoft has in China are coming under close scrutiny.
In an interview with BBC News, Microsoft’s chief executive Satya Nadella has said that despite national security concerns, backing out of China would “hurt more” than it solved.
“A lot of AI research happens in the open, and the world benefits from knowledge being open,” he said.
“That to me is been what’s been true since the Renaissance and the scientific revolution. Therefore, I think, for us to say that we will put barriers on it may in fact hurt more than improve the situation everywhere.”
Microsoft’s first office in China was opened by founder and then-chief executive Bill Gates in 1992. Its main location in Beijing now employs more than 200 scientists and involves over 300 visiting scholars and students. It is currently recruiting for, among other roles, researchers in machine learning.
In April, it was reported by the Financial Times that Microsoft researchers were collaborating with teams at China’s National University of Defence Technology, working on artificial intelligence projects that some outside observers warned could be used for oppressive means.
Speaking to the newspaper, Republican Senator Ted Cruz said: “American companies need to understand that doing business in China carries significant and deepening risk.”
He added: “In addition to being targeted by the Chinese Communist party for espionage, American companies are increasingly at risk of boosting the Chinese Communist party’s human rights atrocities.”
Technology as weapon
Mr Nadella acknowledged that risk.
“We know any technology can be a tool or a weapon,” he told the BBC.
“The question is, how do you ensure that these weapons don’t get created? I think there are multiple mechanisms. The first thing is we, as creators, should start with having a set of ethical design principles to ensure that we’re creating AI that’s fair, that’s secure, that’s private, that’s not biased.”
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Media captionMicrosoft’s CEO Satya Nadella spoke to the BBC in 2017: Judge us on value we add, not tax we pay
He said he felt his company had sufficient control over how the controversial emerging technologies are used, and said the firm had turned down requests in China – and elsewhere – to engage in projects it felt were inappropriate, due to either technical infeasibility or ethical concerns.
“We do have control on who gets to use our technology. And we do have principles. Beyond how we build it, how people use it is something that we control through Terms of Use. And we are constantly evolving the terms of use.
“We also recognise whether it’s in the United States, whether it’s in China, whether it’s in the United Kingdom, they will all have their own legislative processes on what they accept or don’t accept, and we will abide by them.”
‘Leaves me wondering…’
Matt Sheehan, from the Paulson Institute, studies the relationship between California’s technology scene and the Chinese economy. He said Microsoft’s efforts, particularly its Beijing office, have had tremendous impact.
“It dramatically advanced the field, advances that have helped the best American and European AI research labs push further,” he said.
“But those same advances feed into the field of computer vision, a key enabler of China’s surveillance apparatus.”
He cites one particular paper as highlighting the complexity of working with, and within, China. Deep Residual Learning for Image Recognition, published in 2016, was a research paper produced by four Chinese researchers working at Microsoft.
According to Google Scholar, which indexes research papers, their paper was cited more than 25,256 times between 2014-2018 – more than any other paper in any other field of research.
“The lead author now works for a US tech company in California,” said Mr Sheehan, referring to Facebook.
“Two other authors work for a company involved in Chinese surveillance. And the last author is trying to build autonomous vehicles in China.
“What do we make of all that? Honestly, it leaves me – and I think it should leave others – scratching their heads and wondering.”
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WASHINGTON — President Donald Trump on Thursday urged another foreign government to probe former Vice President Joe Biden and his son Hunter, saying the Chinese government should look into Hunter Biden’s involvement with an investment fund that raised money in the country.
“China should start an investigation into the Bidens because what happened in China is just about as bad as what happened with Ukraine,” Trump told reporters outside the White House.
While Trump said he hasn’t asked Chinese President Xi Jinping to investigate the Bidens, the public call mirrors the private behavior on which Democrats are partially basing their impeachment inquiry — using the office of the presidency to press a foreign leader to investigate a political rival.
It is “certainly something we can start thinking about, because I’m sure that President Xi does not like being on that kind of scrutiny, where billions of dollars is taken out of his country by a guy that just got kicked out of the Navy,” Trump said Thursday of asking China to probe the Bidens. “He got kicked out of the Navy, all of the sudden he’s getting billions of dollars. You know what they call that? They call that a payoff.”
The U.S. in the midst of a tense trade war with China. The president, discussing progress on negotiations with Beijing on a possible trade agreement just moments before his remarks about the Bidens, told reporters that “if they don’t do what we want, we have tremendous power.”
Chinese officials will be in Washington next week in another attempt to revive talks, Trump said.
Trump, seeking to expand his corruption accusations against the Bidens beyond Ukraine, has in recent days repeatedly accused Hunter Biden of using a 2013 trip on Air Force Two with his father, then the vice president, to procure $1.5 billion from China for a private equity fund he had started.
Prior to Thursday, Trump had not called for an investigation into the matter. The White House declined to comment on Trump’s remarks.
Despite Trump’s accusations, there has been no evidence of corruption on the part of the former vice president or his son. In a statement, Biden’s deputy campaign manager and communications director, Kate Bedingfield, said the president “is flailing and melting down on national television, desperately clutching for conspiracy theories that have been debunked and dismissed by independent, credible news organizations.”
“As Joe Biden forcefully said last night, the defining characteristic of Donald Trump’s presidency is the ongoing abuse of power,” Bedingfield said. “What Donald Trump just said on the South Lawn of the White House was this election’s equivalent of his infamous ‘Russia, if you’re listening’ moment from 2016 — a grotesque choice of lies over truth and self over the country.”
Trump, during a 2016 campaign rally, encouraged the country to meddle in the 2016 election by trying to access Hillary Clinton’s emails, saying, “Russia, if you’re listening, I hope you’re able to find the 30,000 emails that are missing.”
Special counsel Robert Mueller’s Russia investigation found that within hours of Trump’s invitation, Russian military intelligence initiated a hack against Clinton’s office. Trump and his allies have said he wasn’t serious when he made the comment.
In pushing back on Trump, Biden’s campaign previously pointed to a fact-check from The Washington Post that found Trump’s claims false while tracing the origins of the $1.5 billion figure he has used to a 2018 book by conservative author Peter Schweizer.
In addition, Hunter Biden’s spokesman, George Mesires, told NBC News previously that Hunter Biden wasn’t initially an “owner” of the company and has never gotten paid for serving on the board. He said Hunter Biden didn’t acquire an equity interest in the fund until 2017, after his father had left office.
And when he did, he put in only about $420,000 — a 10 percent interest. That puts the total capitalization of the fund at the time at about $4.2 million — a far cry from the $1.5 billion that Trump has alleged.
Trump also said Thursday that he still wants Ukraine to conduct “a major investigation” into Joe and Hunter Biden.
“I would think that if they were honest about it, they would start a major investigation into the Bidens,” he said, adding, “They should investigate the Bidens.”
House Democrats have launched a formal impeachment inquiry against Trump centered on a July 25 phone call between him and the president of Ukraine during which Trump asked his Ukrainian counterpart to investigate the family of the former vice president, Trump’s possible 2020 opponent. The House is also looking into whether Giuliani’s overtures were proper and whether the White House was using almost $400 million in frozen aid to Ukraine as leverage.
The White House has since released a detailed description of the July call, while the House Intelligence Committee made public a lightly redacted version of the intelligence community whistleblower complaint that brought to light the allegations against Trump. The complaint alleged that Trump, in the July phone call, used the power of his office “to solicit interference from a foreign country” in the 2020 election.
The impeachment inquiry has unleashed a torrent of activity in the House and key cabinet agencies.
House Democrats have so far issued subpoenas for Trump’s personal lawyer Rudy Giuliani as well as for Secretary of State Mike Pompeo for Ukraine-related documents. They have also threatened the White House with subpoenas for Ukraine-related documents. And on Thursday, the Department of Defense said its general counsel had directed all agency offices and leadership to turn over any pertinent information dealing with military funding to Ukraine.
Democrats, meanwhile, immediately excoriated Trump’s latest comments Thursday as “unacceptable” and “indefensible,” suggesting that the president is only strengthening their case for impeachment.
“The president cannot use the power of his office to pressure foreign leaders to investigate his political opponents. His rant this morning reinforces the urgency of our work. America is a Republic, if we can keep it.” House Intelligence Committee Chairman Adam Schiff, D-Calif., said in a tweet.
Rep. Emanuel Cleaver, D-Mo., tweeted: “This is absolutely unacceptable. It’s clear the president understands he’s been caught red-handed and has now moved to normalize this kind of corrupt behavior.”
“GOP must speak out,” he added.
Rep. G.K. Butterfield, D-N.C., also had a message for Republican lawmakers.
“To my Republican colleagues, I implore you to listen to the words that came out of Trumps’ mouth this morning. From the SOUTH LAWN OF THE WHITE HOUSE,” he said on Twitter. “Think about the detrimental impact these actions will have on our democracy and our national security. This is indefensible.”
The remarks also elicited the attention of the top elections official in the U.S., Federal Election Commission Chair Ellen Weintraub, who re-shared a tweet she had posted in June explaining that “it is illegal for any person to solicit, accept, or receive anything of value from a foreign national in connection with a U.S. election.”
Weintraub had initially posted the tweet in June, after Trump said he’d consider taking information on opponents from other countries.
TASHKENT(Sputnik) – China wants to further conduct cybersecurity exercises within the Shanghai Cooperation Organisation (SCO), the Regional Anti-Terrorist Structure of Shanghai Cooperation Organization (RATS) of the SCO said Monday in a statement.
“Chao Shijian noted on the need to continue holding cybersecurity drills within the SCO framework,” RATS said in its statement.
Last week, Yevgeniy Sysoyev, the director of RATS SCO, met with the deputy head of the Information Department of the Chinese Ministry of Public Security, Chao Shijian, on the sidelines of a meeting of experts on fight against cybercrime.
Sysoyev stressed that the second joint cybersecurity drills of the SCO countries held in China in December were successful. The first such exercises were held in December 2015.
The SCO was set up in 2001 by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. In June last year, the members of the organization formally approved the decision to accept India and Pakistan.
Started by the legend that is Dark Tangent (Jeff Moss) DEF CON (spelt like that, i..e two separate words) is, really, the world’s best known “hacker convention” or “hacker conference.” DEF CON is held every year in Las Vegas, Nevada, USA and the first DEF CON took place in June 1993 so it”s also one of the oldest (and therefore original) cybersecurity meetings.
New rules have added to costs and had a big impact on how they do business, survey finds, and tax regime and land acquisition policy are also headaches
Most of the 215 foreign firms polled said the country’s tax regime, land acquisition policy and cybersecurity law were all headaches, according to a white paper and report on the business environment in China released on Thursday.
But of the three areas, it is the new cybersecurity law introduced in June that is causing “mass concerns” among foreign firms because it has greatly increased operating costs and has had a big impact on how business is done in China, said Harley Seyedin, president of AmCham South China.
“It created uncertainties within the investment community and it’s resulting in, at the minimum, postponement of some R&D investment,” Seyedin said.
“The law requires approval … to be obtained for cybersecurity, but it does not tell you where to apply, how long it takes you to apply, how long it takes for the results to come out, and what the process might be in case you want to appeal the decision,” he said. “All of these are vague but it’s going to result in .
D5 Creation