Building the blocks around the smartest cryptocurrency on the market



We’re talking Blockchain – but it began with Bitcoin.

So what is Bitcoin?
Bitcoin is a cryptocurrency and a digital payment system.  Invented by an unknown programmer (or a group of programmers), it was released as open-source software in 2009. There is a market cap with Bitcoin.  The value of an individual Bitcoin has increased substantially during this time, every year more and more merchants and vendors accept bitcoin as payments for goods and services, and millions more unique users are using a cryptocurrency (digital) wallet.

Why is there a worry about Bitcoin?
There are many concerns related to Bitcoin, price volatility, doubts around legal status, tax and (lack of any) regulation, Bitcoin has been notorious in criminal activity, and is well renowned for the role it has in cyber-attacks like Ransomware.  But for believers, Bitcoin has huge upsides, de-centralised thus outside the control of a central authority, privacy, deflationary, low cost to transfer funds across borders, but most it is an attractive “store of value”.

Why is Bitcoin important?
Bitcoin is important because it requires a blockchain.  A blockchain is an undeniably ingenious invention, but since Bitcoin, blockchain has evolved into something greater.  And the main question every person is asking is – what is a blockchain?

So what is a blockchain?
The simplest explanation “Blockchain is to Bitcoin, what the internet is to email. A big electronic system, on top of which you can build applications. Currency is just one.”  Sally Davies, FT Technology Reporter.

How does blockchain work?
A blockchain is a distributed database that is used to maintain a continuously growing list of records, called ‘blocks’.   Each block contains a timestamp and a link to a previous block. A blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. By design, blockchains are inherently resistant to modification of the data. Once recorded, the data in any given block cannot be altered retrospectively without the alteration of all subsequent blocks and a collusion of the network majority.   Functionally, a Blockchain can serve as “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”.

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” Don & Alex Tapscott, authors Blockchain Revolution (2016).

Blockchains are secure by design and are an example of a distributed computing system with high Byzantine fault tolerance.  Decentralised consensus has therefore been achieved with a Blockchain.  This makes Blockchains potentially suitable for the recording of events, medical records and other records management activities, such as Identity Management, transaction processing and documenting provenance.

The entire financial, legal, and record-keeping industries are being disrupted using this decentralised, secure, and inexpensive method. It has therefore caught the eye of the Bank of England plus other large organisations including Microsoft, IBM and Cisco have consequently started to take note of it.

In summary the opportunities are infinite.

People need to understand that “blockchain” is NOT the same thing as “Bitcoin”.

Bitcoin was the first blockchain system designed, but there have been a number of others since then which are very different, designed by different people, often for different purposes. These people are in the business of designing things for use by corporations to operate their businesses to drive a competitive edge. This is no different to what Amicus ITS has been doing for 30 years, problem solving and designing solutions that deliver business value as we look constantly to the horizon at future technologies.

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UK prepares to open its doors to the ‘National Cyber Security Centre’

The new body responsible for the UK’s cyber security which was unveiled by the Chancellor last October has been named and will officially open its doors in London in October 2016.

The National Cyber Security Centre (“NCSC”) will be the pooling point for guidance and communications on cyber security. Historically, this function has been handled by GCHQ, however, as a secret intelligence service, this has been off limits to business resulting in a lack of clarity in this key area of national risk.

The new entity will have one foot in the closed intelligence world and the other in the public and corporate space. The NCSC will work with regulators such as the Bank of England to provide advice to the private sector and with government departments and national infrastructure groups.

In the event of a cyber attack, the liability would still vest with the entity that owns the data, but the NCSC would be the first port of call should another major cyber breach like the TalkTalk incident taking place. Additionally it will be at the fulcrum for setting standards for the financial sector to increase resilience against cyber threats which could impact the UK economy.

In an interview with the BBC, Matthew Hancock, the Minister for the Cabinet Office said, “We need to have a one-stop shop that people inside and outside government can go to”, saying that the NCSC will aim to be the authoritative voice on information security in the UK.

Designed to bring the UK’s cyber expertise into one place, the Board appointments have been announced: Ciaran Martin, currently a senior official at GCHQ, will be the NCSC’s first head and joining him will be Dr Ian Levy, as Technical Director (also from GCHQ).

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All of this follows recent news of the opening (also in October 2016), of a national cyber security academy at Newport in Wales, aimed at training people to fight internet crime. Computer forensics and computer security undergraduates will be trained to work with businesses to identify cyber challenges. If successful, the course will be developed into a full-time cyber security degree. With some companies spending £16m per year to protect themselves online, this couldn’t come sooner for business as cyber crime becomes viperishly more intelligent.

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Bank of England seeks to challenge Bitcoin with its own RSCoin

The Bank of England (BoE) is seeking to take on Bitcoin, the non-regulated peer-to-peer digital currency in use for the last few years (and popular with the underworld in laundering proceeds of crime and a route for ransomware payments to cyber criminals).  Bitcoin, which has made an estimated $5bn (£3.5bn) of Bitcoin transactions operates a “distributed ledger” similar to how central banks operate.  Bitcoin’s limitation however lies in the restriction of its code to 21m Bitcoins and that it can only handle sever transactions per second.

The new digital crypto currency, RSCoin, crafted by a team at University College London for BoE, seeks to create a State controlled digital ledger held by those trusted to be in charge of the nation’s currency but without the limitations of Bitcoin or the add-on charges and middlemen elsewhere in the industry.  Potentially and most controversially, RSCoin has the potential to offer a system whereby ordinary people could hold accounts directly with the Bank of England, thus competing directly with commercial banks.  Ben Broadbent, the BoE’s deputy governor believes that an RSCoin currency would greatly widen the balance sheet of the central bank and allow it to keep better control of the money supply and be better able to respond to crises.

Led by Dr George Danezis, UCL presented their findings at the Network and Distributed System Security Symposium (NDSS) in San Diego recently and suggested that a national pilot could be up and running within 18 months.  “Whoever reacts too slowly to these developments is going to take it on the chin.  They will lose their businesses”

Central banks originally viewed Bitcoin as a rogue currency and a threat to monetary order.  However with heavyweight financial organisations carving big profits from their payment systems Visa, Master and PayPal) and commercial banks and financial institutions making money from the complex manipulation of the money markets (through stocks and shares, foreign exchange dealings, derivatives and hedge funds etc.), this proposal has the potential to cut out gross fat and privileges of the competition.  It could simplify the trading of money and one would hope, offer greater transparency and accountability, much lacking for many years in banking. 

It would be highly disruptive if adopted and create a wholly new era in finance.  One would have to trust that the State’s banker would keep the interests of the nation it serves at the forefront of its modus operandi – and that corporate greed did not play a part.  That, has yet to be seen and proven to an unsurprisingly distrustful public.
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Does your company include “cyber” on the Board agenda every month?

Amicus ITS has long been an exponent of the merit of having an IT expert on a company Board.  Indeed ‘cyber’ has been on Amicus ITS’ own Board’s monthly agenda for the past 18 months.

As we continue to convey this good practice recommendation with our customers, this message is now being endorsed by HM Gov’s Treasury department in a direct appeal to the major UK banks.

As reported in The Sunday Times (240116), Andrew Tyrie, Treasury committee chairman and Tory MP for Chichester, wrote to the major financial institutions over the weekend demanding that they take urgent steps to thwart hacking and data theft.  “Bank IT systems don’t appear to be up to the job”, he said.  “Every few months we have yet another IT failure at a major bank.  These IT weaknesses are exposing millions of people to uncertainty, disruption and sometimes distress.  Businesses suffer too.  We can’t carry on like this”.

The remedy is no magic potion.  The Treasury MP is advocating hard investment in computer systems and that banks answer to a new group within the financial regulator, the Prudential Regulation Authority.

No banks are immune.  Barclays, HSBC, Lloyds and the UK tax payer’s own bank Royal Bank of Scotland (RBS) have all suffered outtages.  Most recently, HSBC suffered a two day failure in its online banking services in January 2016. This follows last August’s dropout when a glitch prevented salaries being paid ahead of the August Bank Holiday.  Other banking failures have included mortgage and pension payments. RBS which has experienced many problems was fined £56 million in 2015 for an IT glitch in 2012 that left millions of customers unable to access their accounts.

The Deputy Governor of the Bank of England, Andrew Bailey is expected to head up a new specialist IT unit within the Bank of England’s Prudential Regulation Authority to ‘ensure lendors are investing enough in their systems’.  We wait to see whether this specialist financial regulator post has the teeth and influence to create the necessary change and improvements required – and soon.  If our banking blog of 31st January 2014 is anything to go by, it could be a very long wait.  Could this MPs plea be one of hope more than expectation?

Irrespective of business sector, it is a timely reminder for companies not to put off updating infrastructures or reinforcing vital firewalls by holding on to unspent, shored up profits post recession.  In our technically challenging world, businesses cannot afford NOT to maintain and future-protect their IT systems, let alone ignore recommendations to invest in protecting against increasingly sophisticated and cynical cyber threats facing every organisation.
• 80% of cyber attacks in 2014 were preventable (source:   Ponemon Institute)
• Only 21% of companies say their Board gets comprehensive information about cyber threat*.
• Only 17% of Board members believe they have a full understanding of the risks*.

Action – do a cyber health check review of your company after today:

• Re-evaluate the crown jewels of YOUR organisation (key information and data assets)
• Review risk from 3rd party suppliers (get into active compliance).
• Be pro-active and transparent about risk – your customers will thank you.
• Arrange for a cyber threat ‘pen test’ and get in shape for 2016.

In the constantly evolving world of cyber security, the wise understand that there is no panacea against cyber attack, it is just a matter of when – however, those best armed against the enemy will be the ones best prepared for attack, understanding and prompt response.