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Use blockchain model to cut small firms’ costs and empower citizens

MD Staff

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Applying the “blockchain” model to areas like energy use, supply chains and governance would cut costs for firms and empower citizens, said the Industry Committee.

Blockchain transactions are recorded by multiple users, rather than by paid – and often costly – intermediaries. The model is currently best known for underpinning the functioning of digital currencies, such as Bitcoin.

The committee approved on Wednesday recommendations on how to apply the blockchain model elsewhere, so as to cut intermediation costs for small firms, empower citizens and enable the EU to become a global leader in this field.

It is not all about Bitcoin

Citizens could use blockchains to gain full control of their own data and decide what to share, and small firms and innovative start-ups could use them to cut intermediation costs and ensure that transactions are executed efficiently, the approved text says.

MEPs advocate applying the blockchain model to areas such as energy consumption, health care, supply chains, transport, finance and the creative industries.

For example, the model could help to:

  • monitor the origin of goods, offering greater certainty that, e.g., diamonds are ethically sourced, clothes are not made in sweatshops and a bottle of champagne comes from Champagne,
  • “democratize” the energy market, by enabling households that produce energy to exchange and consume it without the need to pay an intermediary agency, and
  • create records such as land registries, birth certificates and business licences with less dependence upon lawyers, notaries and government officials.

Getting blockchain rules right

Industry Committee MEPs call on the EU Commission to propose a regulatory approach designed to promote different uses of blockchains and other Distributed ledger technologies (DLTs) that is innovation-friendly and technology neutral.

To ensure the sector is competitive, MEPs also ask for the post-2020 EU long-term budget (Multiannual Financial Framework – MFF, currently under negotiation) to include funding for blockchain-based research and projects.

Background

Blockchain-based transactions create fast, cheap and secure public records and can be also used for many non-financial tasks, such as casting votes in elections or proving that a document existed at a specific time. Blockchains are particularly well suited to situations where it is necessary to know ownership histories.

They also present opportunities in all kinds of public services such as health and welfare payments and, at the frontier of blockchain development, are self-executing contracts paving the way for companies that run themselves without human intervention.

Blockchain – How does it work? 

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Technological Superiority at the Heart of China-US Confrontation

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The US defense and technology sectors have become genuinely worried about Chinese significant strides in the technological sphere. Various reports have over the past couple of weeks stated that the Chinese military and technology sectors are close to achieving parity with the US.

One such report, published several days ago by the Center for New America Security, stated that China now “appears increasingly close to achieving technological parity with US operational systems and has a plan to achieve technological superiority.”

In a way, the current confrontation between the US and China fits into the biggest struggle in history: a battle between sea and land peoples. China is more of a continental power than a sea one, while the US is clearly an oceanic country. The US, like its historical predecessors, be they ancient Greeks, medieval Venetian merchants, or British and French seafarers in the 19th century, has so far successfully managed to limit Eurasian powers from rising to a prime position in the major world continent.

But with China it is different. One simple example suffices to state a surprising development. Since about 1885, the United States has not had to face a competitor or even a group of competitors with a combined Gross Domestic Product (GDP) larger than its own. China surpassed the United States in purchasing power parity in 2014 and is on track to have the world’s largest GDP in absolute terms by 2030. In comparison, America’s Cold War adversary, the Soviet Union, was bogged down by a truly unsustainable economic system that ultimately crumbled under pressure in the 1980s. At the height of the Soviet power, its GDP was roughly 40% the size of the United States’.

As said, a guarantee to win the Cold War was the US’ technological and economic preeminence. This is still at the heart of today’s global competition. Both Washington and Beijing understand that bilateral trade issues are in fact disguised by a deeper rivalry which opens up in the technology and innovation sector.

It has always been the case that sea powers possessed much fewer human resources, but attenuated this problem with much larger technological advances in comparison with continental powers. What is worrying for the US, and this constitutes a fundamental shift in global history, is China’s ability as a land power not only to confront the Americans with a larger population pool, but also with a highly competitive technological sector.

Several moves made by the Chinese government in the past week show China’s massive technological prowess. According to state media, Beijing is allegedly creating a system to protect its technology. Exactly what this system is, is not clear, but it was suggested that the system will build a strong firewall to strengthen the nation’s ability to innovate and to accelerate the development of key technologies.

The Chinese also announced that they, like the Americans are considering restricting export of Chinese technologies abroad, primarily to the US. This follows similar US moves to restrict sales to Huawei Technologies and other Chinese tech firms on national security grounds.

Thus, there are major concerns as to how the US would be able to offset the Chinese geopolitical challenge. There has always been a simple understanding in the US ruling circles, and among strategists, that it is America’s technological edge which gives it fundamental superiority. If this is no longer the case, then the very foundation of the US grand strategy is at stake. US general Paul J. Selva, Vice Chairman of the Joint Chiefs of Staff, has warned that the Chinese military could reach technological parity with the United States in the early 2020s and outpace the Pentagon in the 2030s, if the US military doesn’t respond to the challenge.

The course is set for future global instability, where the Americans will be more worried and the Chinese more assertive in pursuing their goals. This does not necessarily mean that a military confrontation would ensue, but it is highly likely that both states might end up investing billions, if not trillions, to develop future technologies.

Author’s note: first published in Georgia Today

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The Huawei affair

Giancarlo Elia Valori

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As the experts of the sector say, all the advanced communication lines and networks are “non-deterministic”.

 This means that, when built and completed, they are a whole that is greater than the sum of its parts and is not predictable in its results, given the functions of the parts taken separately.

 The complication of the Web is related to the number of the parts composing it and to the number of relations, namely “nodes”, which are present in the elements that make it up.

  This is not a phenomenon that can be corrected or controlled. It is a purely mathematical and inevitable effect of the Web and of the interaction between its nodes.

 The Communication Assistance for the Law Enforcement Act (CALEA) is a US regulation obliging those who maintain the Networks to keep sound security mechanisms that are defined – together with those who produce them –  in specific FBI directories.

 Nevertheless, there is much talk about the relationship – which is, indeed, non-existent – between the Chinese intelligence services and Huawei.

 According to CALEA, each information network must have a control system – hence a system to check the data passing through the network, so as to know – at any time – the data running on the specific Network to be controlled.

 In other words – and with harsh clarity –  it is a matter of allowing interceptions, according to the US law.

 Therefore, from the privacy viewpoint, the US law does not impose different and better behaviours than those of which Huawei is accused.

 Recently the UK-based Huawei Cyber Security Evaluation Centre has submitted its fifth annual report.

 It has clarified that – as in any Networks – the source code  is extremely complex and “long”, written in a language that is naturally “insecure and unsafe”, which can be manipulated by all those who can reach the source code since the aforementioned level of complexity is such that it does not allow any security check. Neither stable nor temporary.

 Hence whoever could inspect the source code of any telephone network or world wide web producer could never determine whether it is devoid of bugs or original elements, or of malicious insertions by the producer or others, and could not even trace its origin.

 Therefore, every time the source code is reconstructed, it produces something different compared to the previous version. It is a direct function of the complexity of the code itself.

 This means that we are never sure that the code that has succeeded the initial check is exactly the one that “works” in the next network.

 Hence data security risks are not and cannot be specific to Huawei alone, but are inherently common to all network builders and to their primary and standard software. Every  manufacturer’s check inserts new data and new unpredictable effects.

 Therefore the pure network technique does not matter much and, in any case, the security problem, which is always relative, applies to everyone.

 Hence the questions we must ask ourselves are eminently political, i.d. how long can Huawei withstand pressure from the Chinese government or to what extent Huawei itself intends to support the efforts of Chinese security agencies.

 It is unlikely that the Chinese intelligence services want to undermine or restrict the global reach of a global and Chinese company, which is essential for the economic development of the country, by trivially putting it in the service of its networks. It is certainly not worth it.

 Moreover, Huawei has developed its 5G model for at least ten years and it has contributed to the definition of the 5G standard globally.

 The Chinese research into the 5G started in 2009 and Huawei is second only to Samsung for number of standard essential patents (SEPs) and has the highest global level of 5G evolution in various areas of use. There are really no credible competitors for Huawei – hence the  pseudo-arguments on security or Huawei’s relations with the Chinese intelligence services are used.

 Too trivial and too dangerous. If anything, the true goal of the Chinese intelligence services is precisely to support Huawei’s image as an impartial and global operator, certainly not as a tool for its operations.

 You cannot understand the Chinese intelligence services at all – which are not childish in their approach – if you assume they behave like this.

It is rather known to all global network and IT operators that five years ago the National Security Agency (NSA) intercepted CISCO’s hardware and also infiltrated and paid  RSA – the company processing numerical codes for the global market – to release manipulated cryptology standards, in addition to forcing some American companies, including Yahoo!, to collaborate in the global espionage organized by US agencies.

 Precisely what of which Huawei is accused.

 Who owns Huawei?

 100% of it is owned by a holding company, 1% of which is directly owned by Ren Zhengfei, the founder of the company.

 The remaining 99% of Huawei is owned by a “union committee” of all employees. The employees’ shares are, in effect, normal contractual rights for profit  distribution.

 Moreover, the purchase of the Huawei 5G network is particularly interesting from the price viewpoint, which could even offset the unlikely damage of a leak – possibly  random – on a node of the Network.

 A leak that obviously anyone can put in place – even using the Huawei network, without being part of the company.

 Obviously you can also buy the 5G networks produced by Ericsson or Nokia.

 These networks are definitely more expensive, less negatively affected by “external elements” (but is it true, considering that anyone can manipulate a network?) and created by less “dangerous” States – if we see them in a simplistic way – than China, which is currently the monstrum of the Western intelligence services that are now reduced to the minimum, including the US ones.

 With specific reference to the relationship between 4G and 5G, it should be noted that, for 10 years, there is an average increase by 64 times in operational capacity for each system that arrives on the market.

 The 4G is planned to run until 2023, but the 5G will increase the data processing power by as many as 5,000 times compared to the current 4G.

 Nowadays, however, also the 4G has reached the “Shannon limit”, that is the maximum limit of theoretical data transfer on a network, given a predetermined “noise” level within the network itself.

 However, the current 5G – namely Huawei’s – can always acquire new additional frequencies, which allow to use more channels, even simultaneously.

 Nevertheless it is much more sensitive to the 4G rain.

 The second advance of the 5G compared to the 4G network is the fact that the transmission cells have advanced antennas of different design compared to the current ones, capable of optimally managing different networks, even simultaneously.

 Furthermore China is much more internationalized in the IT and Network sector than we may think.

 Chengdu, the Chinese city with the highest density of “intel” companies, currently hosts 16,000 companies in the IT sector, including 820 ones fully owned by foreigners, in addition to Huawei’s primary competitors: Cisco, Ericsson, Microsoft, etc.

 Nokia-Siemens has 14 joint-ventures and directly-owned factories in China. Alcatel-Lucent has its largest factory in China. Ericsson’s largest distribution centre in China is the point of reference for the whole network of the Swedish company in the world. Cisco has some Research & Development centres in China, but also 25% of all Cisco production is provided by Chinese factories.

 The various quality controls, which in Huawei focus  explicitly on the ban and detection of backdoors, i.e.  hidden or secret ways to bypass normal authentication or encryption in computer operating system, which are controlled systematically, are managed – also financially –  by companies known throughout the global market, such as Price Waterhouse Coopers for internal finance and accounting, IBM Consulting for IT technologies and many others. Hence how can we think that a company like Huawei, with this type of relations, controls and checks, is so “impenetrable”, as some Western media report?

 Hence, apart from the rumors spread by mass media, what are the real reasons why, according to British intelligence documents, Huawei should not spread its far more cost-effective and functional 5G than the others in the West?

a) Huawei is the result of the Chinese “political ecosystem”. Well, what is the problem? How many Western companies work in China? A huge number and they all operate on the basis of local laws and China’s economic and political system. It is a hollow and generic argument.

b) According to its professional detractors, Huawei is the result of the Civilian-Military merger. However, the same  principle applies also to the USA. Certainly there are CPC committees in 11 of the most technologically advanced companies in China. Nevertheless, as many studies show, including Western ones, this does not automatically transfer the expanding civilian technologies to the Chinese military system.

c) In 2010, only less than 1% of hi-tech civilian companies  were connected to defence-related activities. Certainly, as happens everywhere, the connection between civilian and military activities is at the origin of Xi Jinping’s plans, namely the Made in China 2025 and the Next Generation Artificial Intelligence Plan. President Xi has also created the Central Military Commission for Integrated Military and Civilian Development. However, these are specific projects and predetermined development lines – not for the  immediate use of civilian companies’ technology state of the art in military ones.

d) The Chinese power, however, has always used – and will continue to do so –  market forces to reform the old State-owned companies. In fact, this is the real current goal of Chinese power in the civilian-military relationship. This is also the reason why the big global Chinese companies are left free to float and fluctuate in the world market, instead of acting as retrievers for small and minor secrets, which the Chinese intelligence services can know anyway. Indeed, some analyses by the Chinese government itself tell us that, if the public business system does not change rapidly, most of the advanced private companies in China will de facto be cut out from the defence economy and its updating process.

e) How can we also think that a country like China manipulates one of its major companies, namely Huawei, to gather confidential information? The secrets, if any, are concepts, projects and sets of news, not the talk of some Presidents or some Ministers’ phone calls to their  lovers. This is at most pink press, stuff for gossip magazines we can find by hairdressers. It is never intelligence. Obviously,  for many Western countries, small personal data has become the substitute for sound strategic thinking, as if the defamation of a leader were the primary goal of an agency.

f) Again according to the detractors of its 5G leadership, Huawei is supposed to be subject to the 2017 Chinese Intelligence Law. This is a rule that allows, in principle, State control over foreign individuals and companies. What do Western intelligence services do differently instead? Not much, I think. Indeed, I am fairly certain about it.

g) The 2017 law also allows the operation of the Chinese intelligence services inside and outside China. Hence, what is wrong with it? What do we do differently? Obviously, in China’s legislation, it is also a matter of following and controlling the internal opposition. But, again, what do Western intelligence services do differently? Do they distribute snacks? Indeed, here is the connection between the various oppositions inside China and their use of, or even connection with, some Western intelligence agencies.

h) Furthermore, Western sources and media also state that the aforementioned Huawei’s structure is “opaque”. It may be so, but how is the structure of the other global hi-tech companies? Apple provides exactly the same internal data that is available to Huawei’s analysts. Considering the habit and style of granting substantial shareholdings to managers, the share ownership is equally opaque and often permits severe insider trading, often in favour of competitors. There is no reason to differentiate between Huawei’s corporate data and the one from other global IT and phone companies. Indeed, Huawei’s technical documentation is often much more detailed than the one of its global competitors. Certainly the public officials belonging to Huawei’s internal unions and control structures are accountable vis-à-vis the CPC and the State, but this holds true also for all the other Western companies that produce or sell in China. Do CISCO and Apple, who have been operating in China for many years, also in the R&D field,  believe they are exempted from some security checks?

i) An apparently rational argument of Huawei’s Western competitors regards the willingness of Chinese banks to fund this company. Just think about the notorious and stupidly ill-reputed “State aid”.

j) Indeed, Chinese banks certainly fund Huawei-the last time to the tune of some billion yuan, but only and solely based on official budgets. Nowadays, Western financial companies have free access to as many as 44 trillion US dollars, which is exactly the current size of the Chinese financial market. They can also have the majority of shares. In 2030 Western financial companies plan to reach 10 billion US dollars of profits in China. The problem is that China is liquid, while Western countries are so to a lesser extent. Yet the credit institutions prefer not to invest in companies and prefer to do so in opaque financial instruments and government bonds.

k) Furthermore – and here we can see the solely political drift of the controversy against Huawei – it is supposed to have produced and updated the e-control networks operating in Xinjiang. Is it possible that the Uyghurs are wrong and China is right? What is the West’s positive bias vis-à-vis an Islamic population that is often refractory to the Chinese system, with decades of terrorism behind it, even after a great economic boom, while the Hui – another Islamic population – do not cause any problem to China? Hence if we do not accept the “authoritarian” values of the Chinese system, we should not massively invest in that economic system. This is exactly what the Western companies are increasingly doing. Conversely, if the Western companies appreciate China’s stability and efficiency, they should resign themselves to accepting also the sometimes necessary repression of vociferous or basically jihadist minorities. If the West wants the jihad liberation, possibly to counter the new “Silk Road”, it shall have the courage to openly say so.

Moreover, Google is planning to re-enter the Chinese market with a version of its search system that adapts to the new Chinese laws on censorship or on the control of dangerous news. Or even on “enemy” propaganda.

Reverting to Huawei, as already mentioned, the Chinese company has set up  the Centre for Cybernetics Security in Great Britain, which is anyway in constant connection with the Government Communication Headquarters (GHCQ), the British intelligence and security organisation responsible for providing signals intelligence and information assurance, as well as for controlling networks,  ciphers and the Internet.

It should also be recalled that the 5G is not only a much faster Internet downloading system than the previous ones, but it is a network that will transform companies and the information technology.

Remote Medicine, self-driving vehicles, Internet of Things (IoT), new automated production systems.

These are the fields in which the outcome of the struggle between Huawei and Western companies will be decided, in a phase in which – for the first time in recent history – the USA and European allies have significantly lower leading technology than the Chinese one. This is precisely the core of the issue – not the talk about Chinese intelligence services or the rhetoric about mass control systems in Xinjiang.

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Robots wander the halls in Jiangsu’s new futuristic environmental monitoring centre

MD Staff

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“Oh, here comes one now,” the engineer says, pointing up. In a blink, a capsule about the size of a paint can has shot across the ceiling in a pneumatic tube. Inside is a sample of soil collected from one of hundreds of monitoring spots across Jiangsu province, on China’s central eastern coast.

The capsule lands in a device like a vending machine, and a lab technician swipes his key card to lift it out. Here on the 8th floor of the Jiangsu Environmental Monitoring Centre, he’ll test the sample for the presence of volatile organic compounds. Certain compounds are extremely poisonous and can cause liver, brain and kidney damage. They can also be extremely difficult to detect without complex equipment and processes.

Other samples of the soil have been delivered throughout the building for other tests. Pollutants such as volatile organic compounds or heavy metals may have found their way into the soil through industrial waste, contaminated groundwater or other methods. The Centre is working to identify and prevent risks to health and the environment from soil, air and water pollution.

The pneumatic tubes also ship the air samples around the 11-floor complex. In contrast to the steampunk conveyance of the tubes, water samples are shuttled around on the backs of autonomous shin-high robots.

Just outside the soil lab, one of them is impatiently trying to navigate around a visiting group of students who have accidentally blocked its path. The robot inches forward. Suddenly, it sees a gap in the forest of legs and whirs off down the hall to deliver its cargo. Absentminded students are hardly an obstacle. The little robot will even navigate stairs on its own.

Robots and pneumatic tubes may seem only a novelty, but they are part of a larger system of automation that China’s most densely populated province hopes will help them proactively neutralize environmental problems.

The automation is anything but a gimmick. Jiangsu has spent over US$120 million (CNY840 million) on retooling their monitoring efforts, rolling out advanced remote sensors and lab equipment in early 2019. Jiangsu is now the first province in China to have automatic air quality monitoring stations in every county and city. Over 200 stations are gathering data from sensors located across the province—even on drones and unmanned ships. This data is fed into a custom US$4.3 million (CNY30 million) monitoring and analysis programme that allows the Centre to predict environmental conditions. They release monthly results and a weekly forecast to the public, available on a website, app and through other media.

“Talk about the environment has reached a fever pitch, but it’s critical we back this up with action.” said Joyce Msuya, Acting Executive Director of UN Environment. “Here in Jiangsu we have a massive investment in the environment and the well-being of the 80 million people living here. It’s leadership and it’s what we need more of.”

The weekly forecasts don’t only inform the public. They inform government policy. When air quality is forecasted to worsen to a certain level, colour codes are issued and the government implements predetermined controls to rein in pollutants. A specific list of companies may have to reduce production for low-level yellow alerts. At orange, certain vehicles will be prohibited from the roads. In an extreme red code situation, steel and cement plants may have to reduce output or shut down entirely and construction can be halted to reduce dust.

These worst-case scenarios are rare. Last year there were only a handful of yellow and orange codes. Even so, Wei Cheng, Director of the Centre, is not dismissive of the problem. “Air pollution is a challenge for all humankind,” he says.

But he is hopeful. “I’m confident that air and water pollution will be improved. As President Xi has said, it’s a shared future. We need to pull together resources to tackle this problem we all face. All countries should do their utmost to protect the environment.”

UN Environment

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