Oct 24, 2016
Tackling Terrorism: Blockchain vs Laws

In 2016, a set of amendments to anti-terrorism legislation, also known as the Yarovaya Package (called so after the Russian Duma deputy Irina Yarovaya who initially proposed the measures) has become the most crucial event in the recent history of Russian IT industry.

Now internet access providers, cellular service operators and internet companies are obliged to store user correspondence for three years and disclose decryption keys if requested by authorities. Failure to comply would entail a penalty fee to the amount of 800 000 to 1 mln rubles ($13,000 to $16,000). The package caused turmoil amongst Russia-based IT-companies who cited the following disadvantages:

Now internet access providers, cellular service operators and internet companies are obliged to store user correspondence for three years and disclose decryption keys if requested by authorities. Failure to comply would entail a penalty fee to the amount of 800 000 to 1 mln rubles ($13,000 to $16,000). The package caused turmoil amongst Russia-based IT-companies who cited the following disadvantages:

High Costs

Independent experts insist the mere deployment of the system would cost 3.9 trillion rubles (around $63 mln). Yes, that’s what the equipment capable of storing data for six months would actually cost. Additionally, Internet access providers would spend nearly as much. Those expenses would seriously cut revenue, so the companies would either have to send prices up or to become unprofitable, so the Russian budget would lose revenue taxes.

Technical Infeasibility

Market players estimate the law’s implementation would require such an amount of data storage systems that all facilities in the world would actually be working for four years solely for Russia’s purposes, which is a tall order itself. Even if the manufacturers agree, new data centers will be required, and, as the service providers says, building them would take around three years. Additionally, power consumption rate for the project would comprise 0.5 GW. Finally, there will have to be new communication channels for data transmission. As a matter of fact, the latest revision of the law bans all apps using end-to-end encryption, as it implies the keys are stored on the user side, and the companies simply have nothing to disclose.

Competitive Risks

Today, Russian Internet market leaders include companies likes ABBYY, Softline, Kaspersky Lab, Mail.ru, and Parus. All they might lose competitive advantage over other players as their revenues would decrease while users concerned with data safety would just stop using their services.

Inherent Futility

According to the internet companies, the share of currently encrypted traffic comprises 40 to 80 per cent. Storing that much data usually makes little sense as more often than not it cannot be decrypted. Besides, no one can stop terrorists from using software purchased in other countries or customized encryption systems. Thus, the law would entail burning extraordinary amounts of money without being effective from the counter-terrorism efforts point of view. So maybe, it’s all about surveillance rather than tackling terrorism?

Russian cryptocommunity also had its share in discussing the Yarovaya Package. Some paid little attention to it, while others thought that the law “would kill off all advantages of blockchain technology.” Nikolai Nosov, a banking expert, has stated that “the these laws would kill the concept of “trusted environment”, since the operator, being the distributor of information in the network, will be required to have keys for all of its customers. According to the law’s requirements, this involves private keys generated for transferring data through blockchain.”

So what can be done here? Could a different approach help solve the problem?

Ghaya, a group of Spain-based hackers decided to create a blockchain ledger to solve the refugee problem. The ledger was proposed to the EU authorities and would incorporate data on each migrant, including health profile, family relations, place of residence, etc.

This blockchain-based ledger would allow authorities to control the refugee inflow, regulate their number in each particular region, and see their histories. It is also hoped that this would stop the terrorists disguised as refugees from entering the European Union.

Another advantage of the technology is the possibility of tracing a person’s movements across the globe. Thus, SITA is developing a blockchain-based system for global digital registration of airline passengers.

“SITA’s innovative research imagines passengers creating a verifiable “token” on their mobile phone which contains biometric and other personal data. In this vision of future travel, no matter where in the world you go any authority can simply scan your face and scan your device to verify you are an authorized traveler. This can be done without all these agencies ever controlling or storing your biometric details.,” the company says.

Still in early development, at the moment the system dubbed Travel Identity of the Future is focusing on creating digital passports, which essentially are ID codes installed on mobile devices.

Some may object that in our world crossing borders and buying weapons and technical equipment without being seen is not a too hard task for a terrorist, which makes blockchain pretty useless. This might be true to some extent, however, terrorism funding is the key to its very existence.

This is where WhiteMoney, a project by Russia-based ModulBank, may come to the aid as it makes it possible to trace money even after several transactions.

“Blockchain could dramatically enhance transparency of remittances and make AML efforts much easier. Another task we sought to accomplish was to accelerate remittances between legal entities,” Andrei Varikov, one of the project’s developers, said.

The technology may prove useful in fighting corruption, which is also one of the cornerstones of terrorism. However, the question of whether it will be done still remains, as sometimes law enforcements find fighting terrorism profitable due to substantial budget support involved.

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