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As allegations of intellectual property theft swirl, a deeper look reveals a tale of phony numbers and twisted data.

Republican China hawks have a problem. They're eager to sell us on the notion that China is, as old GOP hand Newt Gingrich puts it, "the greatest threat to a free America that we have faced in our lifetime." Gingrich pins China's ascendancy on its "totalitarian system, extraordinary organization, and immense population," brushing aside the economic liberalization and market reforms initiated by former leader Deng Xiaoping—which ushered China out of Maoist isolation and into the global market—as mere smoke and mirrors, a "40-year-long propaganda campaign" masking the "real China."

Main reasons for the prevalence of counterfeit products throughout the world are (a) high demand for less expensive drugs, (b) low availability of medical products, (c) social tolerance for counterfeit products, (d) globalization and consumer access to the internet (e-commerce), (e) complex and fragile supply chains, (f) limited technical capacity to monitor products throughout the supply chain, (g) complex import-export mechanisms, (h) the use of free and special economic and trade zones, (i) lack of law enforcement, (g) weak national regulatory policies on the manufacturing and marketing of medications, and (k) lack of adequate financial and political commitments [3], [4], [5], [11], [14], [15], [16], [17], [18], [19]. For these reasons the penetration of counterfeit products is generally higher in developing countries with West Africa and South America being reported as the areas mostly affected [11], [20], [21]. In 2017, the WHO after reviewing laboratory results on medical products from 75 low- and middle-income countries (LMIC), reported that 33.6 % of hypertension, cancer, epilepsy, analgesic uterotonics and immunosuppressants drugs, 11.8 % of antimalarial drugs, 7.2 % of antibiotics and anti-infective products, 6.7 % of tuberculosis medicines, and 4.2 % of HIV medicines were falsified or substandard, while approximately 10.5 % of all pharmaceuticals may be falsified in those countries [20].

Bitcoin’s rapid expansion over the past decade has propelled blockchain technology to new heights. Today, the tech is still maturing, and companies continue to experiment with other use cases. So, does blockchain provide authenticity of physical products too?

The short answer is no. Blockchain software alone does not suffice as a holistic anti-counterfeit system. Cryptocurrency’s widespread adoption is certainly historical, yet this particular use case was never intended to secure physical goods. Instead, cryptocurrency mainly provides a means to secure digital transactions, but it’s possible to leverage the underlying innovation – blockchain – to verify digital records for counterfeit protection.

Coulton’s comment, which was followed by a more in-depth blog, both spotlighted at TechDirt, contributed to the ongoing debate over the accuracy of the half-billion-dollar number. In addition to the due process concerns raised by the government’s abrupt shutdown of the Megaupload site, more and more commentators are challenging industry assertions about the amount of losses piracy creates. Actor Wil Wheaton, for example, said Hollywood loses more money through “creative accounting” than it does through piracy.

Coulton himself, who does not have a label but sells recordings via the Web, believes the cost of piracy is overstated:

High-end brands should “lean in” and embrace the #dupe subculture that feeds off recommending duplicates or cheaper alternatives to luxury products, social media experts have advised.

Dupes, knockoffs and brand imitators are not new: the first wave of beauty YouTubers were highlighting cheaper products as far back as 2010. But in the past, buying imitation goods was mostly done with the aim of passing the item off as the real thing.

The disruption to global supply chain operations is being used as a pretext to reshore production, but diversifying supply chains actually lowers risk. The ongoing digitalisation of global supply chains — accelerated by the COVID-19 pandemic — also increases resilience while reducing the cost of distance, diminishing the case for reshoring. But the reshoring prerogative is so great that it was one of many factors that drove the United States to initiate a trade war with China. Japan has also offered generous subsidies to its affiliates to return from China.

COVID-19 was a global shock that disrupted production in every country that locked down, irrespective of their global supply chain integration. But it mattered not whether the goods were produced from start to finish in one of those lockdown countries or across several of them. The more recent output disruptions may have more to do with the explosion in pent-up demand and the unevenness of the recovery that preceded the war in Ukraine, and associated sanctions on Russia, than the way goods are produced.

Assuming a satellite survives the launch and calls home without any troubles, it faces a constant battle for survival out in the harshness of space. Even Earth satellites in low orbits can see temperature swings of minus 50°C (-58°F) to plus 50°C (122°F) every 90 minutes, which can have a big effect on the equipment onboard, as can the lack of air. “Materials that you thought were quite solid can actually have some liquid or gaseous components which can leave into the vacuum of space, changing the properties of the material and causing it to shrink or become brittle,” says Andy Vick, head of disruptive technology at RAL Space. Space weather is another major contributor to satellite failures. Many of these bus-sized, multi-ton satellites are out in GEO, thousands of miles from Earth where there is little atmospheric protection from extreme conditions and large amounts of radiation. And the void can be surprisingly active and unpredictable when it comes to weather. X-rays, ultraviolet rays, radiation, and geomagnetic storms can all wreak havoc on-board; components can be damaged by the high current that discharges into the satellite or damaged by high-energy particles that penetrate the satellite. Space dust – literally tiny particles of rock dust – can hit the sats and become plasma and damage equipment. Sun Outages, where the satellite passes in front of the Sun, don't harm the satellite. However, the sun's interference swamps the signal from the satellite, causing a loss of data. These outages affect the signals from geostationary satellites, and can last for around ten minutes a day during the Equinox - but they are predictable. The University of Reading recently recorded the first ‘space hurricane’ which it described as a ‘1,000km-wide swirling mass of plasma raining electrons several hundred kilometers above the North Pole.’ The most notorious space weather event was the Carrington Event, a solar flare in 1859 that caused auroras as far south as the Caribbean, woke people in the night thinking it was morning, and caused telegraph lines to fail. Smaller events in 1989 caused blackouts and communication failures. A Carrington-level event today would cause worldwide electronics failures, and could wipe out all the satellite networks of the world if action wasn’t taken ahead of time. In a disaster report, space insurance consortium Atrium warned a single anomalously large proton flare or a number of flares in quick succession from our sun could result in a loss of power to all satellites in geosynchronous orbit and cost billions of dollars to fix. Dr. Holger Krag, head of the Space Safety Programme Office for the European Space Agency, tells DCD there is little that can be done to protect satellites from the impact of a solar flare beyond turning off key electrical systems ahead of time. But the unpredictable nature of the sun can make this a difficult task. To better predict coronal ejections from the sun and provide more notice about potential space weather events, the ESA has planned a mission called Lagrange, where spacecraft will be positioned at "Lagrange points", where the gravity of the Earth and Sun balance providing stable locations to observe the sun’s activity a few days ahead of the Earth’s position. “From [the L5] position, it can see the surface of the sun that would turn towards Earth three days later. We can see an advanced view of the activity area on the sun as it’s rotating around its axis towards the Earth,” says Dr. Krag. “At the same time, you can have a side view on the line between Earth and Sun so it can see coronal mass ejection traveling from the Sun to the Earth and it can measure the velocity of the ejections."

At first glance, there may seem to be little commonality between OTC derivatives and smart contracts. The former is a financial technology that is based on written legal agreements, whereas the latter is an information technology based on digital ledger technology. Nevertheless, there are several similarities worth examining, as outlined in Table 2. These, in conjunction with other risks that are specific to smart contracts, could potentially threaten the integrity of the financial system under certain circumstances.

The proliferation of bilateral OTC derivative agreements, which led to critical financial dependencies between counterparties, could easily occur with smart contracts when the use and sophistication of smart contracts grows to the point where they are facilitate businesses transactions on a regular basis. Without a specific need or mandate to centrally clear or settle smart contract agreements, there is little reason why agreements should not be bilateral and thus, known only to the counterparties involved. Likewise, because of the relative ease of implementing smart contracts, the ultimate scale of the number of smart contract agreements could easily dwarf traditional contracts. Systemic risk could arise from failure or flaws with of the contractual mechanics, i.e. smart contract technology, rather than the agreements themselves. It is unclear how millions of bilateral agreements between thousands of counterparties could be dealt with, say in the case of the discovery of a cybersecurity vulnerability that was common to a large number of agreements, which could corrupt those transactions. The fact that the collapse of The DAO was a non-event systemically was largely due to its recent invention. Had it been established longer, with more investors, larger in financial size, or had it been used as the base source code for other smart contracts, the impact could have been much more severe. While, overall, the scale of smart contract use does not present an immediate concern, their impact would be significant if and when major business areas, such as trade finance, adopt and employ smart contracts on a wide-scale basis.

Blockchain technology is anonymous, distributed, permanent, and widely touted as unbreakably secure.

But those qualities are also the source for some of blockchain’s greatest weaknesses, and with the technology gaining popularity and acceptance as a solution to just about everything, it’s important to be cautious before jumping on the bandwagon.

The double-spending analysis is consistent with the modest early use cases of Bitcoin, in which Bitcoin was primarily used by hobbyists and for small-scale black market activity (e.g., online gambling, Silk Road). In these early days, the amount that could be gained in a double-spending attack was not very high, because there were not high-value transaction opportunities. If a doublespending attack could gain at most $1,000, then the implicit cost per transaction in the base case necessary to secure the trust is just $0.04.

The double-spending analysis is also consistent with larger-scale black-market uses of cryptocurrencies, especially as black-market users may be most willing to pay the high implicit costs. For example, if a double-spending attack could gain at most $10 million, then the implicit cost per transaction in the base case needs to be about $380. This is modest relative to the costs of transporting large amounts of cash (Rogoff, 2017).

One modern form of currency is a digital asset, or cryptocurrency. Cryptocurrencies are usually not issued by a central public or private authority; instead, these digital currencies were independently created to pay for services or goods. Myriad ones exist, such as Bitcoin, XRP, Ethereum (ETH), and Dogecoin, and many depend on blockchain technology.

Cryptocurrency users found a preferred advantage in digital assets: they were no longer relying on a centralized financial institution to support transactions. So, if a financial crisis occurs, some have argued that the funds invested in digital assets will retain their value.

Terrorism financing. Beyond sidestepping sanctions, criminal organizations like terrorist organizations and drug cartels are finding advantages in aspects of digital currencies, notably the ability to transfer and launder funds.

While the most common method to transfer funds remains through traditional banking systems and money wiring services, online payment platforms have increased in popularity because they lack the strict regulations of traditional banks that are subject to anti-money laundering rules.

In 2015, all member states of the United Nations adopted Sustainable Development Goals that are to be achieved by 2030.[1] Among these goals is goal #7, whose purpose is “to ensure access to affordable, reliable, sustainable and modern energy for all.”[2] While the United States should be gearing up for a shift towards more reliable, sustainable, and clean energy that is compatible with goal #7, blockchain is being hailed as the technology of the future.[3] Although it is a groundbreaking technology, blockchain is a flawed system that consumes an astounding amount of energy – and until this energy consumption issue is fixed, regulators should look into ways to restrict the practice of bitcoin and blockchain mining.

Bitcoin is a cryptocurrency. Blockchain is a distributed ledger technology, and the means used to document and record cryptocurrency transactions.[4] The ledger is maintained by every user in the network, and each member must validate and maintain identical ledgers to protect against fraudulent transactions and to avoid the need for centralized authority.[5] While avoiding a centralized system may be appealing to some, the issue is that the entire system revolves around what miners (participants in a distributed ledger who utilize advanced computer hardware, which requires a lot of power, to solve complicated algorithms) call “proof of work.”[6] Proof of work is “a piece of data which [is] difficult (costly, time-consuming) to produce so as to satisfy certain requirements.”[7] For every bitcoin transaction, hundreds or thousands of miners must participate in obtaining proof of work, which involves solving costly algorithms, using electricity, time, and expensive hardware in order to find a winning nonce. A nonce is simply a string of numbers that, when combined with the data of the transaction, hashes (hashes are a 32 character series of alphanumeric characters that are generated through an algorithm) to a value with the required difficulty.[8] Difficulty for a blockchain transaction is a hash value with a certain numbers of a certain characters at the front of the hash, say 0’s, a hash with difficulty 7 would look like this: 0000000731fc30c8cdf220028eeab863, because it has 7 zeros in front of the hash value. This hash would be a winning nonce, but finding it requires the processing of millions of numbers (nonces) to find which nonce “wins.” The miner who finds the winning nonce is typically awarded a set amount in the currency they’re mining, thus incentivizing people to mine coins.[9]

The rise of blockchain technology, renowned for its transparency and immutability, has ignited a fresh discourse on privacy within the financial sector. This article provides an in-depth exploration of privacy on the blockchain, the pros and cons of public transactions, and the future of privacy-centric protocols.

Introduction

With blockchain becoming so popular, and with everybody trying to build the decentralized applications which will turn the technology mainstream, there are still many challenges for public blockchains, aside from the fact that the blockchain should be integrated in the current legacy centralized system. The challenges of the public blockchains are related to Scalability, Interoperability and Sustainability, coined in 2018 as the blockchain trilemma by Vitalik Buterin, the creator of Ethereum, referring to the difficulty of creating a blockchain with the three characteristics at the same time (Ethereum, 2018). Currently, there is no fully working blockchain to have solved all these issues and it is considered that you can only address two of them by giving up the other one (Lyons et al., 2019). That is why multiple blockchain platforms exist: to offer the best possible solutions for specific use-cases. In what follows, we are going to talk about these three challenges, while later on we are going to see possible solutions to them. 3.1. Scalability

A public blockchain should respond to the critical challenge of scalability, which means to achieve the consensus of the distributed computing nodes in a scalable and efficient manner. In the blockchain, all the nodes are involved in creating blocks that can be added to the ledger and they decide whatever unconfirmed transactions they want to include in the block they are working on. The node which calculates the first valid hash in PoW or the declared leader in PoS or other consensus mechanisms is going to forge the new block and then the block needs to be broadcasted to the whole network. A new block of 1MB for Bitcoin is propagated every 10 minutes, giving it a throughput of 7 transactions per second (tps), while Ethereum can confirm 20 tps (Lyons et al., 2019). Small adjustments have been brought to the blockchain in order to address scalability issues, such as increasing the block size of Bitcoin, which is 1MB, to 4 or 8MB. A hard fork in the main Bitcoin blockchain has been created, called Bitcoin Cash, having an 8MB block (Bashir, 2018). While this adjustment can increase the number of transactions that can be stored on a block, the block will take longer to propagate in the network, as nodes require better internet connection with larger bandwidth. In the case of maintaining the size of the blocks, transactions with higher fees are validated faster, as miners have the ability to choose the transactions they want to mine, in order to gain higher rewards. This will unfairly cause the neglect of low fee value transactions, as the blockchain might not follow a first come first served rule. A solution for scalability is the SegWit (Segregated Witnesses), another fork in the Bitcoin, which eliminates different signatures from the blocks, thus allowing the addition of more transactions (Bashir, 2018). To gain a better performance in scaling the blockchain, research has been conducted to address the problem by creating new data structures, such as Directed Acyclic Graphs (DAGs), or more efficient consensus algorithms, or to move transactions and computations from the blockchain to a second-layer protocol. While looking for solutions for replacing the computation puzzles in PoW with more useful ones, many blockchains are trying to replace PoW with PoS, or to integrate PoS with PoW. The Ethereum team has been talking about replacing PoW with PoS since 2014, and wanted to replace Ethash with Casper protocol, which we currently see integrated in Ethereum 2.0 (Serenity), an early version of Ethereum, built from scratch, using the PoS. For this new version of Ethereum, Vitalik Buterin states that it will validate transactions with 1% of the energy consumed by PoW (Zamfir, 2016). 3.2. Interoperability With the persisting problems of scalability and the variety of approaches to solve them, the market has got up to more than 2700 cryptocurrencies in September 2019 (CoinLore, 2019). The problem raised is that, with so many different implementations, and with many of them having their own adopters, blockchains will have to be able to share information with each other. This means that transactions could span multiple blockchains and information on a blockchain could be retrieved and validated through a transaction on another blockchain (Yaga et al., 2018). In Hardjono et al. (2018), Hardjono et al. talks about what blockchains should look like in order to achieve interoperability, referring to the main goals of the Internet architecture and how they should be applied on the blockchain. One of the examples built with the Internet architecture goals premise is MIT Tradecoin. Another project proposes the Digital Trade Coin (Lipton et al., 2018), a cryptocurrency to replace cash money with a worldwide stable digital token, serving as a “blueprint” for an interoperability model between blockchains. 3.3. Sustainability Sustainability refers to the ability of public blockchains to remain a viable solution over time. A blockchain has to be environmentally friendly, efficient, while its entities should be able to govern over the blockchain in a decentralized manner, in order to take actions in case unlawful acts are being committed (Lyons et al., 2019). As blockchains are mostly open-source and maintained by communities of programmers and advisors, in order to be successful and sustainable, Decentralized Autonomous Organizations (DAOs) or Decentralized Organizations (DOs) can integrate the ways in which a blockchain should be maintained and governed, keeping the blockchain upto-date, secured and running for the good of the system. Many of the current blockchain projects are implemented by companies and corporations that make the decentralized public blockchain mostly centralized, due to the fact that these companies are deciding the roadmaps of the implementations. Blockchain protocols are actively improved and nodes have always been incentivized to participate in the consensus, but the community and developers have been trying to find ways to improve the system in their own time. New business rules need to be applied to decentralize companies and corporations and also to govern a blockchain like Bitcoin, to reward the individuals proposing enhancements and developing them towards improving the system. A DAO can dictate the economy that incentivizes community participation, which can speed up the implementation of new technology.

We have heard a lot about Blockchain and its usage, how it can positively influence the world, but at the same, we cannot ignore the fact that it is at a very nascent stage and to make it perfect there is a need for many improvisations.

Despite a large number of supporters supporting this technology, we still have the drawbacks that need to be addressed. There are some areas of concern on which the developers need to work so that they can create a full-proof technology which can handle a large volume of data and at the same time it also ensures safety and security.

It is the intangible aspects of IP that makes it so vulnerable to cyber risk and attack affecting business and trade relations worldwide. It can operate at a number of levels and in all types of industries as this book will demonstrate. Levels include industry, government, military defence establishments and businesses of all sizes. The geo-political, trade sectors and finance including banking and insurance are all prey to this 21st-century digital-age menace. Some industries are more prone to IP theft, cyberattack and potential/variants of cyberwarfare, often in unexpected ways, such as shipping, national grids, defence systems and retail banking systems. Examples as in previous books are mainly from Japan, Europe and the USA but in terms of the shipping sector, for instance, it can occur anywhere in the world because of global trade routes.

For example, a blockchain that offers full visibility across an entire value chain may make a ton of sense, but when you weigh the costs for setting up that ecosystem and building out that blockchain, it may not make fiscal sense.

“Who is going to pay for it, and how will the benefits that make so much intuitive sense accrue to the participants? If the costs are shared, are they shared by outcomes? By return on investment? These are knotty issues that often get bigger as pilots move to production,” said James Wester, research director for IDC Worldwide Blockchain Strategies. “In other words, the pilot proved the concept works, but at scale, the costs and considerations become much bigger.”

When transactions take place without a third party, customers have no one to whom they can appeal for help. This is often the case with blockchain applications. For example, the digital wallets that people and entities use to send and receive digital assets have public keys, akin to publicly listed physical addresses. They also have private keys, which function like passwords and are possessed only by the wallets’ owners. Losing a private key is a catastrophic event with no recourse: Owners can no longer access their wallets. In January 2021, The New York Times reported that $140 billion worth of bitcoin is locked in wallets whose private keys have been lost or forgotten. With a traditional bank, a lost password delays access to an account only for mere minutes — as opposed to forever.

What developers must consider. Developers need to think about the kinds of services third parties provide that protect stakeholders and then devise a decentralized way to offer those protections. If that is impossible, developers must inform stakeholders that the technology lacks the protections they are accustomed to. A developer may even decide not to develop the app because the risks to users are too high.

Blockchain networks can be slow and inefficient due to the high computational requirements needed to validate transactions. As the number of users, transactions, and applications increases, the ability of blockchain networks to process and validate them in a timely way becomes strained. This makes blockchain networks difficult to use in applications that require fast transaction processing speeds.

Traditional blockchains like Bitcoin and Ethereum rely on consensus algorithms like proof-of-work and proof-of-stake, which can be slow and resource-intensive. As a result, these networks face limitations in transaction throughput, often leading to congestion and high transaction fees.