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Is blockchain a friend or foe in ransomware attacks?

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UCD assistant professor Dr Nima Afraz explores how blockchain technology could be used against cyberattacks as well as the potential danger it poses.

In light of the recent ransomware attack on Ireland’s Health Service Executive (HSE), I have examined the possible role blockchain technology can play in exacerbating but also preventing such attacks.

The race is now on between those who want to use blockchain for good and those who seek to use it to create further criminal harm.

Ransomware is an increasingly common type of cyberattack during which the victim’s computer is infiltrated and their data rendered inaccessible by encryption techniques. The victim is then forced to pay a ransom to gain access to their own data.

A ransomware attack consists of several steps:

1. Infection/breach: Hackers use an attack vector to deliver the infected software or the ‘payload’ to the victim’s device.

2. The malware spreads: The malware spreads within the victim’s network and quickly encrypts their files.

3. Negotiations begin: The attacker shows an alert on the victim’s screen or opens a communication channel with them and promises to unlock the encrypted data when the ransom is paid.

A ransomware victim’s computer screen with directions on how to pay the ransom.

A ransomware victim’s computer screen with directions on how to pay the ransom.

Ransomware supply chain

The more advanced these attacks become, the more specialisation each step requires. For instance, an advanced cryptographist capable of designing the most sophisticated multi-threaded encryption technique is not necessarily a skilled extortion-negotiator or an adept social engineer.

At the same time, a cybercrime gang will risk more danger by recruiting more people. Hence, a new concept has emerged to connect these cybercriminals without exposing them to more danger. The recent phenomenon is called ransomware-as-a-service (RaaS).

RaaS platforms are often equipped with a step-by-step process allowing the client (in this case, the attacker) to customise many aspects of the malicious software, including the attack vector, encryption method, the type of files targeted (images, PDF, or a specific file format), communication channel and messages.

A dark web marketplace ad claiming to sell a custom-made ransomware

A dark web marketplace ad claiming to sell a custom-made ransomware.

Cybercriminals’ struggle for trust

Unsurprisingly cybercriminals do not trust each other. The marketplaces on the dark web where such RaaS offerings are sold are full of reviews from opportunist novice criminals who heard about RaaS and thought they could get rich overnight, only to be scammed by other con artists.

Similarly, the victims also have good reasons not to trust the attackers, besides them being criminals. For one, according to Kaspersky, only a quarter of ransomware victims manage to fully recover their data after paying the ransom. This is simply because the attackers do not invest substantial time and money in developing the decryption tool.

Meanwhile, very often, even after receiving the ransom and exchanging the decryption keys, the greedy attackers threaten to leak the sensitive data acquired during the attack and continue blackmailing the victim.

Therefore, there is no guarantee that after paying the ransom, the victim will get all their data back.

This issue seldom goes out of the area of individual trust and becomes a public cry for legitimacy. The collective of dark web hackers has long enjoyed the Robin Hood status due to targeting big corporations and donating to charities or leaking classified data on the government and public figure corruption.

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Like drug cartels’ popularity stunts during the pandemic, cybercriminals benefit from the ‘coolness factor’ to recruit more hackers and maintain a reputation in public opinion.

However, preventing a country’s cancer patients from accessing chemotherapy and articles such as this is not consistent with the Robin Hood stature they yearn for. This might be why the cybercriminals behind the recent ransomware attack against HSE suddenly decided to publish the decryption tool online and for free.

Where does the blockchain come in?

Although the earliest documented ransomware attack dates back to 1989, the emergence of bitcoin and other cryptocurrencies has resulted in a massive resurgence in ransomware attacks. This is mainly because these cryptocurrencies allow attackers to extort large sums of money while remaining anonymous and difficult to trace.

The bad news is blockchain technology might prove to be the missing link in the full automation of ransomware attacks. Cybercriminals have already made efforts in automating the process of customising and selling ransomware. However, the lack of trust between cybercriminals is still a barrier to the full automation of this process.

A smart contract-based RaaS supply chain could cultivate more worrying degrees of operation. For instance, the cybercriminals could agree on a smart contract where a ransomware developer would only get a commission fee and only if the ransomware is proven effective. Once an agreement is written in a smart contract format, it’s immutable and unstoppable by either party.

From human-operated to automated attacks

On the other hand, blockchain could be used by the attackers to gain the victim’s trust. Researchers have studied how blockchain-based semi-autonomous ransomware could take the scale of ransomware attacks to an entirely new level. Researchers are now studying new ransom payment paradigms enabled by blockchain technology, including the pay-per-decrypt method.

Pay-per-decrypt is designed to gain the victim’s trust by allowing them to pay separate ransom for each, or a subset of, encrypted files. This will remedy the lack of trust between a victim who, rather than a large lump sum payment with uncertainty, will pay small amounts in return for guaranteed decryption. Another advantage of pay-per-decrypt for the attacker is the additional payment options they can program into the smart contracts, such as dynamic pricing of the files.

It is not all bad news

Blockchain technology can also work as a preventative measure to disarm ransomware.

In many cases, the main problem for victims is that only one copy of their data was ever stored on the servers. If attackers target this single point of failure, it’s enough to cost a victim access to their data.

Suppose the victim was instead keeping distributed records of their data spread across multiple servers hosted by independent providers instead of a single centralised copy. In that case, they could have isolated the infected machine and recovered all the data from the other copies.

Blockchain is one of the main technologies that allow such a distributed record-keeping with multiple immutable copies of the data available on demand without relying on a central entity and, therefore, no single point of failure.

On top of that, other distributed file storage protocols such as InterPlanetary File System (IPFS) could be used in parallel to blockchain to store larger datasets.

In addition, our work on collaborative attack prevention also uses blockchain technology to incentivise network entities to share attack information with each other and potentially leading to better defence against ransomware.

By Dr Nima Afraz

Dr Nima Afraz is an assistant professor at University College Dublin and is associated with the Connect  SFI research centre in Trinity College Dublin.

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London is the best European city for founders, Startup Genome report

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The UK capital was the only European city to make the top ten in Startup Genome’s ranking, tying with New York in second place for the second year in a row.

London is Europe’s number one start-up city, according to a recent report by Startup Genome. The research and advisory body which specialises in start-ups released its ‘Global Startup Ecosystem Report 2021’ report today (22 September).

The report identified London and New York as joint second-best cities in the world for start-ups. London was the only European location to make it into the top ten. The city is attractive to founders thanks to its educated workforce and tax incentives, the report found.

Silicon Valley in California took the top spot, unsurprisingly. This year’s global rankings were dominated by the US, with half of the top 30 ecosystems coming from this region, followed by Asia with 27pc and Europe with 17pc of the top performing ecosystems globally.

Silicon Valley, New York City, Boston, and Los Angeles alone contributed more than 70pc to the US’s total ecosystem value.

Paris made the top 20, coming in at number 12. The Amsterdam-Delta region followed in thirteenth place. Dublin improved its rank from the previous year’s report, coming in at number 36 this time.

Beijing, Boston, Los Angeles, Tel Aviv, Shanghai, Seattle and Stockholm also made the top ten best start-up cities.

The global start-up economy is currently worth more than $3.8trn in ecosystem value. There are 79 ecosystems generating over $4bn in value, which is more than double the number identified in 2017. This time last year, 91 ecosystems had achieved unicorn status.

Also in 2020, Startup Genome published a report indicating its concerns over the future of the start-ups ecosystem during Covid-19. The report suggested that 42pc of start-ups were in what it called ‘the red zone,’ meaning they had three months or fewer runway ahead of them.

Several countries  including the UK, France and Germany introduced special support packages for start-ups. Irish non-profit Scale Ireland also introduced a similar start-up scheme for Irish companies.

“Entrepreneurs, policymakers, and community leaders in Europe have been working hard to build inclusive innovation ecosystems that are engines of economic growth and job creation for all,” commented JF Gauthier, founder and CEO of Startup Genome on the report’s release.

“The Global Startup Ecosystem Report is the foundation of knowledge where we, as a global network, come together to identify what policies actually produce economic impact and in what context,” Gauthier added.

Don’t miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic’s digest of need-to-know sci-tech news.

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Facebook oversight board to review system that exempts elite users | Facebook

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Facebook’s semi-independent oversight board says it will review the company’s “XCheck” system, an internal program that has exempted high-profile users from some or all of its rules.

The decision follows an investigation by the Wall Street Journal that revealed that reviews of posts by well-known users such as celebrities, politicians and journalists are steered into the separate system.

Under the program, some users are “whitelisted”, or not subject to enforcement action, while others are allowed to post material that violates Facebook rules pending content reviews that often do not take place. The Xcheck system, for example, allowed Brazilian footballer Neymar to post nude pictures of a woman who had accused him of rape, according to the report.

Users were identified for additional scrutiny based on criteria such as being “newsworthy”, “influential or popular” or “PR risky”, the Wall Street Journal found. By 2020 there were 5.8 million users on the XCheck list, according to the newspaper.

The oversight board said Tuesday that it expects to have a briefing with Facebook on the system and “will be reporting what we hear from this” as part of a report it will publish in October.

The board may also make other recommendations, although Facebook is not bound to follow these.

The Journal’s report, the board said, has drawn “renewed attention to the seemingly inconsistent way that the company makes decisions, and why greater transparency and independent oversight of Facebook matters so much for users”.

Facebook told the Journal in response to its investigation that the system “was designed for an important reason: to create an additional step so we can accurately enforce policies on content that could require more understanding”. The company added that criticism of it was “fair” and that it was working to fix it.

A representative for Facebook declined to comment to the Associated Press on the oversight board’s decision.

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Philippines imposes 12 per cent digital services tax • The Register

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The Philippines has become the latest nation to impose a digital services tax.

Such taxes require the likes of Netflix and Spotify to pay local sales taxes even though their services are delivered – legally, notionally, and physically – from beyond local jurisdiction.

The Philippines has chosen a rate of 12 per cent, mirroring local value added taxes.

“We have now clarified that digital services and the goods and services traded through digital service providers should generally be subject to VAT. This is just a matter of common tax sense,” said Joey Salceda, a member of the Philippines’ House of Representatives and a backer of the change to the nation’s tax code.

Salceda tied the change to post-pandemic economic recovery.

“If brick and mortar establishments, which are the hardest-hit by the pandemic, have to pay VAT, the giants of e-commerce shouldn’t be exempt,” he said.

However, local companies that are already exempt from VAT by virtue of low turnover won’t be caught by the extension of the tax into the virtual realm.

Salceda’s amendments are designed to catch content streamers, but also online software sales – including mobile apps – plus SaaS and hosted software. The Philippines’ News Agency’s report on the amendment’s passage into law even mentions firewalls as subject to VAT.

The Philippines is not alone in introducing a digital services tax to raise more revenue after the COVID-19 pandemic hurt government revenue – Indonesia used the same logic in 2020 .

But the taxes are controversial because they are seen as a unilateral response to the wider issue of multinational companies picking the jurisdictions in which they’ll pay tax – a practice that erodes national tax bases. The G7 group of nations, and the OECD, think that collaborations that shift tax liabilities to nations where goods and services are acquired and consumed are the most appropriate response, and that harmonising global tax laws to make big tech pay up wherever they do business is a better plan than digital services taxes.

The USA has backed that view of digital services taxes, by announcing it will impose tariffson nations that introduce them – but is yet to enact that plan.

Meanwhile, the process of creating a global approach to multinational tax shenanigans is taking years to agree and implement.

But The Philippines wants more cash in its coffers – and to demonstrate that local businesses aren’t being disadvantaged – ASAP. ®

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