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Sweden, Norway rethink plans for cashless societies over fears that fully digital payment systems would leave them vulnerable to Russian security threats (www.theguardian.com)

submitted 2 months ago by [email protected] to c/[email protected]

149 comments fedilink hide all child comments

cross-posted from: https://feddit.org/post/4262252

A combination of good high-speed internet coverage, high digital literacy rates, large rural populations and fast-growing fintech industries had put the Nordic neighbours on a fast track to a future without cash.

[...]

But Russia’s invasion of Ukraine in 2022 and a subsequent rise in cross-border hybrid warfare and cyber-attacks blamed on pro-Russia groups have prompted a rethink.

[...]

The Swedish government has since completely overhauled its defence and preparedness strategy, joining Nato, starting a new form of national service and reactivating its psychological defence agency to combat disinformation from Russia and other adversaries. Norway has tightened controls on its previously porous border with Russia.

[...]

[Norway's] justice and public security ministry said it “recommends everyone keep some cash on hand due to the vulnerabilities of digital payment solutions to cyber-attacks”. It said the government took preparedness seriously “given the increasing global instability with war, digital threats, and climate change. As a result, they’ve ensured that the right to pay with cash is strengthened”.

[...]

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[–] [email protected] 4 points 2 months ago (5 children)

From what I understand, which honestly, isn’t a lot - the method used to anonymize transactions and balances is more like obfuscation than anything else. The system uses various techniques to fuzz up the data in such a way that it becomes impossible to trace.

It’s a bit like if you wanted to send a bank transfer for £200 but anonymize it somewhat, you could transfer that money around between a bunch of other bank accounts, before sending it on to the final source. And if multiple people are doing the same thing, it becomes essentially impossible to determine where the money entered and left.

The problem is though that such systems aren’t true encryption in the same way that RSA is, for example - the data isn’t unreadable, and it’s not impossible to reverse, it’s just that there’s so much junk data and it’s such a mess that it makes the true transactions difficult to identify and the end user has extremely strong plausible deniability. However, it’s likely just a matter of time before some state actor finds a vulnerability in the technique that allows them to trace transactions - if they haven’t already done so.

[–] explodicle 1 points 2 months ago (2 children)

What if it bounced through multiple peers between sender and recipient, encrypted on each hop like Tor? Then they'd need to actually break the encryption, or compromise every hop.

[–] [email protected] 2 points 2 months ago (1 children)

The transaction data itself does need to be publicly readable, because otherwise the whole consensus mechanism that the blockchain relies on wouldn’t work.

[–] explodicle 1 points 2 months ago

Not every transaction, just the ones that open and close payment channels. This deletes data that would be needed to reconstruct an overwhelming majority of transactions.

(This is how Bitcoin's lightning network works.)

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