#Enterprise File Synchronization and Sharing previous data
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Secure and Simple Document Storage Software
In today's digital era, managing business documents efficiently is crucial for productivity, compliance, and security. As companies move away from paper-based systems, the demand for secure and simple document storage software has soared. At PDMPL, we understand the evolving needs of modern enterprises and offer tailored solutions that streamline document handling without compromising on safety or user experience.

Why Secure and Simple Document Storage Matters
Organizations today deal with vast amounts of documents—ranging from contracts, financial statements, HR records to operational manuals. Storing, retrieving, and managing these files manually not only consumes time but also increases the risk of misplacement, unauthorized access, and data breaches.
A secure & simple document storage software not only helps safeguard sensitive information with advanced encryption but also simplifies access and sharing for authorized users. When storage systems are easy to use, teams collaborate more effectively, and decision-making becomes faster and more informed.
Key Features of PDMPL’s Document Storage Software
At PDMPL, we’ve developed an intelligent document storage system that prioritizes both security and simplicity. Here’s what makes our software the go-to solution for forward-thinking businesses:
1. Advanced Security Protocols
Security is our top priority. Our document storage solution uses multi-level encryption, secure access controls, role-based permissions, and real-time activity logs. Whether you're a small business or a large enterprise, you can trust PDMPL to protect your critical data from unauthorized access and cyber threats.
2. User-Friendly Interface
We believe software should be powerful yet simple. Our platform features an intuitive interface designed for users of all technical levels. With drag-and-drop uploading, folder-based organization, and intelligent search functionality, navigating through documents has never been easier.
3. Cloud-Based Access
Our document storage software is cloud-enabled, allowing users to access documents anytime, anywhere. Whether working from the office, at home, or on the go, your files are always available and synchronized in real time—without the need for physical storage devices.
4. Version Control and Audit Trails
PDMPL’s solution ensures that you always work with the most updated version of a file. Our built-in version control system tracks changes and lets users revert to previous versions if needed. Additionally, audit trails provide transparency into who accessed or modified a document and when.
5. Integration and Customization
Our software integrates easily with popular business applications such as CRM, ERP, and HRMS systems. It can also be tailored to meet specific industry or organizational needs, whether you operate in healthcare, legal, finance, or manufacturing.
Benefits of Using PDMPL’s Document Storage Software
By adopting PDMPL’s secure and simple document storage software, businesses can unlock numerous advantages:
Improved Data Security: Safeguard sensitive data with enterprise-grade protection.
Better Compliance: Meet regulatory requirements with automated document retention and access control.
Enhanced Productivity: Minimize time spent searching for files and reduce administrative overhead.
Cost Savings: Reduce paper use, physical storage needs, and associated costs.
Disaster Recovery: Ensure business continuity with cloud backups and data redundancy.
Who Can Benefit?
Our document storage software is ideal for:
Startups seeking affordable yet secure storage
SMEs aiming to digitize their processes
Large Enterprises managing vast document repositories
Professionals like lawyers, accountants, doctors, and architects who handle sensitive client information
Government bodies and NGOs needing structured and confidential document management
Why Choose PDMPL?
At PDMPL, we go beyond offering just a tool—we deliver a comprehensive solution. With years of experience in the document management space, we bring industry insights, technical excellence, and customer-centric support to every implementation.
We offer:
Dedicated support teams for onboarding and training
Flexible pricing plans to fit every budget
Regular updates and improvements based on user feedback
Scalable architecture for growing business needs
Conclusion
As businesses continue to digitize operations, the need for a secure and simple document storage software becomes not just a convenience, but a necessity. With PDMPL, you gain more than just a storage system—you get a partner committed to efficiency, security, and innovation.
Make the smart move today. Empower your organization with PDMPL’s trusted document storage solution and transform the way you manage information.
To learn more or request a free demo, contact PDMPL – Your Partner in Digital Document Management.
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#Enterprise File Synchronization and Sharing#Global Enterprise File Synchronization and Sharing market#Enterprise File Synchronization and Sharing market#Enterprise File Synchronization and Sharing market share#Enterprise File Synchronization and Sharing market size#Enterprise File Synchronization and Sharing market trends#Enterprise File Synchronization and Sharing analysis#Enterprise File Synchronization and Sharing vendors#Enterprise File Synchronization and Sharing forecast#Enterprise File Synchronization and Sharing previous data
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Verizon, Samsung and Qualcomm Cross Upload Speeds of Over 700 Mbps on a mmWave 5G Network
Verizon, Samsung and Qualcomm Cross Upload Speeds of Over 700 Mbps on a mmWave 5G Network In a 5G mmWave lab trial using aggregated bands, Verizon, Samsung Electronics and Qualcomm Technologies reached upload speeds of 711 Mbps. The companies continue to push the limits of 5G technology, using innovation to continuously drive greater performance from this transformational technology.
“Our mmWave build is a critical differentiator, even as we drive towards massive and rapid expansion of our 5G service using our newly acquired mid-band spectrum, we are doubling down on our commitment to mmWave spectrum usage,” said Adam Koeppe, Senior Vice President of Technology Planning for Verizon. “You will see us continue to expand our mmWave footprint to deliver game changing experiences for the densest parts of our network and for unique enterprise solutions. We had over 17k mmWave cell sites at the end of last year and are on track to add 14k more in 2021, with over 30k sites on air by the end of this year, and we’ll keep building after that,” said Koeppe.
Previous multi-gigabit speeds have been recorded on downloads before, but this is the fastest speed the companies have been able to reach while uploading data to the network. Speeds approaching those seen in this recent trial (for comparison, 700+ Mbps is the equivalent of a one GB movie uploaded in about 10 seconds) will pave the way for uploading videos, pictures and data to the cloud, social media accounts, or sharing directly with others in densely populated venues like downtown streets, concerts and football stadiums. Whether using a traditional mobile link or fixed wireless access, these speeds will also allow students working from home or employees in distributed workforces the ability to upload and synchronize massive files, complete simultaneous editing of documents in the cloud, and collaborate with colleagues effortlessly.
These breakthrough uplink speeds will also drive new private network use cases for enterprises. Faster uplink speeds can enable quality control solutions for manufacturers using artificial intelligence to identify tiny product defects in products visible only through ultra-HD video feeds. Other upload-intensive solutions such as multi-location, massive security video capabilities and augmented reality centered customer experiences will also get a boost with these increased speeds.
About the trial
The demonstration surpassed current peak upload speeds by combining 400 MHz of Verizon’s 5G mmWave frequency and 20 MHz of 4G frequency using the latest 5G technologies, including mmWave carrier aggregation and Single-User MIMO (SU-MIMO). Network technology used in the demo included Samsung’s 28 GHz 5G Compact Macro and virtualized RAN (vRAN) and Core (vCore) along with a smartphone form-factor test device powered by the flagship Snapdragon® X65 5G Modem-RF System.
Snapdragon X65 is Qualcomm Technologies’ 4th generation 5G mmWave Modem-RF System for phones, mobile broadband, compute, XR, industrial IoT, 5G private networks and fixed wireless access. Commercial mobile devices based on these Modem-RF solutions are expected to launch by late 2021.
Samsung’s Compact Macro delivers 5G mmWave by bringing together a baseband, radio and antenna in a single form factor. This compact and lightweight solution can be easily installed on the sides of buildings, as well as on utility poles, for the swift build-out of 5G networks. The Compact Macro achieved first Common Criteria (CC) certification against Network Device collaborative Protection Profile (NDcPP), an internationally recognized IT security standard.
“In collaboration with Qualcomm Technologies and Verizon, we are excited to begin to reach these ultra-fast uplink speeds, which will enable differentiated 5G experiences and deliver more immersive mobile services for all users”, said Junehee Lee, Executive Vice President and Head of R&D, Networks Business at Samsung Electronics. “Samsung looks forward to harnessing the full potential of 5G through new breakthroughs that will bring truly transformative benefits to people around the world and across the enterprise landscape.”
“Enhancing uplink speeds opens the door to new possibilities with 5G mmWave, in transit hubs, downtown areas, shopping malls and crowded venues, while also powering robust 5G fixed wireless access services in homes and small businesses,” said Durga Malladi, Senior Vice President and General Manager, 5G, Mobile Broadband and Infrastructure, Qualcomm Technologies, Inc. “Our collaboration with Samsung and Verizon exemplifies how we are collectively driving 5G mmWave commercialization and enabling new and exciting user experiences – everyday.”
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Connecting field data with BIM data
Summary
§ Many AEC firms are focusing on adopting BIM-based processes and tools on the capabilities it offers
§ But there is a significant disconnect between onsite construction and an offsite BIM model.

§ A crucial question that requires an answer is – how efficiently is BIM being adopted onsite where physical construction takes place?
§ Project stakeholders like architects, engineers, owners, and others are under a pressing need to connect field data with BIM data
§ Putting BIM tools and technology in the hands of the onsite workforce will allow leverage of seamless & real-time data
§ Connecting BIM objects from the model to onsite activities help build a simplified and transparent digitally-supported built landscape
§ Along these lines, the BIM model will be reinforced with onsite data, and fundamental BIM data can be shared with the onsite workforce.
The goal of connected construction is to
1. Gather data
2. Standardize processes at an enterprise level
3. Enable teams to connect BIM objects to simplify processes
4. Leverage greater focus on project execution
Common challenges in construction management.
§ Construction management is an integral part of a construction project
§ Every construction project frames various challenges
§ Construction managers need to possess a strong acumen of the construction business and expertise – both onsite and offsite
§ Onsite and offsite activities are flooded with interests and feedback from various stakeholders viz. designers, engineers, contractors, owners, etc.
§ Difference in mindset can create issues that can inhibit the construction process
§ Lack of focus causing construction errors
§ Common challenges include –
1. Unrealistic project timelines
2. Building a synchronized mind-set
3. Poorly defined project goals
4. Insidious scope creep
5. Lack of project accountability
Connecting field data with BIM data using construction management tools.
§ The construction industry does not function on a one-size fit all solution
§ Connecting field data with BIM data requires an efficient construction BIM management platform
§ Although running applications on a computer is crucial, offsite and onsite personnel do need the power of mobility to enhance efficiency and productivity
§ The need to achieve operational excellence is absolute, thus the need to leverage accurate project data is crucial
§ Construction firms can leverage construction management software to plan, coordinate, and take control over the project
§ Construction managers, remodelers, specialty or general contractors, owners, etc. can take advantage of construction management applications for various construction projects
§ Based on a Market Study Report, the market value for construction management is said to reach 1620 million by 2024
Main benefits of adopting digital platforms that augment the construction process.
§ Build intuitive dashboards and daily reports for better BIM coordination and collaboration
§ Reduce the carbon-footprint by streamlining key processes
§ Enable quick & productive coordination and collaboration between onsite and offsite BIM teams
§ Share updates in real-time through document exchange
§ Improve productivity and efficiency through BIM visualization of project status
§ Capture and track onsite processes, planning challenges, and tasks for onsite work
Benefits of connecting field data with BIM data.
§ Real-time communication & collaboration builds a synchronized mind-set.
1. Overcoming team communication challenges is key to improve construction planning and coordination
2. Construction management facilitates connecting field personnel with the back-office BIM model and design personnel
3. This includes various team dashboards, task priorities, shared calendars, etc. for trades or levels data, etc.
4. Teams can leverage effective clash management by synchronizing model and onsite data
5. Leverage Issue management reports, RFI, and submittal reports
§ Clear defined project goals for improved budget management.
1. Connecting field data to BIM data also includes efficient budget management & forecasting
2. Project managers can leverage the broad capabilities of construction management software to prepare estimates for better project control
3. Historical onsite data from previous projects can be used to determine construction performance
4. This data can be used to calculate the cost of equipment, labor, and materials
5. Construction management software includes dashboards for budget, tracking time, and invoicing
§ Connected construction through document storage, access, and sharing.
1. Storing, accessing, and sharing documentation becomes easier between offsite and onsite teams
2. BIM data like models, RFI’s, transmittals, submittals, etc. can be stored, accessed, and shared securely through a private link
3. Onsite personnel can jump on a quick virtual meeting for a specific file or send building component information using QR codes
4. 360 images from the field help project stakeholders leverage a detailed view of the site. 360 photo storage on a centralized cloud platform helps document site conditions, track job progress, and validate contract documents
5. Decision-making becomes more streamlined with centralized document control
§ Proactive Onsite Support to meet project goals.
1. Given onsite complexities, the team at BIMENGUS and iFieldSmart Technologies helps project complete on budget and time
2. Onsite BIM support helps, leverage field data with BIM data through trade coordination, communication, collaboration, and more
3. Early coordination meetings help mitigate clashes in the early project lifecycle
4. Proactive solutions can be leveraged to enhance profitability and save on budget
5. These solutions include – clash detection, process workflows, trade coordination meetings, and adoption of collaboration tools
§ Auditing Installed vs Planned field operations to reduce scope creep.
1. For AEC projects to deliver positive outcomes, the evaluation of installed vs planned field operations is crucial
2. Clash identification, resolution, and assignment is key to ensure installed field operations comply with planned operations
3. Detecting and resolving clashes onsite can result in significant cost & time overruns, collaboration issues, and project delays
4. Tools and features from iFieldSmart technologies connect seamlessly across the board through quick Navisworks sync, finding and assigning clashes to different trades, renaming viewpoints, and much more
5. To make sure installed and planned field operations run seamlessly, construction managers, contractors, modelers, etc. can access trade sorted drawings from a single point of truth
6. Granular classification of models, clashes, or documents helps coordinate offsite and onsite activities better, and get accurate field data in the BIM model
7. Auditing BIM models through accurate annotation, actual material usage, the number of building components, etc. helps make the BIM model effective and efficient
8. Adding, searching, and printing RFI’s with detailed parameters helps various stakeholders like the RFI manager, contractors, designers stay on the same page
9. Contractors can leverage field data and close information gaps through better RFI handling and decision-making
10. Project submittals hold the key to knowing if the final deliverables conform with the design intent
11. Fabricators can leverage accurate submittals through the creation, review, and approval of shop drawings
12. Submittals can be created, stored, and processed in a single location for quicker revisions, analyzing codes and standards, structural capabilities, etc.
13. Project teams can share comprehensive submittal details with various participants for a quick project review & management
Conclusion.
· Connecting field data to BIM data through construction tools can seamlessly connect various processes to improve onsite operations
· Connecting field data with BIM data helps clear out project noise, and assists stakeholders with using the right data set for quick and quality project handovers
· With the right set of software tools, every project stakeholder stays on the same page and has access to updated data streams
· Collaboration tools help onsite and offsite personnel coordinate better through accurate and complete datasets
· Finally, for projects to complete on time, installations need to be accurate, thus contractors, designers, architects, etc. need to collaborate perpetually for better project outcomes
Contact Us: - 703-994-4242
Visit us: - http://www.bimengus.com/
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What is File Sharing Software and How Does it Work?
File sharing software applications can send files of any size under a powerful data protection layer to anywhere in the world. Send and share an unlimited number of files at the speed of light. You can submit the portal and customize the portal with language, brand, storage, etc. You can select a storage point, such as file transfer software, hard disk, or cloud storage.
How Does File Sharing Software Work?
It uses a local area network or network to send and receive multiple files in the form of text documents, videos, and images. After sharing, people with permission can access these files and even download them. They can also use the software to share these files with others on the network. It is very suitable for business people to distribute and share project documents. It uses four systems for storage, transmission, and distribution, such as distributed peer-to-peer networks, manual sharing of removable media, hyperlinked documents residing online, and local servers on computer networks.
It is also known as the Managed File Transfer (MFT) solution, which solves key file sharing issues related to data security, its control, and core operating procedures. Since it can be audited in compliance with regulations, organizations seeking secure transactions of files between remote data centers, trading partners, and cloud applications will find it very useful.
Is it Worth Investing in File Sharing Software?
Gone are the days when it was used to complete a paper-based file system to maintain official data. Now, even electronic money transfers are replacing check systems for reliability purposes. The current trend of "minimalists" does apply to file transfer systems within organizations. Digital files make it easy for users to access, edit, and send files from one person to another. Besides, the software also enables you to retrieve deleted files from backups and store them with a security layer just in case. If you can exchange all of these facilities for $200-300 per month, it is certainly worth the investment.
Before choosing any file transfer software, you must better understand their types so that you can easily make a decision.
You must understand the following four basic types of file sharing software applications:
System local file sharing software: You can run this software directly from the computer's operating system. Used for local network file sharing. Besides, the list of transferable files involves ordinary documents, pages, photos, and videos.
Client-server file sharing software: This type of file sharing software is used to transfer web pages, FTP sharing, and email. Data is stored in a central location, and people with permission can access them for use.
Peer-to-peer (P2P) file sharing software: Unlike previous file sharing software, this type of file sharing software does not rely on any centralized server, but uses computers in the network as node servers and enables them to be between them Transfer files directly.
Cloud-based file sharing program: If you want to choose software with cloud functions, then this file transfer software is your ideal choice. You create a special folder, and then sync data to it, which can be accessed through a website or mobile phone.
How to Choose the Best File Sharing Software?
Some key requirements need to be met at least through file sharing software and shortlisted by the buyer. These basic requirements are as follows:
1. High-speed file transfer: Don't forget, speed is the main reason why we seek to replace traditional methods of file sharing. This is why if the software is not fast enough to transfer large files in less time, then the whole purpose of buying it is meaningless.
2. Ease of use: Ease of use is another major factor that determines how your employees or other users react. Fast file transfer software should also be a simple web-based system, anyone can easily use it without any additional training. Users should be able to easily access and share files without having to understand their complicated operating procedures.
3. Easy to deploy and manage: Your file sharing software should be very easy to deploy and manage. If you choose to use SaaS (software as a service) applications, you don't need to worry about the same situation. However, please make sure that the supplier is committed to the service aspect of SaaS.
4. Professional after-sales team: there is no guarantee that there will be no errors in any software. It is common for software to catch errors and failures. However, your supplier must have a dedicated team of managers that can complete the same work in minutes. They should provide world-class customer support to ensure your 24/7 availability.
5. Security: It is very important to understand your vendor's security practices for its software. As some high-profile security vulnerabilities have recently emerged, look for a vendor who is firmly committed to a security marking. Suppliers who follow in-depth security practices or consider security at all levels of the product should be your ideal choice.
6. Storage independence: The ideal file transfer software meets a range of storage options. You can choose an internal deployment or external deployment (cloud) storage option, which not only allows you to control assets but also protects assets from unnecessary security breaches. You can choose any option at any time, depending on the confidentiality level of the file at different stages of the content lifecycle.
7. Easy to customize: No two organizations may have the same use case, and the software should be able to meet the requirements through its easy-to-customize options. For example, you should be able to customize an unlimited number of browser-based portals for multiple clients, partners, and freelancers.
8. Worry-free report: Imagine a file transfer software that will enable you to view content flow analysis in real-time. Isn't that great? You can see which content has received the most attention and receive notifications every time you download. It can help you design your business strategy accordingly.
9. Supplier reputation: When choosing any software application, not only the application is important, but the reputation of the supplier is also very important. Just make sure that the supplier has some positive feedback on their kittens and the ratio of positive to negative comments is high. If possible, ask your social circle for advice, as this will help you make an easy decision.
Raysync large file transfer software, high-speed transfer system, provides FTP transfer acceleration service, file synchronous transfer, enterprise-level large file transfer protocol, solves the problem of slow big data transfer, cross-border transfer, and transnational large file transfer, helping companies Improve transmission efficiency.
Article From:
https://www.raysync.io/news/what-is-file-sharing-software-and-how-does-it-work
#file sharing software#what is file sharing software#file sharing program#best file sharing software
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Amazon RDS for SQL Server now supports SQL Server 2019
Amazon RDS for SQL Server now supports Microsoft SQL Server 2019 for Express, Web, Standard, and Enterprise Editions. You can use SQL Server 2019 features such as Accelerated Database Recovery, Intelligent Query Processing, Intelligent Performance, Monitoring improvements, and Resumable Online Index creations. The purpose of this post is to: Summarize the new features in SQL Server 2019 that are supported in Amazon RDS for SQL Server Explain when and how the compatibility level of a database is set Describe changes to tempdb default configuration Review a few caveats with respect to some of the new features New Features Amazon RDS for SQL Server 2019 supports the following new features: Accelerated database recovery (ADR) improves database availability by reducing crash recovery time. ADR also allows for instantaneous transaction rollback and aggressive transaction log truncation, even in the presence of active long-running transactions. Intelligent query processing (IQP) features such as: Row mode memory grant feedback to automatically correct excessive memory grants based on real execution statistics. Row mode memory grant feedback is an extension to the batch mode memory grant feedback feature in previous version of SQL Server . This feature fine-tunes the memory grant sizes for both batch and row mode operator. Batch mode runs on rowstore, without requiring column store indexes. Scalar User Defined Functions (UDF) Inlining to automatically transform UDFs into scalar expressions or scalar subqueries. Table variable deferred compilation, to defer the compilation of a statement that references a table variable until the first actual use of the statement, resulting in actual cardinality use. Approximate counts with APPROX_COUNT_DISTINCT to return the approximate number of unique non-null values in a group without having to scan the entire table. Interleaved implementation for multi-statement table-valued functions to pause the optimization until the applicable subtree runs and accurate cardinality estimates are received. Memory-optimized tempdb metadata improves scalability of tempdb-heavy workloads by moving system tables managing temporary table metadata into latch-free, non-durable, memory-optimized tables. Intelligent Performance features such as: OPTIMIZE_FOR_SEQUENTIAL_KEY for index creation, which improves the throughput for high-concurrency inserts into an index. Forcing fast forward and static cursors provides Query Store plan forcing support for fast forward and static cursors. Indirect checkpoint scalability improvements to help DML-heavy workloads. Reduced recompilations for workloads running DML on temporary tables created by an outer scope batch. Concurrent Page Free Space (PFS) updates by using a shared latch instead of an exclusive latch. Scheduler worker migration enables the migration of long-running tasks across schedulers on the same NUMA node to provide balanced CPU usage. Monitoring improvements such as: A new wait type, WAIT_ON_SYNC_STATISTICS_REFRESH shows accumulated instance-level time spent on synchronous statistics refresh operations. LIGHTWEIGHT_QUERY_PROFILING to reduce the overhead of capturing performance data. COMMAND column of dm_exec_requests to show “SELECT (STATMAN)” for tasks waiting on a synchronous statistics update. Dynamic Management Function (DMF) dm_exec_query_plan_stats returns the last known actual query plan when LAST_QUERY_PLAN_STATS database configuration is enabled. DMF dm_db_page_info returns information about a database page. Mission-critical security features such as: Data Discovery & Classification to facilitate classifying and labeling columns basing on their data content. SQL Server Audit enhancements to view the new data_sensitivity_information column in the Audit Log. Transparent Data Encryption (TDE) is now also available on Standard Edition. The data truncation error message defaults to include table and column names, and the truncated value. Prior to SQL Server 2019, only resumable online index rebuild was supported. Resumable online index creations are also now supported. For more details, review the Guidelines for online index operations. Provisioning a SQL Server 2019 DB instance You can provision a SQL Server 2019 DB instance on Amazon RDS for SQL Server two different ways: Create a new RDS DB instance with the engine version = 15.00 Upgrade an existing DB instance to engine version = 15.00 Amazon RDS for SQL Server supports upgrading directly to SQL Server 2019 from all supported versions. The oldest supported engine version is SQL Server 2012 (engine version 11.00). We highly recommend testing database workloads on the new engine version prior to upgrading the DB instances. Amazon RDS for SQL Server makes this easy to do. Simply take a snapshot of the DB instance, restore the snapshot as a test DB instance, and upgrade the test DB instance to the new engine version. When the testing is complete, you can stop the test DB instance. For more information about testing and upgrading to new major versions, see Best practices for upgrading SQL Server 2008 R2 to SQL Server 2016 on Amazon RDS for SQL Server. You can provision a SQL Server 2019 DB instance on Amazon RDS for SQL Server by using the AWS Management Console, AWS Command Line Interface (AWS CLI), AWS SDK, or AWS CloudFormation. While provisioning the DB instance, the engine version needs to be set to 15.00. Compatibility level The compatibility level defines the Transact SQL (T-SQL) and query processing behavior in SQL Server. For more information, see ALTER DATABASE (Transact-SQL) Compatibility Level. The compatibility level is set at the database level and the native compatibility level of a newly created database on SQL Server 2019 is 150. Irrespective of the provisioning method (creating a new DB instance or upgrading an existing DB instance), a newly created database on an RDS SQL Server 2019 DB instance has a compatibility level of 150 by default. On an upgraded RDS SQL Server 2019 DB instance, existing databases that were created on older engine versions prior to the engine version upgrade remain on the older compatibility level. For example, if an RDS SQL Server 2017 DB instance was upgraded to SQL Server 2019, prior to the upgrade, databases created on SQL Server 2017 had a compatibility level of 140. These databases continue to have a compatibility level of 140 even after the upgrade. However, after the upgrade, you can change the compatibility level using the ALTER DATABASE T-SQL command: alter database set compatibility_level=150 SQL Server Management Studio (SSMS) provides an option to change the compatibility mode via the SSMS graphical user interface (GUI). This requires elevated privileges that aren’t available in Amazon RDS, so you can’t change the compatibility level using the SSMS GUI. Instead, use the T-SQL command to change the compatibility level. Changes to tempdb In Amazon RDS for SQL Server, starting with SQL Server 2019, the number of tempdb data files created by default has changed. Prior to SQL Server 2019, an RDS SQL Server instance had one tempdb data file across all editions and instance sizes. With SQL Server 2019, a newly created RDS SQL Server 2019 DB instance uses the following mapping for deciding how many tempdb data files get created. Edition Instance Class Size Number of TempDB Data Files Express All 1 Enterprise/Standard and Web db.*.xlarge and below Number of vCPUs Enterprise/Standard and Web db.*.2xlarge and above 8 The number of tempdb data files are decided during the creation of the DB instance. Post-creation, scaling a DB instance up or down doesn’t change the number of tempdb data files. For example, a newly created Standard Edition db.m5.xlarge DB instance has four tempdb datafiles. Scaling the instance to a db.m5.2xlarge doesn’t increase the number of tempdb files to eight. Using the new Amazon RDS for SQL Server features You can enable and use most of the new features as described in the SQL Server documentation, but there are a few exceptions. Multi-AZ deployments Multi-AZ deployments in Amazon RDS for SQL Server 2019 use one of two modes for synchronous replication: Always On or database mirroring, depending on the edition and upgrade path. Keep in mind the following: A newly created Multi-AZ RDS SQL Server 2019 Enterprise Edition (EE) DB instance uses Always On. Enabling Multi-AZ on a newly created Single-AZ RDS SQL Server 2019 EE DB instance uses Always On. Enabling Multi-AZ on a Single-AZ RDS SQL Server 2019 EE DB instance that was upgraded from any older engine version or edition uses Always On. A Multi-AZ DB instance upgraded from an older engine version to SQL Server 2019 uses the same mode it used on the older engine version. All Standard Edition DB instances use database mirroring. To check if a Multi-AZ DB instance is using Always On or database mirroring, on the Amazon RDS console, choose the database and navigate to its Configuration tab. On the Configuration tab, look for Multi AZ. For a Multi-AZ DB instance using Always On, the setting shows as Yes (Always On). For a DB Multi-AZ instance using database mirroring only, the setting shows as just Yes. To check using the AWS CLI or the AWS SDK, look for the ListenerEndpoint. Multi-AZ DB instances using database mirroring only have one endpoint. An additional ListenerEndpoint exists for Multi-AZ DB instances using Always On. You can change a Multi-AZ RDS SQL Server 2019 EE DB instance using database mirroring to use Always On by converting the DB instance to Single-AZ and then re-enabling Multi-AZ. Accelerated database recovery ADR is a SQL database engine feature that greatly improves database availability, especially in the presence of long running transactions, by redesigning the SQL database engine recovery. ADR achieves fast database recovery by versioning database modifications and only undoing logical operations, which are limited and can be undone almost instantly. Any transactions that were active at the time of a crash are marked as stopped and therefore concurrent user queries can ignore any versions generated by these transactions. For more information, see Accelerated database recovery. In Amazon RDS for SQL Server, ADR is fully supported on Single-AZ instances. On a Multi-AZ instances, ADR is supported on instances using Always On and is not supported on instances using database mirroring. As indicated in this bugfix, ADR is incompatible with database mirroring and trying to enable ADR on a mirrored database results in an error: Msg 1484, Level 16, State 1, Line LineNumber Database Mirroring cannot be set for database 'ADR_Mirroring' because the database has Accelerated Database Recovery enabled or there are still versions in the Persisted Version Store. If Accelerated Database Recovery is disabled, please run sys.sp_persistent_version_cleanup '' to clean up previous versions. On a Multi-AZ DB instance using database mirroring, enabling ADR on a newly created database results in Amazon RDS automation disabling ADR and enabling database mirroring. When enabling Multi-AZ on a DB instance wherein the mode is database mirroring, if ADR enabled databases are found, enabling Multi-AZ fails and the following notification appears: Unable to convert the DB instance to Multi-AZ: The database(s) ‘’ prevented the conversion because they have Accelerated Database Recovery (ADR) enabled. Disable ADR for these databases and try again. Intelligent query processing All IQP features in SQL Server 2019 are supported in Amazon RDS for SQL Server. Apart from the Approximate Count Distinct feature, you need to enable all the IQP features at the database level using the following command: alter database scoped configuration set =on You can also enable some of these features on tempdb, and the Amazon RDS primary user has the permissions to do so. On Multi-AZ DB instances, enabling these features on tempdb needs to be done on the primary and secondary. This can be achieved in two ways: Enable the feature on the primary, reboot the DB instance with failover, and enable the feature on the new primary Convert the Multi-AZ DB instance to Single-AZ, enable the feature, and convert the DB instance to Multi-AZ In-Memory database Amazon RDS for SQL Server doesn’t support persistent memory (PMEM) devices and SQL Server native database snapshots. So, the enhancement to Hybrid Buffer Pool to use PMEM devices and In-Memory OLTP support for SQL Server native database snapshots are not supported. The memory-optimized tempdb metadata feature is supported in Amazon RDS for SQL Server. You can enable this feature by running the alter server configuration command. However, the Amazon RDS primary user doesn’t have access to run this command on an RDS SQL Server DB instance. Instead, you can set the parameter “Memory optimized tempdb Metadata” in the Amazon RDS parameter group. After applying the parameter group with the modified parameter to the DB instance, the feature is enabled on the DB instance. Intelligent Performance As part of Intelligent Performance, SQL Server 2019 brings some enhancements to Resource Governance. Given that Amazon RDS for SQL Server doesn’t support SQL Server’s Resource Governor feature, these enhancements are not supported. All other Intelligent Performance features like concurrent PFS updates, scheduler worker migration, and more, are supported in Amazon RDS for SQL Server. Mission-critical security Data Discovery & Classification introduces a new tool built into SSMS for discovering, classifying, labeling, and reporting sensitive data in databases. For more information, see SQL Data Discovery and Classification. Using SSMS version 17.5 and above, Data Discovery & Classification is achievable on Amazon RDS for SQL Server. You can also add data sensitivity labeling using the ADD SENSITIVITY CLASSIFICATION clause, and the Amazon RDS primary user has the necessary permissions to run this command. The data sensitivity information has been added to the SQL Server Audit file record under the new field data_sensitivity_information. You can enable SQL Server auditing in Amazon RDS for SQL Server using options groups. After the SQL Server Audit is enabled on the DB instance and audit specifications are created, you can read the Audit files on the DB instance using the function msdb.dbo.rds_fn_get_audit_file. This function also returns the new field data_sensitivity_information. You can read the audit files as long as they are on the disk. To change how long the audit files should be persisted on the disk, you can configure the parameter RETENTION_TIME while setting up the SQL Server Audit option. Amazon RDS for SQL Server now supports TDE for SQL Server Standard Edition. TDE needs be enabled on the DB instance using option groups. For more information about enabling TDE, see Support for Transparent Data Encryption in SQL Server. Conclusion In this post, we listed some of the new and exciting features of SQL Server 2019 that are supported in Amazon RDS for SQL Server, along with brief descriptions of the features. We called out cases where the features differ slightly, provided instructions on how to enable the features, and advised on any prerequisites they might have. A major engine version release like SQL Server 2019 brings significant changes to the engine—some visible and others not. We highly recommend testing database workloads using the Amazon RDS easy clone mechanisms as described in this post before upgrading to this new engine version. About the Author Prashant Bondada is a Senior Database Engineer at Amazon Web Services. He works on the RDS team, focusing on commercial database engines, SQL Server and Oracle. Sudarshan Roy is a Senior Database Specialist Cloud Solution Architect with the AWS Database Services Organization (DBSO), Customer Advisory Team (CAT). He has led large scale Database Migration & Modernization engagements for Enterprise Customers to move their on-premises database environment to Multi Cloud based database solutions. https://aws.amazon.com/blogs/database/amazon-rds-for-sql-server-now-supports-sql-server-2019/
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Ecommerce Product Releases: December 2, 2019
Here is a list of product releases and updates for late November from companies that offer services to online merchants. There are updates on shipping, customer support, website builders, artificial intelligence, and shoppable videos.
Got an ecommerce product release? Email [email protected].
Ecommerce Product Releases
Sendle, a shipping carrier for small business, launches in the U.S. Sendle, a carrier focused on small ecommerce businesses, has launched its 100-percent carbon-neutral, flat-rate shipping service in the U.S. Sendle reduces the environmental impact of shipping by tapping existing shipping providers and filling their vehicles with packages to ensure every trip is as efficient as possible, as well as purchasing carbon offsets to address the remaining impact. The company also offers compostable packaging in Australia and plans to extend the offering in the U.S.
Sendle
BigCommerce launches GraphQL Storefront API. BigCommerce has announced the open beta release of its new GraphQL Storefront API for creating faster, personalized shopping experiences. With GraphQL, brands can quickly develop and launch commerce experiences that are both contextual and unique to each shopper by delivering data across multiple BigCommerce services in one API call. The GraphQL Storefront API enhances developers’ ability to leverage BigCommerce in a headless architecture through its open APIs for seamless integrations with their preferred content management system, digital experience platform, and progressive web apps framework.
Mailchimp launches website builder for small businesses. Mailchimp has launched a public beta of its website builder as part of its all-in-one-marketing platform, giving users the ability to build their own websites and the option to purchase unique domains to make landing pages look like a natural extension of their brand. Users will have the ability to create and publish a website with a free Mailchimp domain. Advanced features, such as custom branding and custom domains, are available for paid users. Mailchimp is also offering multi-page websites, enabling users to index more pages to market their products and services.
PayPal to acquire Honey to personalize shopping offers. PayPal has agreed to acquire Honey Science Corporation, a platform for shopping and rewards, for approximately $4 billion. The acquisition supports PayPal and Honey’s shared mission to simplify and personalize shopping experiences for consumers while driving conversion and increasing consumer engagement and sales for merchants. Honey will enable PayPal to reach consumers at the beginning of their shopping journeys and will enhance PayPal’s ability to help merchants acquire and convert consumers by delivering offers that are personalized, timely, and optimized across channels. Honey will accelerate its growth by driving adoption among 275 million active consumer accounts of PayPal and Venmo (PayPal’s mobile payment service).
Honey
Verizon Media and eBay launch campaign and shoppable videos. Verizon Media and eBay have launched a new campaign, “The Guy’s Guide to Nailing the Holidays,” to help men tackle the holiday season with ease and confidence. eBay will be the first advertising partner to sponsor Verizon Media’s new shoppable video format, integrating the online marketplace’s products from top brands into shoppable carousels beneath gift-guide videos. Verizon Media will roll out a series of videos featuring influencers, such as tech and gaming expert Brian Tong and reality TV star Tanner Tolbert, to highlight eBay products across lifestyle, tech, and sports.
Elavon acquires Sage Pay payment gateway. Elavon, a subsidiary of U.S. Bancorp, has agreed to acquire Sage Pay, a payment gateway. The acquisition is part of Elavon’s strategy to help its business customers as the global economy becomes more digital, and as businesses look to streamline their operations with software that includes payments capabilities. Elavon is the fourth-largest merchant account provider in Europe with a platform that allows it to do business in many countries and currencies. The Sage Pay acquisition extends Elavon’s market share in the U.K. and Ireland, particularly for small and medium-sized enterprises.
Ohi raises $2.75 million to provide brands with same-day delivery. Ohi, which enables ecommerce brands to offer same-day delivery, has announced the close of a $2.75 million seed round led by Flybridge Capital Partners. Ohi’s artificial intelligence helps growth-stage companies find fulfillment centers across the US, without the commitment of long-term leases and expensive integration. Ohi partners with landlords to convert commercial space into micro-warehouses in major cities. The company then offers those warehouses on flexible leases that can be as short as three months to help direct-to-consumer brands achieve same-day and next-day deliveries. Ohi charges brands a fixed monthly fee.
Ohi
Returnly enables online gifting for Shopify Plus merchants. Returnly, a post-purchase payments company for returns, has announced the availability of instant gift exchange for Shopify Plus merchants and their customers. The program enables gift recipients to immediately browse a site and purchase an alternative item, even before they return the original gift. According to Returnly, nine in 10 users have ordered a second item before they shipped the first item back, and they’re likely to outspend the original size of their order by 23 percent.
Gorgias raises $14 million to help ecommerce companies deliver customer service. Gorgias, a startup offering artificial intelligence tools for customer service and support, has raised $14 million in Series A funding. With the shift that brands are taking to sell directly to consumers, Gorgias provides tools to help customer service representatives respond quickly and upsell products and services. Using AI and customer data, Gorgias can automate responses to basic questions. Gorgias pulls data from a brand’s apps to display rich customer profiles next to tickets. Agents can respond to chats, emails, and Instagram comments while seeing previous conversations and order data. Flex Capital led the financing round. Gorgias will use the money to build out the product with new features while also bringing on more merchants.
Route raises $12 million to track packages with AI. Route, a package-tracking app that helps merchants with post-purchase satisfaction and offers shipping insurance to consumers, has raised $12 million through seed financing with Peak Venture Capital and Album VC. Route aggregates purchase and tracking into one place, synchronized with the customers’ Gmail accounts. Route’s insurance program enables customers to file lost, damaged, and stolen package claims from within the Route app. It’s free for brands to offer. The seed funds will help Route keep up with demand and add new features to its app.
Route
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Guest Post: The Bitcoin Plague Spreads to Retail
John Reed Stark
In recent days, a number of leading retailers have announced that they are initiating processes to allow consumers to complete purchase transactions using bitcoin or other cryptocurrencies. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at these developments in the retail industry. A version of this article originally appeared on Securities Docket. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.
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Warren Buffett, perhaps the most celebrated investor ever known, refers to bitcoin as “rat poison squared.” I disagree. Bitcoin is worse than rat poison – it is more akin to the plague and mayhem that rats can spread if not properly contained. Now, the bitcoin plague has spread to U.S. shopping malls.
Thanks to a new initiative, several big name retailers, including Crate and Barrel, Nordstrom, and Amazon-owned Whole Foods, according to Fortune, will now reportedly accept bitcoin and three other types of digital currency.
At first glance, creating cryptocurrency payment arrangements for retail products might seem like a no-brainer, falling squarely in line with classic, basic and critical marketing principles. Consider all the benefits:
What better way to attract customers than to create a financially friendly environment where a customer’s cryptocurrency fanaticism is enthusiastically embraced;
Sharing the excitement of cryptocurrency offers a unique chance to bond with tech-savvy customers, especially those beyond borders;
The medium can become the message. By accepting cryptocurrency as payment, a retailer is demonstrating its commitment to creativity, modernization and originality – traits that customers might appreciate and find compelling;
Payment flexibility can attract business in and of itself. Given that accepting debit and credit cards online can make a retailer more appealing to current and potential customers, so too can accepting other forms of payment, including cryptocurrencies; and
Retailers can take advantage of the chance to demonstrate tangible support for a client’s libertarian financial preferences. By “putting your money where your mouth is,” retailers can prove themselves true believers in the future of technology-driven digital currency, setting themselves apart from their scribe competitors who remain content to observe the crypto-revolution from the safety and shelter of the sidelines.
But despite all of the crypto-hoopla, retailers should ignore the Marketing 101 crypto-lesson blather set forth above. Given its complete and utter lack of oversight and meaningful licensure, the cryptocurrency marketplace has spawned a growing global cadre of dangerous criminals, and the risks for retailers accepting cryptocurrency run a perilous gamut of legal, regulatory, financial, ethical and reputational dangers.
In short, accepting cryptocurrency from customers in today’s crypto-manic environment is, despite all of the high-tech allure, just not worth it – and a glaring exemplar of commercial ignorance; opportunistic corporate pandering; and sadly, plain old-fashioned executive avarice.
The Dark Side of Cryptocurrency
Need a fake I.D., a bottle of opiates, a cache of credit card numbers or a thousand social security numbers? Need a way to collect a ransomware payment? Need to fund terrorist-related activities? Need to hire a hitman? Need to finance an election tampering scheme? Cryptocurrencies like bitcoin have become the payment method of choice for these, and a slew of other, criminal enterprises.
What exactly is bitcoin? Bitcoin is a virtual or digital currency that uses encryption techniques for governance and security and operates independent of any central bank. A token is a digital asset that can be used in many ways — for example, as a unit of value (or as means of providing access to and transactional value inside a particular blockchain system (e.g., retail allows access to electronic data storage space in Sia’s blockchain ecosystem). Tokens are built on top of blockchain technology, a form of distributive ledger technology, which is a digital database that is consensually shared and synchronized across networks spread across multiple sites, institutions or geographies.
Transactions in cryptocurrencies like bitcoin are pseudo-anonymous, encrypted and decentralized by nature, offering a convenient method of transferring funds obtained from illegal activities without an audit trail. Cryptocurrencies also operate outside of traditional and established financial networks and are alarmingly unregulated. There is no central issuer of bitcoins, nor a Federal Reserve of Bitcoins monitoring and tracking transactions or controlling their value. In short, government surveillance and regulation of cryptocurrency is virtually nonexistent (no pun intended).
Thus, it should come as no surprise that bitcoin can trace its origins with criminals in the dark web marketplace. Indeed, cryptocurrency and criminal activity have remained inexorably linked ever since the 2011 launching of The Silk Road, who began using bitcoin as its main currency in their virtual marketplace for buying and selling drugs, weapons, and all things illicit on the dark web. Until shut down by law enforcement in 2013 and then again in 2014 and finally going offline in 2017 due to loss of funding, Silk Road served as a glaring example of the crimes so easily facilitated by cryptocurrency (in 2015 Silk Road’s creator, Ross Ulbricht, was sentenced to life in prison).
After Silk Road was shut down, bitcoin’s price plummeted, and many crypto-pundits expected bitcoin demand to dry up. But in the following years, the opposite seemed to happen. Recent data from Kapersky CiperTrace shows criminals have laundered $2.5 billion worth of criminally utilized bitcoin through cryptocurrency exchanges, and almost all of it ends up in countries with lax Anti-Money-Laundering (AML) and Know Your Customer (KYC) regulations. The data, which spans from January 2009 to September 2018, indicates 97 percent of the bitcoin laundered through cryptocurrency trading platforms ends up in countries with lenient AML regulations. Kapersky CiperTrace deemed transactions to be of criminal nature if they came directly from, or with close connection to, sources such as “dark market sites, extortion, malware, mixer/tumbler/money laundering, ransomware, and terrorist financing services.”
Though bitcoin traversed from the digital to physical world with the first-ever bitcoin ATM at a Vancouver coffee shop in 2013, bitcoin’s use as a real currency has not truly caught on as a legitimate means of payment. Bitcoin ATMs remain mysterious, suspicious and enigmatic to say the least. Meanwhile the U.S. government has never recognized bitcoin as a currency – rather, bitcoin and all other cryptocurrencies are simply property or, as lawyers would say, chattel.
Spotlight: Cryptocurrency and Ransomware Extortion Schemes
One of the more prominent criminal uses of bitcoin involves so-called “ransomware” schemes and provides a definitive example of how nefarious cryptocurrency has become.
Insurer Beazley Group in its May 2019 Beazley Breach Insights Report (BBR) claims its clients have reported twice the number of ransomware cyberattacks in the first quarter of 2019 as they did last year, with hackers targeting bigger companies and demanding bigger ransoms than ever before. The size of demands is also growing. According to the May 2019 BBR, in Q1 2019, the average ransomware demand reported to the BBR Services team was $224,871, an increase of 93% over the 2018 average of $116,324. Here is how a typical ransomware extortion scheme works:
Ransomware attackers break into a corporate system and encrypt, or lock-up, a corporate victim’s data. Most ransomware infections come from phishing attacks, in which unwitting users are enticed to open a file or click on a link containing the ransomware malware;
The ransomware attackers demand payment in cryptocurrency for the encryption key to enable the victim corporation to unlock the now inaccessible data;
The ransomware victim pays the cryptocurrency ransom to the attacker; and
The ransomware attackers move on to their next victim.
While ransomware attacks come in many forms, in each case they infect a computer and restrict users’ access to certain data, systems, and files, until a ransom is paid. A few particularly disturbing statistics about ransomware:
A new organization will fall victim to ransomware every 14 seconds in 2019, and every 11 seconds by 2021;
1.5 million new phishing sites are created every month;
Ransomware attacks have increased over 97 percent in the past two years;
34% of businesses hit with malware took a week or more to regain access to their data;
Cryptocurrency payments made to ransomware attackers increased nearly 90 percent in Q1 2019 over the previous quarter, according to Coveware’s latest report; and
In 2019 ransomware from phishing emails increased 109 percent over 2017.
What makes ransomware attacks so devastating is that many variants do not simply target individual endpoints, but rather establish a foothold on one device and then fan out across a corporate network, encrypting everything from shared drives and email servers to website platforms and backup servers. In this way, ransomware attackers can cripple significant portions, or even all, of a company’s technologically facilitated operations. Hence ransomware’s dirty little secret: most corporations pay the ransom.
How do most corporate victims of ransomware attacks pay the ransoms demanded? Bitcoin of course – it’s fast, reliable, verifiable, subject to little regulation, and virtually untraceable. Bitcoin is ideal for ransomware extortion schemes. The hacker can simply watch the public blockchain to know if and when a victim has paid up. Hackers can even create a unique payment address for each victim and automate the process of unlocking their files upon a confirmed bitcoin transaction to that unique address.
Unlike the sequence of events during a kidnapping scenario, where the exchange of money arguably places criminals in their most vulnerable position, ransomware attackers facilitate pseudo-anonymity by orchestrating a bitcoin transaction process. Rarely is there ever even an arrest, let alone a successful prosecution, of a ransomware attacker. Law enforcement remains virtually powerless, and has even fallen victim themselves to ransomware extortion schemes. Ransomware attackers have become yet another class of cybercriminal who continue to enrich themselves while, for the most part, law enforcement can only watch from the sidelines.
Once the ransomware attackers take possession of the bitcoin payment, it can now be laundered via the Dark Web – that is, until now. Now, ransomware attackers might have a new and better money laundering option: using ransomware proceeds to buy a pint of avocado ice cream at Whole Foods; a Nantucket Rug at Crate and Barrel or a Zegna Quindici Tie at Nordstrom’s.
Isn’t Cash Equally as Dangerous as Bitcoin and Other Cryptocurrencies?
Bitcoin and other crypto-fanatics argue that criminals can use cash just as easily as they can use bitcoin and other cryptocurrencies to commit crimes. After all, in comparison to bitcoin and other cryptocurrencies, isn’t cash similarly anonymous; untraceable; and fungible? The answer is no – which is precisely why bitcoin has evolved into the currency of choice for criminals.
First off, in the U.S., pursuant to the Bank Secrecy Act (BSA), transactions involving traditional financial firms, such as banks, brokers and dealers, and money service businesses (MSBs), are subject to strict federal and state anti-money laundering laws and regulations aimed at detecting and reporting suspicious activity, including money laundering and terrorist financing, as well as securities fraud and market manipulation.
AML programs typically include a system of internal controls to ensure ongoing compliance with the BSA; independent testing of BSA/AML compliance; a designated BSA compliance officer to oversee compliance efforts; training for appropriate personnel; and a customer identification program. Thus, to ensure AML compliance, financial firms start by obtaining clearly identifiable information about a prospective client, and identifying any potential risks of association. This makes engaging in cash-related crimes challenging. Given in particular the tremendous technological innovation at financial institutions, moving or warehousing cash without detection and surveillance has become significantly challenging.
The same is not necessarily true for cryptocurrency transactions. Cryptocurrency transactions can create challenging hurdles for law enforcement to identify criminals. Theoretically, anyone with an Internet connection and a digital wallet can be part of any cryptocurrency platform, initial coin offering or other cryptocurrency financing endeavor operating anywhere on the globe – which, of course, opens the laundry room door for those with criminal motives.
For example, in July, 2018, special counsel Robert Mueller indicted twelve Russian intelligence officials for allegedly attempting to influence U.S. elections in 2016. The indictment notes that the conspirators used bitcoin to fund the purchase of servers, register domains, and make other payments “in furtherance of hacking activity.” According to the indictment, the “use of bitcoin allowed the Conspirators to avoid direct relationships with traditional financial institutions, allowing them to evade greater scrutiny of their identities and sources of funds.”
The same rationale of secrecy and pseudo-anonymity unfortunately applies to terrorism financing. For instance, the Palestinian military-political group Hamas, which the U.S. government deems a terrorist organization, may be using the Coinbase cryptocurrency exchange for fundraising. Similarly, in December 2017, a woman was arrested in New York for allegedly obtaining $62,000 in bitcoin to send to Islamic State. Around the same time, an Islamic State-affiliated Darknet site called Isdarat sought bitcoin contributions from supporters.
Wildly Absurd and Oft Manipulated Crypto-Valuations
In addition to becoming a facilitator for cryptocurrency transactions, by accepting cryptocurrency from customers, retailers are also indirectly endorsing cryptocurrency’s oft manipulated and wholly unregulated farcical valuations.
In fact, the criminalities associated with cryptocurrency’s use are almost as egregious and disturbing as the criminalities associated with its valuations. Bitcoin and other cryptocurrency’s anarchistic valuations remain generally unregulated and without any meaningful oversight, leaving them easily susceptible to fraud and chicanery by insiders, management and better-informed traders and market participants.
For example, researchers from the University of Texas found that manipulation in the cryptocurrency market is rampant and much of the run-up in Bitcoin’s price during 2017 was due to manipulation orchestrated by the Hong Kong exchange Bitfinex. In a 66-page paper, the authors found that tether was used to buy bitcoin at key moments when it was declining, which helped “stabilize and manipulate” the cryptocurrency’s price.
More Illiquidity, Fraud and Manipulation Risks
For retailers to willingly subject themselves to bitcoin’s sinister and stealthy environment of illiquidity, fraud and manipulations makes little sense. Here’s why:
The logistics of accepting cryptocurrency are unique, complicated and problematic. It is not as if a retailer can stroll across the street and convert cryptocurrency to U.S. dollars, record the data in a firm’s accounting software, and be back in time for lunch. First, the retailer must identify a reliable and trustworthy financial institution to safeguard the cryptocurrency (and to convert the cryptocurrency upon demand. Where to find this kind of honorable, respected and U.S. financial institution? Not among Wall Street’s traditional ranks of federally registered, regulated and monitored reliable institutions.
The institutions servicing cryptocurrency clients are barely in their infancy. For the typical cryptocurrency trading platform, there is no central regulatory authority; no state or federal team of bank auditors and compliance experts scrutinizing transactions and policing for manipulation; no existing federal licensure – it’s not just the Wild West, it’s global economic anarchy.
Cryptocurrency intermediaries often give the impression to investors that they are regulated or meet the regulatory standards of national securities exchanges and that their operations are similarly transparent, reliable, trustworthy and bonafide. This is not true.
Although some of these platforms claim to use strict standards to pick only high-quality digital assets to trade, the U.S. Securities and Exchange Commission (SEC), the primary regulator of securities exchanges, does not review these standards or the digital assets that the platforms select, and the so-called standards should not be equated to the listing standards of national securities exchanges.
Likewise, the SEC does not review the trading protocols used by these platforms, which determine how orders interact and execute, and access to a platform’s trading services may not be the same for all users. Again, investors should not assume the trading protocols meet the standards of an SEC-registered national securities exchange.
Along the same lines, cryptocurrency trading platforms claiming to abide by AML, KYC and other similar safety standards and protocols are nothing like registered banks, national exchanges, broker-dealers. Given the identification and verification challenges associated with the global locations, pseudo-anonymity and historically criminal tendencies of typical cryptocurrency users, AML, KYC and other similar compliance procedures have little in common with the sophisticated technological compliance infrastructure at traditional U.S. financial institutions.
For instance, the U.S. Department of Justice (DOJ) announced in April of 2019, that it has charged two individuals with bank fraud in connection to a system for depositing funds to cryptocurrency trading platforms. In a statement, the U.S. Attorney’s Office for the Southern District of New York alleged that Reginald Fowler of Arizona and Ravid Yosef, said to live in Tel Aviv, Israel, were part of a scheme that involved using bank accounts to move money into a series of unnamed cryptocurrency trading platforms.
Similarly, on April 26, 2019, after New York’s attorney general accused the owners of a prominent cryptocurrency trading platform, Bitfinex, of using illicit transactions to mask $850 million in missing funds. According to a 23-page legal filing, Bitfinex raided the reserves of a so-called stablecoin called Tether — a digital currency purportedly backed one-to-one by U.S. dollars—in order to pay out customers demanding withdrawals from the platform.
The New York AG filing also reproduces messages written by a Bitfinex executive which plead for capital from a Panamanian payment processor to which it had transferred funds. The exact identity of the Panamanian payment processor, Crypto Capital, is unclear. According to the attorney general, Bitfinex, which is incorporated in the British Virgin Islands, relied on a shadowy network of money agents, including “human being friends of Bitfinex employees that were willing to use their bank accounts to transfer money to Bitfinex clients.”
Thus, for the most part, the various financial intermediaries operating within the cryptocurrency marketplace typically:
Are not registered with any federal government agency and has no liquidity, net capital or other depository or financial requirements of any kind;
Are not examined or audited by any federal agency such as the Federal Reserve or the U.S. Securities and Exchange Commission (SEC);
Are not regulated by any quasi-government agency such as the Financial Industry Regulatory Authority (FINRA).
Warehouse property such as bitcoin (bitcoin is not recognized as an official currency), which is not insured by any federal agency, such as the Federal Deposit Insurance Corporation;
Do not have any federal accounting requirements with respect to their assets;
Do not report their financial condition in any form of official SEC filing, such as an annual report or Form 10-K;
Do not have any federal record-keeping requirements with respect to their operations, communications or any other aspect of its business;
Would assert that they have no specific federal requirements regarding the pricing of any cryptocurrency trading transaction, the use of employees of its payment systems or any federal anti-manipulation requirements; and
Would assert that they do not have the same federal compliance systems or code of conduct requirements of traditional financial institutions such as banks, investment companies, brokerages and other financial firms, who spend millions of dollars every year on internal compliance infrastructure and customer-protection-related infrastructure.
The bottom line: cryptocurrency financial marketplaces tend to believe that they have no federal licensing requirements to meet the bulk of the vigorous federal safeguards historically rooted and associated with U.S. financial institution registration and regulation. These standards and practices, formulated after decades of scrutiny, analysis and enquiry, are the hallmark of U.S. financial institutions.
Currently, when a customer has a problem with a cryptocurrency transaction, there also exists no established federal government watchdog, which causes further enforcement consternation. To exacerbate matters, typical cryptocurrency transactions are by definition irreversible – no anti-fraud guarantee from a financial institution and no reversing the charges, if any dispute or problem arises.
And even if there was a formal federal regulatory complaint filing structure, the pseudo-anonymous nature of virtual currencies, ease of cross-border and interstate transport, and the lack of a formal banking edifice creates enormous challenges for law enforcement to investigate and apprehend any individuals who use cryptocurrencies for illegal activities.
Price Volatility Risks
For retailers accepting bitcoin, they are encouraging their customers to take on tremendous price volatility risks.
Bitcoin started a decade ago but gained status as a household name during its 1,300 percent price rise and march to nearly $20,000 last year. Because the cryptocurrency’s value can vary drastically in a single day, its unprecedented volatility creates serious challenges to using bitcoin as a method of payment for retailers.
For instance, since January, bitcoin has fallen roughly 70 percent and recently fell below $3,500 for the first time in 14 months, losing 30 percent in over seven days. Bitcoin recovered slightly afterwards but continues to experience dramatic, unpredictable and startling price swings.
Enabling retail customers to pay via bitcoin is a not-so-subtle endorsement encouraging them to invest in bitcoin – which is replete with too many risks to mention, and seems irresponsible for any U.S. corporation.
Cybersecurity Risk
Transacting in bitcoin for a retailer and its customers carries with it extraordinary cybersecurity risk. Bitcoin’s true believers tout that cryptocurrencies provide a safe and secure way of making payments, but rarely have a clue as to how they work.
In 2016, hackers stole $72 million worth of bitcoin from exchange Bitfinex. And in 2018, hackers stole $500 million in digital tokens from exchange Coincheck. Binance, one of the largest cryptocurrency trading platforms in the world, just announced that hackers stole $40 million worth of bitcoin from them using a phishing and virus scheme, in what the company described as a “large scale security breach.” According to the Wall Street Journal, more than $1.7 billion in cryptocurrency has been stolen over the years, most of which has come from exchanges and been centered around Asia.
Hackers have now become virtual bank robbers – except their break-ins can be done thousands of miles away from a dark and quiet basement, and then launder the proceeds through various digital wallets or their friendly neighborhood U.S. retailer.
Renowned security technologist Bruce Scheier explains in clear and simple terms the cybersecurity risks of cryptocurrency, emphasizing bitcoin’s (and blockchain’s) regulatory and enforcement vacuum:
“If your bitcoin exchange gets hacked, you lose all of your money. If your bitcoin wallet gets hacked, you lose all of your money. If you forget your login credentials, you lose all of your money. If there’s a bug in the code of your smart contract, you lose all of your money. If someone successfully hacks the blockchain security, you lose all of your money. In many ways, trusting technology is harder than trusting people.”
Say it Ain’t So Whole Foods
Benevolently branded Whole Foods seems the most incongruous of these purported crypto-friendly retailers. Loyal Whole Foods Market customers laud the company’s commitment to minimally processed products free of certain artificial ingredients, and foods that contain nitrates, harmful pesticides, artificial colors, antibiotics, and hormones. Whole Foods farmed seafood standards are the highest in the industry: antibiotics, growth hormones, preservatives like sulfites and phosphates, genetically-modified seafood, and land animal by-products in feed are all prohibited.
Several times a year, each Whole Foods holds “5% days,” where five percent of that day’s net sales goes to support local education, hospitals or non-profits. Whole Foods Market also sets an example in its use of wind power, solar power, company-wide recycling programs, green buildings for their stores, etc. Whole Foods markets their benevolence aggressively — and consumers love it.
But by accepting cryptocurrency, Whole Foods would be assisting in the growth of an increasingly sophisticated, dangerous and terrorist-minded gang of global criminals – which to me, seems far more menacing than the threats posed by genetically-modified seafood or feed containing land animal by-products.
Looking Ahead
Bitcoin resides amid a libertarian financial realm of competing bandits. That is why, ironically, one of bitcoin’s most useful criminal attributes is its use for the theft of other bitcoin. Retailers should think twice before lending an aura of legitimacy to bitcoin and other cryptocurrencies, and consider carefully their role in supporting cryptocurrency growth and encouraging cryptocurrency use.
In the history of financial innovation, modernization and invention, there has always existed one constant: whatever the product, criminals will attempt to exploit its application. Bitcoin dramatically illustrates this axiom. Yet despite the treacherous reality of bitcoin’s predominant use, retail apparently wants in. It would seem that retailers have become so desperate for market share that they will resort to enabling terrorism, extortion and other criminalities.
It’s not just that bitcoin-friendly retailers have given little consideration to the myriad of victims of crypto-funded ransomware, terrorism, drug dealing and the like. Cryptocurrency’s liquidity risk; price volatility; cybersecurity vulnerabilities; commission fees; AML implications; ethical dilemmas; tax burdens; entanglement mishaps and the rest, create a situation that could be unmanageable or even untenable for a retailer’s shareholders, partners, affiliates and other fiduciaries. Not to mention that for the most part, the entire cryptocurrency system resides amid an unregulated, mysterious and sinister environment – a patently poor choice of virtual venue.
Cryptocurrencies purport to be items of inherent value (similar, for instance, to cash or gold) that are designed to enable purchases, sales and other financial transactions, and promise to provide many of the same functions as long-established currencies such as the U.S. dollar, euro or Japanese yen. But retailers should not be fooled.
Cryptocurrencies are mere computer-generated chattel, and Whole Foods, Nordstrom and Crate and Barrel should not agree to accept chattel from customers as consideration for their purchases. We are not living in the 1800s and this is not Deadwood, South Dakota.
Don’t get me wrong, the blockchain technology on which cryptocurrencies are based may turn out to be the most exciting, disruptive, transformative and efficiency enhancing breakthrough since sliced bread. But aside from complex issues of privacy, security, ethics and simple practicality, blockchain technology remains embryonic; has still yet to be proven; and happens to reside amid an economic ecosystem rife with fraud, deceit, dishonesty and thievery. Bitcoin is arguably blockchain’s most celebrated accomplishment yet much of bitcoin’s value, outside of mere speculation, is derived solely from its ability to facilitate criminal activity.
Moreover, just because some mythical engineer has discovered a potentially revolutionary manner to engage in and verify commercial transactions (e.g. replacing a traditional corporate entry recorded in an intermediary institution’s centralized ledger with a virtual entry recorded on a blockchain’s decentralized distributed ledger), it does not mean that criminals should be permitted to create their own form of currency to use to commit robbery, theft, extortion and even murder.
I can appreciate that bitcoin investors are merely ascribing to the historically proven greater fool theory, betting that there will always be a “greater fool” in the cryptocurrency marketplace poised to pay a price based on higher valuation for an already overvalued bitcoin. But the inherent scourge of bitcoin is an altogether different story. For retailers, where reputation is so critical, the risks of somehow becoming ensnared or even merely associating with the dark and seedy underbelly of cryptocurrency are considerable.
Director of the SEC Enforcement Division from 1974 to 1981; general counsel to the Central Intelligence Agency from 1981 to 1985; and U.S. District Court Judge for the District of Columbia from 1985 to 2000, famed Judge Stanley Sporkin put it best when he said, “When you lie down with dogs, you wake up with fleas.”
When it comes to bitcoin and other cryptocurrencies, the so-called “fintech” lawyers advising retailers contemplating crypto-cash registers should take heed of Judge Sporkin’s enduring admonition. Fintech legal advice should be plain and simple: bitcoin is a plague, so stay as far away from it as you can.
_________________________
John Reed Stark is president of John Reed Stark Consulting LLC, a data breach response and digital compliance firm. Formerly, Mr. Stark served for almost 20 years in the Enforcement Division of the U.S. Securities and Exchange Commission, the last 11 of which as Chief of its Office of Internet Enforcement. He currently teaches a cyber-law course as a Senior Lecturing fellow at Duke Law School. Mr. Stark also worked for 15 years as an Adjunct Professor of Law at the Georgetown University Law Center, where he taught several courses on the juxtaposition of law, technology and crime, and for five years as managing director of global data breach response firm, Stroz Friedberg, including three years heading its Washington, D.C. office. Mr. Stark is the author of “The Cybersecurity Due Diligence Handbook.”
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Guest Post: The Bitcoin Plague Spreads to Retail
John Reed Stark
In recent days, a number of leading retailers have announced that they are initiating processes to allow consumers to complete purchase transactions using bitcoin or other cryptocurrencies. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at these developments in the retail industry. A version of this article originally appeared on Securities Docket. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.
*********************
Warren Buffett, perhaps the most celebrated investor ever known, refers to bitcoin as “rat poison squared.” I disagree. Bitcoin is worse than rat poison – it is more akin to the plague and mayhem that rats can spread if not properly contained. Now, the bitcoin plague has spread to U.S. shopping malls.
Thanks to a new initiative, several big name retailers, including Crate and Barrel, Nordstrom, and Amazon-owned Whole Foods, according to Fortune, will now reportedly accept bitcoin and three other types of digital currency.
At first glance, creating cryptocurrency payment arrangements for retail products might seem like a no-brainer, falling squarely in line with classic, basic and critical marketing principles. Consider all the benefits:
What better way to attract customers than to create a financially friendly environment where a customer’s cryptocurrency fanaticism is enthusiastically embraced;
Sharing the excitement of cryptocurrency offers a unique chance to bond with tech-savvy customers, especially those beyond borders;
The medium can become the message. By accepting cryptocurrency as payment, a retailer is demonstrating its commitment to creativity, modernization and originality – traits that customers might appreciate and find compelling;
Payment flexibility can attract business in and of itself. Given that accepting debit and credit cards online can make a retailer more appealing to current and potential customers, so too can accepting other forms of payment, including cryptocurrencies; and
Retailers can take advantage of the chance to demonstrate tangible support for a client’s libertarian financial preferences. By “putting your money where your mouth is,” retailers can prove themselves true believers in the future of technology-driven digital currency, setting themselves apart from their scribe competitors who remain content to observe the crypto-revolution from the safety and shelter of the sidelines.
But despite all of the crypto-hoopla, retailers should ignore the Marketing 101 crypto-lesson blather set forth above. Given its complete and utter lack of oversight and meaningful licensure, the cryptocurrency marketplace has spawned a growing global cadre of dangerous criminals, and the risks for retailers accepting cryptocurrency run a perilous gamut of legal, regulatory, financial, ethical and reputational dangers.
In short, accepting cryptocurrency from customers in today’s crypto-manic environment is, despite all of the high-tech allure, just not worth it – and a glaring exemplar of commercial ignorance; opportunistic corporate pandering; and sadly, plain old-fashioned executive avarice.
The Dark Side of Cryptocurrency
Need a fake I.D., a bottle of opiates, a cache of credit card numbers or a thousand social security numbers? Need a way to collect a ransomware payment? Need to fund terrorist-related activities? Need to hire a hitman? Need to finance an election tampering scheme? Cryptocurrencies like bitcoin have become the payment method of choice for these, and a slew of other, criminal enterprises.
What exactly is bitcoin? Bitcoin is a virtual or digital currency that uses encryption techniques for governance and security and operates independent of any central bank. A token is a digital asset that can be used in many ways — for example, as a unit of value (or as means of providing access to and transactional value inside a particular blockchain system (e.g., retail allows access to electronic data storage space in Sia’s blockchain ecosystem). Tokens are built on top of blockchain technology, a form of distributive ledger technology, which is a digital database that is consensually shared and synchronized across networks spread across multiple sites, institutions or geographies.
Transactions in cryptocurrencies like bitcoin are pseudo-anonymous, encrypted and decentralized by nature, offering a convenient method of transferring funds obtained from illegal activities without an audit trail. Cryptocurrencies also operate outside of traditional and established financial networks and are alarmingly unregulated. There is no central issuer of bitcoins, nor a Federal Reserve of Bitcoins monitoring and tracking transactions or controlling their value. In short, government surveillance and regulation of cryptocurrency is virtually nonexistent (no pun intended).
Thus, it should come as no surprise that bitcoin can trace its origins with criminals in the dark web marketplace. Indeed, cryptocurrency and criminal activity have remained inexorably linked ever since the 2011 launching of The Silk Road, who began using bitcoin as its main currency in their virtual marketplace for buying and selling drugs, weapons, and all things illicit on the dark web. Until shut down by law enforcement in 2013 and then again in 2014 and finally going offline in 2017 due to loss of funding, Silk Road served as a glaring example of the crimes so easily facilitated by cryptocurrency (in 2015 Silk Road’s creator, Ross Ulbricht, was sentenced to life in prison).
After Silk Road was shut down, bitcoin’s price plummeted, and many crypto-pundits expected bitcoin demand to dry up. But in the following years, the opposite seemed to happen. Recent data from Kapersky CiperTrace shows criminals have laundered $2.5 billion worth of criminally utilized bitcoin through cryptocurrency exchanges, and almost all of it ends up in countries with lax Anti-Money-Laundering (AML) and Know Your Customer (KYC) regulations. The data, which spans from January 2009 to September 2018, indicates 97 percent of the bitcoin laundered through cryptocurrency trading platforms ends up in countries with lenient AML regulations. Kapersky CiperTrace deemed transactions to be of criminal nature if they came directly from, or with close connection to, sources such as “dark market sites, extortion, malware, mixer/tumbler/money laundering, ransomware, and terrorist financing services.”
Though bitcoin traversed from the digital to physical world with the first-ever bitcoin ATM at a Vancouver coffee shop in 2013, bitcoin’s use as a real currency has not truly caught on as a legitimate means of payment. Bitcoin ATMs remain mysterious, suspicious and enigmatic to say the least. Meanwhile the U.S. government has never recognized bitcoin as a currency – rather, bitcoin and all other cryptocurrencies are simply property or, as lawyers would say, chattel.
Spotlight: Cryptocurrency and Ransomware Extortion Schemes
One of the more prominent criminal uses of bitcoin involves so-called “ransomware” schemes and provides a definitive example of how nefarious cryptocurrency has become.
Insurer Beazley Group in its May 2019 Beazley Breach Insights Report (BBR) claims its clients have reported twice the number of ransomware cyberattacks in the first quarter of 2019 as they did last year, with hackers targeting bigger companies and demanding bigger ransoms than ever before. The size of demands is also growing. According to the May 2019 BBR, in Q1 2019, the average ransomware demand reported to the BBR Services team was $224,871, an increase of 93% over the 2018 average of $116,324. Here is how a typical ransomware extortion scheme works:
Ransomware attackers break into a corporate system and encrypt, or lock-up, a corporate victim’s data. Most ransomware infections come from phishing attacks, in which unwitting users are enticed to open a file or click on a link containing the ransomware malware;
The ransomware attackers demand payment in cryptocurrency for the encryption key to enable the victim corporation to unlock the now inaccessible data;
The ransomware victim pays the cryptocurrency ransom to the attacker; and
The ransomware attackers move on to their next victim.
While ransomware attacks come in many forms, in each case they infect a computer and restrict users’ access to certain data, systems, and files, until a ransom is paid. A few particularly disturbing statistics about ransomware:
A new organization will fall victim to ransomware every 14 seconds in 2019, and every 11 seconds by 2021;
1.5 million new phishing sites are created every month;
Ransomware attacks have increased over 97 percent in the past two years;
34% of businesses hit with malware took a week or more to regain access to their data;
Cryptocurrency payments made to ransomware attackers increased nearly 90 percent in Q1 2019 over the previous quarter, according to Coveware’s latest report; and
In 2019 ransomware from phishing emails increased 109 percent over 2017.
What makes ransomware attacks so devastating is that many variants do not simply target individual endpoints, but rather establish a foothold on one device and then fan out across a corporate network, encrypting everything from shared drives and email servers to website platforms and backup servers. In this way, ransomware attackers can cripple significant portions, or even all, of a company’s technologically facilitated operations. Hence ransomware’s dirty little secret: most corporations pay the ransom.
How do most corporate victims of ransomware attacks pay the ransoms demanded? Bitcoin of course – it’s fast, reliable, verifiable, subject to little regulation, and virtually untraceable. Bitcoin is ideal for ransomware extortion schemes. The hacker can simply watch the public blockchain to know if and when a victim has paid up. Hackers can even create a unique payment address for each victim and automate the process of unlocking their files upon a confirmed bitcoin transaction to that unique address.
Unlike the sequence of events during a kidnapping scenario, where the exchange of money arguably places criminals in their most vulnerable position, ransomware attackers facilitate pseudo-anonymity by orchestrating a bitcoin transaction process. Rarely is there ever even an arrest, let alone a successful prosecution, of a ransomware attacker. Law enforcement remains virtually powerless, and has even fallen victim themselves to ransomware extortion schemes. Ransomware attackers have become yet another class of cybercriminal who continue to enrich themselves while, for the most part, law enforcement can only watch from the sidelines.
Once the ransomware attackers take possession of the bitcoin payment, it can now be laundered via the Dark Web – that is, until now. Now, ransomware attackers might have a new and better money laundering option: using ransomware proceeds to buy a pint of avocado ice cream at Whole Foods; a Nantucket Rug at Crate and Barrel or a Zegna Quindici Tie at Nordstrom’s.
Isn’t Cash Equally as Dangerous as Bitcoin and Other Cryptocurrencies?
Bitcoin and other crypto-fanatics argue that criminals can use cash just as easily as they can use bitcoin and other cryptocurrencies to commit crimes. After all, in comparison to bitcoin and other cryptocurrencies, isn’t cash similarly anonymous; untraceable; and fungible? The answer is no – which is precisely why bitcoin has evolved into the currency of choice for criminals.
First off, in the U.S., pursuant to the Bank Secrecy Act (BSA), transactions involving traditional financial firms, such as banks, brokers and dealers, and money service businesses (MSBs), are subject to strict federal and state anti-money laundering laws and regulations aimed at detecting and reporting suspicious activity, including money laundering and terrorist financing, as well as securities fraud and market manipulation.
AML programs typically include a system of internal controls to ensure ongoing compliance with the BSA; independent testing of BSA/AML compliance; a designated BSA compliance officer to oversee compliance efforts; training for appropriate personnel; and a customer identification program. Thus, to ensure AML compliance, financial firms start by obtaining clearly identifiable information about a prospective client, and identifying any potential risks of association. This makes engaging in cash-related crimes challenging. Given in particular the tremendous technological innovation at financial institutions, moving or warehousing cash without detection and surveillance has become significantly challenging.
The same is not necessarily true for cryptocurrency transactions. Cryptocurrency transactions can create challenging hurdles for law enforcement to identify criminals. Theoretically, anyone with an Internet connection and a digital wallet can be part of any cryptocurrency platform, initial coin offering or other cryptocurrency financing endeavor operating anywhere on the globe – which, of course, opens the laundry room door for those with criminal motives.
For example, in July, 2018, special counsel Robert Mueller indicted twelve Russian intelligence officials for allegedly attempting to influence U.S. elections in 2016. The indictment notes that the conspirators used bitcoin to fund the purchase of servers, register domains, and make other payments “in furtherance of hacking activity.” According to the indictment, the “use of bitcoin allowed the Conspirators to avoid direct relationships with traditional financial institutions, allowing them to evade greater scrutiny of their identities and sources of funds.”
The same rationale of secrecy and pseudo-anonymity unfortunately applies to terrorism financing. For instance, the Palestinian military-political group Hamas, which the U.S. government deems a terrorist organization, may be using the Coinbase cryptocurrency exchange for fundraising. Similarly, in December 2017, a woman was arrested in New York for allegedly obtaining $62,000 in bitcoin to send to Islamic State. Around the same time, an Islamic State-affiliated Darknet site called Isdarat sought bitcoin contributions from supporters.
Wildly Absurd and Oft Manipulated Crypto-Valuations
In addition to becoming a facilitator for cryptocurrency transactions, by accepting cryptocurrency from customers, retailers are also indirectly endorsing cryptocurrency’s oft manipulated and wholly unregulated farcical valuations.
In fact, the criminalities associated with cryptocurrency’s use are almost as egregious and disturbing as the criminalities associated with its valuations. Bitcoin and other cryptocurrency’s anarchistic valuations remain generally unregulated and without any meaningful oversight, leaving them easily susceptible to fraud and chicanery by insiders, management and better-informed traders and market participants.
For example, researchers from the University of Texas found that manipulation in the cryptocurrency market is rampant and much of the run-up in Bitcoin’s price during 2017 was due to manipulation orchestrated by the Hong Kong exchange Bitfinex. In a 66-page paper, the authors found that tether was used to buy bitcoin at key moments when it was declining, which helped “stabilize and manipulate” the cryptocurrency’s price.
More Illiquidity, Fraud and Manipulation Risks
For retailers to willingly subject themselves to bitcoin’s sinister and stealthy environment of illiquidity, fraud and manipulations makes little sense. Here’s why:
The logistics of accepting cryptocurrency are unique, complicated and problematic. It is not as if a retailer can stroll across the street and convert cryptocurrency to U.S. dollars, record the data in a firm’s accounting software, and be back in time for lunch. First, the retailer must identify a reliable and trustworthy financial institution to safeguard the cryptocurrency (and to convert the cryptocurrency upon demand. Where to find this kind of honorable, respected and U.S. financial institution? Not among Wall Street’s traditional ranks of federally registered, regulated and monitored reliable institutions.
The institutions servicing cryptocurrency clients are barely in their infancy. For the typical cryptocurrency trading platform, there is no central regulatory authority; no state or federal team of bank auditors and compliance experts scrutinizing transactions and policing for manipulation; no existing federal licensure – it’s not just the Wild West, it’s global economic anarchy.
Cryptocurrency intermediaries often give the impression to investors that they are regulated or meet the regulatory standards of national securities exchanges and that their operations are similarly transparent, reliable, trustworthy and bonafide. This is not true.
Although some of these platforms claim to use strict standards to pick only high-quality digital assets to trade, the U.S. Securities and Exchange Commission (SEC), the primary regulator of securities exchanges, does not review these standards or the digital assets that the platforms select, and the so-called standards should not be equated to the listing standards of national securities exchanges.
Likewise, the SEC does not review the trading protocols used by these platforms, which determine how orders interact and execute, and access to a platform’s trading services may not be the same for all users. Again, investors should not assume the trading protocols meet the standards of an SEC-registered national securities exchange.
Along the same lines, cryptocurrency trading platforms claiming to abide by AML, KYC and other similar safety standards and protocols are nothing like registered banks, national exchanges, broker-dealers. Given the identification and verification challenges associated with the global locations, pseudo-anonymity and historically criminal tendencies of typical cryptocurrency users, AML, KYC and other similar compliance procedures have little in common with the sophisticated technological compliance infrastructure at traditional U.S. financial institutions.
For instance, the U.S. Department of Justice (DOJ) announced in April of 2019, that it has charged two individuals with bank fraud in connection to a system for depositing funds to cryptocurrency trading platforms. In a statement, the U.S. Attorney’s Office for the Southern District of New York alleged that Reginald Fowler of Arizona and Ravid Yosef, said to live in Tel Aviv, Israel, were part of a scheme that involved using bank accounts to move money into a series of unnamed cryptocurrency trading platforms.
Similarly, on April 26, 2019, after New York’s attorney general accused the owners of a prominent cryptocurrency trading platform, Bitfinex, of using illicit transactions to mask $850 million in missing funds. According to a 23-page legal filing, Bitfinex raided the reserves of a so-called stablecoin called Tether — a digital currency purportedly backed one-to-one by U.S. dollars—in order to pay out customers demanding withdrawals from the platform.
The New York AG filing also reproduces messages written by a Bitfinex executive which plead for capital from a Panamanian payment processor to which it had transferred funds. The exact identity of the Panamanian payment processor, Crypto Capital, is unclear. According to the attorney general, Bitfinex, which is incorporated in the British Virgin Islands, relied on a shadowy network of money agents, including “human being friends of Bitfinex employees that were willing to use their bank accounts to transfer money to Bitfinex clients.”
Thus, for the most part, the various financial intermediaries operating within the cryptocurrency marketplace typically:
Are not registered with any federal government agency and has no liquidity, net capital or other depository or financial requirements of any kind;
Are not examined or audited by any federal agency such as the Federal Reserve or the U.S. Securities and Exchange Commission (SEC);
Are not regulated by any quasi-government agency such as the Financial Industry Regulatory Authority (FINRA).
Warehouse property such as bitcoin (bitcoin is not recognized as an official currency), which is not insured by any federal agency, such as the Federal Deposit Insurance Corporation;
Do not have any federal accounting requirements with respect to their assets;
Do not report their financial condition in any form of official SEC filing, such as an annual report or Form 10-K;
Do not have any federal record-keeping requirements with respect to their operations, communications or any other aspect of its business;
Would assert that they have no specific federal requirements regarding the pricing of any cryptocurrency trading transaction, the use of employees of its payment systems or any federal anti-manipulation requirements; and
Would assert that they do not have the same federal compliance systems or code of conduct requirements of traditional financial institutions such as banks, investment companies, brokerages and other financial firms, who spend millions of dollars every year on internal compliance infrastructure and customer-protection-related infrastructure.
The bottom line: cryptocurrency financial marketplaces tend to believe that they have no federal licensing requirements to meet the bulk of the vigorous federal safeguards historically rooted and associated with U.S. financial institution registration and regulation. These standards and practices, formulated after decades of scrutiny, analysis and enquiry, are the hallmark of U.S. financial institutions.
Currently, when a customer has a problem with a cryptocurrency transaction, there also exists no established federal government watchdog, which causes further enforcement consternation. To exacerbate matters, typical cryptocurrency transactions are by definition irreversible – no anti-fraud guarantee from a financial institution and no reversing the charges, if any dispute or problem arises.
And even if there was a formal federal regulatory complaint filing structure, the pseudo-anonymous nature of virtual currencies, ease of cross-border and interstate transport, and the lack of a formal banking edifice creates enormous challenges for law enforcement to investigate and apprehend any individuals who use cryptocurrencies for illegal activities.
Price Volatility Risks
For retailers accepting bitcoin, they are encouraging their customers to take on tremendous price volatility risks.
Bitcoin started a decade ago but gained status as a household name during its 1,300 percent price rise and march to nearly $20,000 last year. Because the cryptocurrency’s value can vary drastically in a single day, its unprecedented volatility creates serious challenges to using bitcoin as a method of payment for retailers.
For instance, since January, bitcoin has fallen roughly 70 percent and recently fell below $3,500 for the first time in 14 months, losing 30 percent in over seven days. Bitcoin recovered slightly afterwards but continues to experience dramatic, unpredictable and startling price swings.
Enabling retail customers to pay via bitcoin is a not-so-subtle endorsement encouraging them to invest in bitcoin – which is replete with too many risks to mention, and seems irresponsible for any U.S. corporation.
Cybersecurity Risk
Transacting in bitcoin for a retailer and its customers carries with it extraordinary cybersecurity risk. Bitcoin’s true believers tout that cryptocurrencies provide a safe and secure way of making payments, but rarely have a clue as to how they work.
In 2016, hackers stole $72 million worth of bitcoin from exchange Bitfinex. And in 2018, hackers stole $500 million in digital tokens from exchange Coincheck. Binance, one of the largest cryptocurrency trading platforms in the world, just announced that hackers stole $40 million worth of bitcoin from them using a phishing and virus scheme, in what the company described as a “large scale security breach.” According to the Wall Street Journal, more than $1.7 billion in cryptocurrency has been stolen over the years, most of which has come from exchanges and been centered around Asia.
Hackers have now become virtual bank robbers – except their break-ins can be done thousands of miles away from a dark and quiet basement, and then launder the proceeds through various digital wallets or their friendly neighborhood U.S. retailer.
Renowned security technologist Bruce Scheier explains in clear and simple terms the cybersecurity risks of cryptocurrency, emphasizing bitcoin’s (and blockchain’s) regulatory and enforcement vacuum:
“If your bitcoin exchange gets hacked, you lose all of your money. If your bitcoin wallet gets hacked, you lose all of your money. If you forget your login credentials, you lose all of your money. If there’s a bug in the code of your smart contract, you lose all of your money. If someone successfully hacks the blockchain security, you lose all of your money. In many ways, trusting technology is harder than trusting people.”
Say it Ain’t So Whole Foods
Benevolently branded Whole Foods seems the most incongruous of these purported crypto-friendly retailers. Loyal Whole Foods Market customers laud the company’s commitment to minimally processed products free of certain artificial ingredients, and foods that contain nitrates, harmful pesticides, artificial colors, antibiotics, and hormones. Whole Foods farmed seafood standards are the highest in the industry: antibiotics, growth hormones, preservatives like sulfites and phosphates, genetically-modified seafood, and land animal by-products in feed are all prohibited.
Several times a year, each Whole Foods holds “5% days,” where five percent of that day’s net sales goes to support local education, hospitals or non-profits. Whole Foods Market also sets an example in its use of wind power, solar power, company-wide recycling programs, green buildings for their stores, etc. Whole Foods markets their benevolence aggressively — and consumers love it.
But by accepting cryptocurrency, Whole Foods would be assisting in the growth of an increasingly sophisticated, dangerous and terrorist-minded gang of global criminals – which to me, seems far more menacing than the threats posed by genetically-modified seafood or feed containing land animal by-products.
Looking Ahead
Bitcoin resides amid a libertarian financial realm of competing bandits. That is why, ironically, one of bitcoin’s most useful criminal attributes is its use for the theft of other bitcoin. Retailers should think twice before lending an aura of legitimacy to bitcoin and other cryptocurrencies, and consider carefully their role in supporting cryptocurrency growth and encouraging cryptocurrency use.
In the history of financial innovation, modernization and invention, there has always existed one constant: whatever the product, criminals will attempt to exploit its application. Bitcoin dramatically illustrates this axiom. Yet despite the treacherous reality of bitcoin’s predominant use, retail apparently wants in. It would seem that retailers have become so desperate for market share that they will resort to enabling terrorism, extortion and other criminalities.
It’s not just that bitcoin-friendly retailers have given little consideration to the myriad of victims of crypto-funded ransomware, terrorism, drug dealing and the like. Cryptocurrency’s liquidity risk; price volatility; cybersecurity vulnerabilities; commission fees; AML implications; ethical dilemmas; tax burdens; entanglement mishaps and the rest, create a situation that could be unmanageable or even untenable for a retailer’s shareholders, partners, affiliates and other fiduciaries. Not to mention that for the most part, the entire cryptocurrency system resides amid an unregulated, mysterious and sinister environment – a patently poor choice of virtual venue.
Cryptocurrencies purport to be items of inherent value (similar, for instance, to cash or gold) that are designed to enable purchases, sales and other financial transactions, and promise to provide many of the same functions as long-established currencies such as the U.S. dollar, euro or Japanese yen. But retailers should not be fooled.
Cryptocurrencies are mere computer-generated chattel, and Whole Foods, Nordstrom and Crate and Barrel should not agree to accept chattel from customers as consideration for their purchases. We are not living in the 1800s and this is not Deadwood, South Dakota.
Don’t get me wrong, the blockchain technology on which cryptocurrencies are based may turn out to be the most exciting, disruptive, transformative and efficiency enhancing breakthrough since sliced bread. But aside from complex issues of privacy, security, ethics and simple practicality, blockchain technology remains embryonic; has still yet to be proven; and happens to reside amid an economic ecosystem rife with fraud, deceit, dishonesty and thievery. Bitcoin is arguably blockchain’s most celebrated accomplishment yet much of bitcoin’s value, outside of mere speculation, is derived solely from its ability to facilitate criminal activity.
Moreover, just because some mythical engineer has discovered a potentially revolutionary manner to engage in and verify commercial transactions (e.g. replacing a traditional corporate entry recorded in an intermediary institution’s centralized ledger with a virtual entry recorded on a blockchain’s decentralized distributed ledger), it does not mean that criminals should be permitted to create their own form of currency to use to commit robbery, theft, extortion and even murder.
I can appreciate that bitcoin investors are merely ascribing to the historically proven greater fool theory, betting that there will always be a “greater fool” in the cryptocurrency marketplace poised to pay a price based on higher valuation for an already overvalued bitcoin. But the inherent scourge of bitcoin is an altogether different story. For retailers, where reputation is so critical, the risks of somehow becoming ensnared or even merely associating with the dark and seedy underbelly of cryptocurrency are considerable.
Director of the SEC Enforcement Division from 1974 to 1981; general counsel to the Central Intelligence Agency from 1981 to 1985; and U.S. District Court Judge for the District of Columbia from 1985 to 2000, famed Judge Stanley Sporkin put it best when he said, “When you lie down with dogs, you wake up with fleas.”
When it comes to bitcoin and other cryptocurrencies, the so-called “fintech” lawyers advising retailers contemplating crypto-cash registers should take heed of Judge Sporkin’s enduring admonition. Fintech legal advice should be plain and simple: bitcoin is a plague, so stay as far away from it as you can.
_________________________
John Reed Stark is president of John Reed Stark Consulting LLC, a data breach response and digital compliance firm. Formerly, Mr. Stark served for almost 20 years in the Enforcement Division of the U.S. Securities and Exchange Commission, the last 11 of which as Chief of its Office of Internet Enforcement. He currently teaches a cyber-law course as a Senior Lecturing fellow at Duke Law School. Mr. Stark also worked for 15 years as an Adjunct Professor of Law at the Georgetown University Law Center, where he taught several courses on the juxtaposition of law, technology and crime, and for five years as managing director of global data breach response firm, Stroz Friedberg, including three years heading its Washington, D.C. office. Mr. Stark is the author of “The Cybersecurity Due Diligence Handbook.”
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Guest Post: The Bitcoin Plague Spreads to Retail
John Reed Stark
In recent days, a number of leading retailers have announced that they are initiating processes to allow consumers to complete purchase transactions using bitcoin or other cryptocurrencies. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at these developments in the retail industry. A version of this article originally appeared on Securities Docket. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.
*********************
Warren Buffett, perhaps the most celebrated investor ever known, refers to bitcoin as “rat poison squared.” I disagree. Bitcoin is worse than rat poison – it is more akin to the plague and mayhem that rats can spread if not properly contained. Now, the bitcoin plague has spread to U.S. shopping malls.
Thanks to a new initiative, several big name retailers, including Crate and Barrel, Nordstrom, and Amazon-owned Whole Foods, according to Fortune, will now reportedly accept bitcoin and three other types of digital currency.
At first glance, creating cryptocurrency payment arrangements for retail products might seem like a no-brainer, falling squarely in line with classic, basic and critical marketing principles. Consider all the benefits:
What better way to attract customers than to create a financially friendly environment where a customer’s cryptocurrency fanaticism is enthusiastically embraced;
Sharing the excitement of cryptocurrency offers a unique chance to bond with tech-savvy customers, especially those beyond borders;
The medium can become the message. By accepting cryptocurrency as payment, a retailer is demonstrating its commitment to creativity, modernization and originality – traits that customers might appreciate and find compelling;
Payment flexibility can attract business in and of itself. Given that accepting debit and credit cards online can make a retailer more appealing to current and potential customers, so too can accepting other forms of payment, including cryptocurrencies; and
Retailers can take advantage of the chance to demonstrate tangible support for a client’s libertarian financial preferences. By “putting your money where your mouth is,” retailers can prove themselves true believers in the future of technology-driven digital currency, setting themselves apart from their scribe competitors who remain content to observe the crypto-revolution from the safety and shelter of the sidelines.
But despite all of the crypto-hoopla, retailers should ignore the Marketing 101 crypto-lesson blather set forth above. Given its complete and utter lack of oversight and meaningful licensure, the cryptocurrency marketplace has spawned a growing global cadre of dangerous criminals, and the risks for retailers accepting cryptocurrency run a perilous gamut of legal, regulatory, financial, ethical and reputational dangers.
In short, accepting cryptocurrency from customers in today’s crypto-manic environment is, despite all of the high-tech allure, just not worth it – and a glaring exemplar of commercial ignorance; opportunistic corporate pandering; and sadly, plain old-fashioned executive avarice.
The Dark Side of Cryptocurrency
Need a fake I.D., a bottle of opiates, a cache of credit card numbers or a thousand social security numbers? Need a way to collect a ransomware payment? Need to fund terrorist-related activities? Need to hire a hitman? Need to finance an election tampering scheme? Cryptocurrencies like bitcoin have become the payment method of choice for these, and a slew of other, criminal enterprises.
What exactly is bitcoin? Bitcoin is a virtual or digital currency that uses encryption techniques for governance and security and operates independent of any central bank. A token is a digital asset that can be used in many ways — for example, as a unit of value (or as means of providing access to and transactional value inside a particular blockchain system (e.g., retail allows access to electronic data storage space in Sia’s blockchain ecosystem). Tokens are built on top of blockchain technology, a form of distributive ledger technology, which is a digital database that is consensually shared and synchronized across networks spread across multiple sites, institutions or geographies.
Transactions in cryptocurrencies like bitcoin are pseudo-anonymous, encrypted and decentralized by nature, offering a convenient method of transferring funds obtained from illegal activities without an audit trail. Cryptocurrencies also operate outside of traditional and established financial networks and are alarmingly unregulated. There is no central issuer of bitcoins, nor a Federal Reserve of Bitcoins monitoring and tracking transactions or controlling their value. In short, government surveillance and regulation of cryptocurrency is virtually nonexistent (no pun intended).
Thus, it should come as no surprise that bitcoin can trace its origins with criminals in the dark web marketplace. Indeed, cryptocurrency and criminal activity have remained inexorably linked ever since the 2011 launching of The Silk Road, who began using bitcoin as its main currency in their virtual marketplace for buying and selling drugs, weapons, and all things illicit on the dark web. Until shut down by law enforcement in 2013 and then again in 2014 and finally going offline in 2017 due to loss of funding, Silk Road served as a glaring example of the crimes so easily facilitated by cryptocurrency (in 2015 Silk Road’s creator, Ross Ulbricht, was sentenced to life in prison).
After Silk Road was shut down, bitcoin’s price plummeted, and many crypto-pundits expected bitcoin demand to dry up. But in the following years, the opposite seemed to happen. Recent data from Kapersky CiperTrace shows criminals have laundered $2.5 billion worth of criminally utilized bitcoin through cryptocurrency exchanges, and almost all of it ends up in countries with lax Anti-Money-Laundering (AML) and Know Your Customer (KYC) regulations. The data, which spans from January 2009 to September 2018, indicates 97 percent of the bitcoin laundered through cryptocurrency trading platforms ends up in countries with lenient AML regulations. Kapersky CiperTrace deemed transactions to be of criminal nature if they came directly from, or with close connection to, sources such as “dark market sites, extortion, malware, mixer/tumbler/money laundering, ransomware, and terrorist financing services.”
Though bitcoin traversed from the digital to physical world with the first-ever bitcoin ATM at a Vancouver coffee shop in 2013, bitcoin’s use as a real currency has not truly caught on as a legitimate means of payment. Bitcoin ATMs remain mysterious, suspicious and enigmatic to say the least. Meanwhile the U.S. government has never recognized bitcoin as a currency – rather, bitcoin and all other cryptocurrencies are simply property or, as lawyers would say, chattel.
Spotlight: Cryptocurrency and Ransomware Extortion Schemes
One of the more prominent criminal uses of bitcoin involves so-called “ransomware” schemes and provides a definitive example of how nefarious cryptocurrency has become.
Insurer Beazley Group in its May 2019 Beazley Breach Insights Report (BBR) claims its clients have reported twice the number of ransomware cyberattacks in the first quarter of 2019 as they did last year, with hackers targeting bigger companies and demanding bigger ransoms than ever before. The size of demands is also growing. According to the May 2019 BBR, in Q1 2019, the average ransomware demand reported to the BBR Services team was $224,871, an increase of 93% over the 2018 average of $116,324. Here is how a typical ransomware extortion scheme works:
Ransomware attackers break into a corporate system and encrypt, or lock-up, a corporate victim’s data. Most ransomware infections come from phishing attacks, in which unwitting users are enticed to open a file or click on a link containing the ransomware malware;
The ransomware attackers demand payment in cryptocurrency for the encryption key to enable the victim corporation to unlock the now inaccessible data;
The ransomware victim pays the cryptocurrency ransom to the attacker; and
The ransomware attackers move on to their next victim.
While ransomware attacks come in many forms, in each case they infect a computer and restrict users’ access to certain data, systems, and files, until a ransom is paid. A few particularly disturbing statistics about ransomware:
A new organization will fall victim to ransomware every 14 seconds in 2019, and every 11 seconds by 2021;
1.5 million new phishing sites are created every month;
Ransomware attacks have increased over 97 percent in the past two years;
34% of businesses hit with malware took a week or more to regain access to their data;
Cryptocurrency payments made to ransomware attackers increased nearly 90 percent in Q1 2019 over the previous quarter, according to Coveware’s latest report; and
In 2019 ransomware from phishing emails increased 109 percent over 2017.
What makes ransomware attacks so devastating is that many variants do not simply target individual endpoints, but rather establish a foothold on one device and then fan out across a corporate network, encrypting everything from shared drives and email servers to website platforms and backup servers. In this way, ransomware attackers can cripple significant portions, or even all, of a company’s technologically facilitated operations. Hence ransomware’s dirty little secret: most corporations pay the ransom.
How do most corporate victims of ransomware attacks pay the ransoms demanded? Bitcoin of course – it’s fast, reliable, verifiable, subject to little regulation, and virtually untraceable. Bitcoin is ideal for ransomware extortion schemes. The hacker can simply watch the public blockchain to know if and when a victim has paid up. Hackers can even create a unique payment address for each victim and automate the process of unlocking their files upon a confirmed bitcoin transaction to that unique address.
Unlike the sequence of events during a kidnapping scenario, where the exchange of money arguably places criminals in their most vulnerable position, ransomware attackers facilitate pseudo-anonymity by orchestrating a bitcoin transaction process. Rarely is there ever even an arrest, let alone a successful prosecution, of a ransomware attacker. Law enforcement remains virtually powerless, and has even fallen victim themselves to ransomware extortion schemes. Ransomware attackers have become yet another class of cybercriminal who continue to enrich themselves while, for the most part, law enforcement can only watch from the sidelines.
Once the ransomware attackers take possession of the bitcoin payment, it can now be laundered via the Dark Web – that is, until now. Now, ransomware attackers might have a new and better money laundering option: using ransomware proceeds to buy a pint of avocado ice cream at Whole Foods; a Nantucket Rug at Crate and Barrel or a Zegna Quindici Tie at Nordstrom’s.
Isn’t Cash Equally as Dangerous as Bitcoin and Other Cryptocurrencies?
Bitcoin and other crypto-fanatics argue that criminals can use cash just as easily as they can use bitcoin and other cryptocurrencies to commit crimes. After all, in comparison to bitcoin and other cryptocurrencies, isn’t cash similarly anonymous; untraceable; and fungible? The answer is no – which is precisely why bitcoin has evolved into the currency of choice for criminals.
First off, in the U.S., pursuant to the Bank Secrecy Act (BSA), transactions involving traditional financial firms, such as banks, brokers and dealers, and money service businesses (MSBs), are subject to strict federal and state anti-money laundering laws and regulations aimed at detecting and reporting suspicious activity, including money laundering and terrorist financing, as well as securities fraud and market manipulation.
AML programs typically include a system of internal controls to ensure ongoing compliance with the BSA; independent testing of BSA/AML compliance; a designated BSA compliance officer to oversee compliance efforts; training for appropriate personnel; and a customer identification program. Thus, to ensure AML compliance, financial firms start by obtaining clearly identifiable information about a prospective client, and identifying any potential risks of association. This makes engaging in cash-related crimes challenging. Given in particular the tremendous technological innovation at financial institutions, moving or warehousing cash without detection and surveillance has become significantly challenging.
The same is not necessarily true for cryptocurrency transactions. Cryptocurrency transactions can create challenging hurdles for law enforcement to identify criminals. Theoretically, anyone with an Internet connection and a digital wallet can be part of any cryptocurrency platform, initial coin offering or other cryptocurrency financing endeavor operating anywhere on the globe – which, of course, opens the laundry room door for those with criminal motives.
For example, in July, 2018, special counsel Robert Mueller indicted twelve Russian intelligence officials for allegedly attempting to influence U.S. elections in 2016. The indictment notes that the conspirators used bitcoin to fund the purchase of servers, register domains, and make other payments “in furtherance of hacking activity.” According to the indictment, the “use of bitcoin allowed the Conspirators to avoid direct relationships with traditional financial institutions, allowing them to evade greater scrutiny of their identities and sources of funds.”
The same rationale of secrecy and pseudo-anonymity unfortunately applies to terrorism financing. For instance, the Palestinian military-political group Hamas, which the U.S. government deems a terrorist organization, may be using the Coinbase cryptocurrency exchange for fundraising. Similarly, in December 2017, a woman was arrested in New York for allegedly obtaining $62,000 in bitcoin to send to Islamic State. Around the same time, an Islamic State-affiliated Darknet site called Isdarat sought bitcoin contributions from supporters.
Wildly Absurd and Oft Manipulated Crypto-Valuations
In addition to becoming a facilitator for cryptocurrency transactions, by accepting cryptocurrency from customers, retailers are also indirectly endorsing cryptocurrency’s oft manipulated and wholly unregulated farcical valuations.
In fact, the criminalities associated with cryptocurrency’s use are almost as egregious and disturbing as the criminalities associated with its valuations. Bitcoin and other cryptocurrency’s anarchistic valuations remain generally unregulated and without any meaningful oversight, leaving them easily susceptible to fraud and chicanery by insiders, management and better-informed traders and market participants.
For example, researchers from the University of Texas found that manipulation in the cryptocurrency market is rampant and much of the run-up in Bitcoin’s price during 2017 was due to manipulation orchestrated by the Hong Kong exchange Bitfinex. In a 66-page paper, the authors found that tether was used to buy bitcoin at key moments when it was declining, which helped “stabilize and manipulate” the cryptocurrency’s price.
More Illiquidity, Fraud and Manipulation Risks
For retailers to willingly subject themselves to bitcoin’s sinister and stealthy environment of illiquidity, fraud and manipulations makes little sense. Here’s why:
The logistics of accepting cryptocurrency are unique, complicated and problematic. It is not as if a retailer can stroll across the street and convert cryptocurrency to U.S. dollars, record the data in a firm’s accounting software, and be back in time for lunch. First, the retailer must identify a reliable and trustworthy financial institution to safeguard the cryptocurrency (and to convert the cryptocurrency upon demand. Where to find this kind of honorable, respected and U.S. financial institution? Not among Wall Street’s traditional ranks of federally registered, regulated and monitored reliable institutions.
The institutions servicing cryptocurrency clients are barely in their infancy. For the typical cryptocurrency trading platform, there is no central regulatory authority; no state or federal team of bank auditors and compliance experts scrutinizing transactions and policing for manipulation; no existing federal licensure – it’s not just the Wild West, it’s global economic anarchy.
Cryptocurrency intermediaries often give the impression to investors that they are regulated or meet the regulatory standards of national securities exchanges and that their operations are similarly transparent, reliable, trustworthy and bonafide. This is not true.
Although some of these platforms claim to use strict standards to pick only high-quality digital assets to trade, the U.S. Securities and Exchange Commission (SEC), the primary regulator of securities exchanges, does not review these standards or the digital assets that the platforms select, and the so-called standards should not be equated to the listing standards of national securities exchanges.
Likewise, the SEC does not review the trading protocols used by these platforms, which determine how orders interact and execute, and access to a platform’s trading services may not be the same for all users. Again, investors should not assume the trading protocols meet the standards of an SEC-registered national securities exchange.
Along the same lines, cryptocurrency trading platforms claiming to abide by AML, KYC and other similar safety standards and protocols are nothing like registered banks, national exchanges, broker-dealers. Given the identification and verification challenges associated with the global locations, pseudo-anonymity and historically criminal tendencies of typical cryptocurrency users, AML, KYC and other similar compliance procedures have little in common with the sophisticated technological compliance infrastructure at traditional U.S. financial institutions.
For instance, the U.S. Department of Justice (DOJ) announced in April of 2019, that it has charged two individuals with bank fraud in connection to a system for depositing funds to cryptocurrency trading platforms. In a statement, the U.S. Attorney’s Office for the Southern District of New York alleged that Reginald Fowler of Arizona and Ravid Yosef, said to live in Tel Aviv, Israel, were part of a scheme that involved using bank accounts to move money into a series of unnamed cryptocurrency trading platforms.
Similarly, on April 26, 2019, after New York’s attorney general accused the owners of a prominent cryptocurrency trading platform, Bitfinex, of using illicit transactions to mask $850 million in missing funds. According to a 23-page legal filing, Bitfinex raided the reserves of a so-called stablecoin called Tether — a digital currency purportedly backed one-to-one by U.S. dollars—in order to pay out customers demanding withdrawals from the platform.
The New York AG filing also reproduces messages written by a Bitfinex executive which plead for capital from a Panamanian payment processor to which it had transferred funds. The exact identity of the Panamanian payment processor, Crypto Capital, is unclear. According to the attorney general, Bitfinex, which is incorporated in the British Virgin Islands, relied on a shadowy network of money agents, including “human being friends of Bitfinex employees that were willing to use their bank accounts to transfer money to Bitfinex clients.”
Thus, for the most part, the various financial intermediaries operating within the cryptocurrency marketplace typically:
Are not registered with any federal government agency and has no liquidity, net capital or other depository or financial requirements of any kind;
Are not examined or audited by any federal agency such as the Federal Reserve or the U.S. Securities and Exchange Commission (SEC);
Are not regulated by any quasi-government agency such as the Financial Industry Regulatory Authority (FINRA).
Warehouse property such as bitcoin (bitcoin is not recognized as an official currency), which is not insured by any federal agency, such as the Federal Deposit Insurance Corporation;
Do not have any federal accounting requirements with respect to their assets;
Do not report their financial condition in any form of official SEC filing, such as an annual report or Form 10-K;
Do not have any federal record-keeping requirements with respect to their operations, communications or any other aspect of its business;
Would assert that they have no specific federal requirements regarding the pricing of any cryptocurrency trading transaction, the use of employees of its payment systems or any federal anti-manipulation requirements; and
Would assert that they do not have the same federal compliance systems or code of conduct requirements of traditional financial institutions such as banks, investment companies, brokerages and other financial firms, who spend millions of dollars every year on internal compliance infrastructure and customer-protection-related infrastructure.
The bottom line: cryptocurrency financial marketplaces tend to believe that they have no federal licensing requirements to meet the bulk of the vigorous federal safeguards historically rooted and associated with U.S. financial institution registration and regulation. These standards and practices, formulated after decades of scrutiny, analysis and enquiry, are the hallmark of U.S. financial institutions.
Currently, when a customer has a problem with a cryptocurrency transaction, there also exists no established federal government watchdog, which causes further enforcement consternation. To exacerbate matters, typical cryptocurrency transactions are by definition irreversible – no anti-fraud guarantee from a financial institution and no reversing the charges, if any dispute or problem arises.
And even if there was a formal federal regulatory complaint filing structure, the pseudo-anonymous nature of virtual currencies, ease of cross-border and interstate transport, and the lack of a formal banking edifice creates enormous challenges for law enforcement to investigate and apprehend any individuals who use cryptocurrencies for illegal activities.
Price Volatility Risks
For retailers accepting bitcoin, they are encouraging their customers to take on tremendous price volatility risks.
Bitcoin started a decade ago but gained status as a household name during its 1,300 percent price rise and march to nearly $20,000 last year. Because the cryptocurrency’s value can vary drastically in a single day, its unprecedented volatility creates serious challenges to using bitcoin as a method of payment for retailers.
For instance, since January, bitcoin has fallen roughly 70 percent and recently fell below $3,500 for the first time in 14 months, losing 30 percent in over seven days. Bitcoin recovered slightly afterwards but continues to experience dramatic, unpredictable and startling price swings.
Enabling retail customers to pay via bitcoin is a not-so-subtle endorsement encouraging them to invest in bitcoin – which is replete with too many risks to mention, and seems irresponsible for any U.S. corporation.
Cybersecurity Risk
Transacting in bitcoin for a retailer and its customers carries with it extraordinary cybersecurity risk. Bitcoin’s true believers tout that cryptocurrencies provide a safe and secure way of making payments, but rarely have a clue as to how they work.
In 2016, hackers stole $72 million worth of bitcoin from exchange Bitfinex. And in 2018, hackers stole $500 million in digital tokens from exchange Coincheck. Binance, one of the largest cryptocurrency trading platforms in the world, just announced that hackers stole $40 million worth of bitcoin from them using a phishing and virus scheme, in what the company described as a “large scale security breach.” According to the Wall Street Journal, more than $1.7 billion in cryptocurrency has been stolen over the years, most of which has come from exchanges and been centered around Asia.
Hackers have now become virtual bank robbers – except their break-ins can be done thousands of miles away from a dark and quiet basement, and then launder the proceeds through various digital wallets or their friendly neighborhood U.S. retailer.
Renowned security technologist Bruce Scheier explains in clear and simple terms the cybersecurity risks of cryptocurrency, emphasizing bitcoin’s (and blockchain’s) regulatory and enforcement vacuum:
“If your bitcoin exchange gets hacked, you lose all of your money. If your bitcoin wallet gets hacked, you lose all of your money. If you forget your login credentials, you lose all of your money. If there’s a bug in the code of your smart contract, you lose all of your money. If someone successfully hacks the blockchain security, you lose all of your money. In many ways, trusting technology is harder than trusting people.”
Say it Ain’t So Whole Foods
Benevolently branded Whole Foods seems the most incongruous of these purported crypto-friendly retailers. Loyal Whole Foods Market customers laud the company’s commitment to minimally processed products free of certain artificial ingredients, and foods that contain nitrates, harmful pesticides, artificial colors, antibiotics, and hormones. Whole Foods farmed seafood standards are the highest in the industry: antibiotics, growth hormones, preservatives like sulfites and phosphates, genetically-modified seafood, and land animal by-products in feed are all prohibited.
Several times a year, each Whole Foods holds “5% days,” where five percent of that day’s net sales goes to support local education, hospitals or non-profits. Whole Foods Market also sets an example in its use of wind power, solar power, company-wide recycling programs, green buildings for their stores, etc. Whole Foods markets their benevolence aggressively — and consumers love it.
But by accepting cryptocurrency, Whole Foods would be assisting in the growth of an increasingly sophisticated, dangerous and terrorist-minded gang of global criminals – which to me, seems far more menacing than the threats posed by genetically-modified seafood or feed containing land animal by-products.
Looking Ahead
Bitcoin resides amid a libertarian financial realm of competing bandits. That is why, ironically, one of bitcoin’s most useful criminal attributes is its use for the theft of other bitcoin. Retailers should think twice before lending an aura of legitimacy to bitcoin and other cryptocurrencies, and consider carefully their role in supporting cryptocurrency growth and encouraging cryptocurrency use.
In the history of financial innovation, modernization and invention, there has always existed one constant: whatever the product, criminals will attempt to exploit its application. Bitcoin dramatically illustrates this axiom. Yet despite the treacherous reality of bitcoin’s predominant use, retail apparently wants in. It would seem that retailers have become so desperate for market share that they will resort to enabling terrorism, extortion and other criminalities.
It’s not just that bitcoin-friendly retailers have given little consideration to the myriad of victims of crypto-funded ransomware, terrorism, drug dealing and the like. Cryptocurrency’s liquidity risk; price volatility; cybersecurity vulnerabilities; commission fees; AML implications; ethical dilemmas; tax burdens; entanglement mishaps and the rest, create a situation that could be unmanageable or even untenable for a retailer’s shareholders, partners, affiliates and other fiduciaries. Not to mention that for the most part, the entire cryptocurrency system resides amid an unregulated, mysterious and sinister environment – a patently poor choice of virtual venue.
Cryptocurrencies purport to be items of inherent value (similar, for instance, to cash or gold) that are designed to enable purchases, sales and other financial transactions, and promise to provide many of the same functions as long-established currencies such as the U.S. dollar, euro or Japanese yen. But retailers should not be fooled.
Cryptocurrencies are mere computer-generated chattel, and Whole Foods, Nordstrom and Crate and Barrel should not agree to accept chattel from customers as consideration for their purchases. We are not living in the 1800s and this is not Deadwood, South Dakota.
Don’t get me wrong, the blockchain technology on which cryptocurrencies are based may turn out to be the most exciting, disruptive, transformative and efficiency enhancing breakthrough since sliced bread. But aside from complex issues of privacy, security, ethics and simple practicality, blockchain technology remains embryonic; has still yet to be proven; and happens to reside amid an economic ecosystem rife with fraud, deceit, dishonesty and thievery. Bitcoin is arguably blockchain’s most celebrated accomplishment yet much of bitcoin’s value, outside of mere speculation, is derived solely from its ability to facilitate criminal activity.
Moreover, just because some mythical engineer has discovered a potentially revolutionary manner to engage in and verify commercial transactions (e.g. replacing a traditional corporate entry recorded in an intermediary institution’s centralized ledger with a virtual entry recorded on a blockchain’s decentralized distributed ledger), it does not mean that criminals should be permitted to create their own form of currency to use to commit robbery, theft, extortion and even murder.
I can appreciate that bitcoin investors are merely ascribing to the historically proven greater fool theory, betting that there will always be a “greater fool” in the cryptocurrency marketplace poised to pay a price based on higher valuation for an already overvalued bitcoin. But the inherent scourge of bitcoin is an altogether different story. For retailers, where reputation is so critical, the risks of somehow becoming ensnared or even merely associating with the dark and seedy underbelly of cryptocurrency are considerable.
Director of the SEC Enforcement Division from 1974 to 1981; general counsel to the Central Intelligence Agency from 1981 to 1985; and U.S. District Court Judge for the District of Columbia from 1985 to 2000, famed Judge Stanley Sporkin put it best when he said, “When you lie down with dogs, you wake up with fleas.”
When it comes to bitcoin and other cryptocurrencies, the so-called “fintech” lawyers advising retailers contemplating crypto-cash registers should take heed of Judge Sporkin’s enduring admonition. Fintech legal advice should be plain and simple: bitcoin is a plague, so stay as far away from it as you can.
_________________________
John Reed Stark is president of John Reed Stark Consulting LLC, a data breach response and digital compliance firm. Formerly, Mr. Stark served for almost 20 years in the Enforcement Division of the U.S. Securities and Exchange Commission, the last 11 of which as Chief of its Office of Internet Enforcement. He currently teaches a cyber-law course as a Senior Lecturing fellow at Duke Law School. Mr. Stark also worked for 15 years as an Adjunct Professor of Law at the Georgetown University Law Center, where he taught several courses on the juxtaposition of law, technology and crime, and for five years as managing director of global data breach response firm, Stroz Friedberg, including three years heading its Washington, D.C. office. Mr. Stark is the author of “The Cybersecurity Due Diligence Handbook.”
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The next integration evolution — blockchain
Bilgin Ibryam Contributor
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Bilgin Ibryam is a principal architect at Red Hat, committer and member of Apache Software Foundation. He is an open-source evangelist, blogger, occasional speaker and the author of Kubernetes Patterns and Camel Design Patterns.
Here is one way to look at distributed ledger technologies (DLT) and blockchain in the context of integration evolution. Over the years, businesses and their systems are getting more integrated, forming industry-specific trustless networks, and blockchain technology is in the foundation of this evolutionary step.
Enterprise integration
Large organizations have a large number of applications running in separate silos that need to share data and functionality in order to operate in a unified and consistent way. The process of linking such applications within a single organization, to enable sharing of data and business processes, is called enterprise application integration (EAI).
Similarly, organizations also need to share data and functionality in a controlled way among themselves. They need to integrate and automate the key business processes that extend outside the walls of the organizations. The latter is an extension of EAI and achieved by exchanging structured messages using agreed upon message standards referred to as business-to-business (B2B) integration.
Fundamentally, both terms refer to the process of integrating data and functionality that spans across multiple systems and sometimes parties. The systems and business processes in these organizations are evolving, and so is the technology enabling B2B unification.
Evolution of integration
There isn’t a year when certain integration technologies became mainstream; they gradually evolved and built on top of each other. Rather than focusing on the specific technology and year, let’s try to observe the progression that happened over the decades and see why blockchain is the next technology iteration.
Evolution of integration technologies
Next we will explore briefly the main technological advances in each evolutionary step listed in the table above.
Data integration
This is one of the oldest mechanisms for information access across different systems with the following two primary examples:
Common database approach is used for system integration within organizations.
File sharing method is used for within and cross-organization data exchange. With universal protocols such as FTP, file sharing allows exchange of application data running across machines and operating systems.
But both approaches are non-real-time, batch-based integrations with limitations around scalability and reliability.
Functionality integration
While data integration provided non-real-time data exchange, the methods described here allow real-time data and importantly functionality exchange:
Remote procedure call provides significant improvements over low-level socket-based integration by hiding networking and data marshaling complexity. But it is an early generation, language-dependent, point-to-point, client-server architecture.
Object request broker architecture (with CORBA, DCOM, RMI implementations) introduces the broker component, which allows multiple applications in different languages to reuse the same infrastructure and talk to each other in a peer-to-peer fashion. In addition, the CORBA model has the notion of naming, security, concurrency, transactionality, registry and language-independent interface definition.
Messaging introduces temporal decoupling between applications and ensures guaranteed asynchronous message delivery.
So far we have seen many technology improvements, but they are primarily focused on system integration rather than application integration aspects. From batch to real-time data exchange, from point-to-point to peer-to-peer, from synchronous to asynchronous, these methods do not care or control what is the type of data they exchange, nor force or validate it. Still, this early generation integration infrastructure enabled B2B integrations by exchanging EDI-formatted data for example, but without any understanding of the data, nor the business process, it is part of.
With CORBA, we have early attempts of interface definitions, and services that are useful for application integration.
Service-oriented architecture
The main aspects of SOA that are relevant for our purpose are Web Services standards. XML providing language-independent format for exchange of data, SOAP providing common message format and WSDL providing an independent format for describing service interfaces, form the foundation of web services. These standards, combined with ESB and BPM implementations, made integrations focus on the business integration semantics, whereas the prior technologies were enabling system integration primarily.
Web services allowed systems not to exchange data blindly, but to have machine readable contracts and interface definitions. Such contracts would allow a system to understand and validate the data (up to a degree) before interacting with the other system.
I also include microservices architectural style here, as in its core, it builds and improves over SOA and ESBs. The primary evolution during this phase is around distributed system decomposition and transition from WS to REST-based interaction.
In summary, this is the phase where, on top of common protocols, distributed systems also got common standards and contracts definitions.
Blockchain-based integration
While exchanging data over common protocols and standards helps, the service contracts do not provide insight about the business processes hidden behind the contracts and running on remote systems. A request might be valid according to the contract, but invalid depending on the business processes’ current state. That is even more problematic when integration is not between two parties, as in the client-server model, but among multiple equally involved parties in a peer-to-peer model.
Sometimes multiple parties are part of the same business process, which is owned by no one party but all parties. A prerequisite for a proper functioning of such a multi-party interaction is transparency of the common business process and its current state. All that makes the blockchain technology very attractive for implementing distributed business processes among multiple parties.
This model extends the use of shared protocols and service contracts with shared business processes and contained state. With blockchain, all participating entities share the same business process in the form of smart contracts. But in order to validate the requests, process and come to the same conclusion, the business processes need also the same state, and that is achieved through the distributed ledger. Sharing all the past states of a smart contract is not a goal by itself, but a prerequisite of the shared business process runtime.
Looked at from this angle, blockchain can be viewed as the next step in the integration evolution. As we will see below, blockchain networks act as a kind of distributed ESB and BPM machinery that are not contained within a single business entity, but spanning multiple organizations.
Integration technology moving into the space between systems
First the protocols (such as FTP), then the API contracts (WSDL, SOAP) and now the business processes themselves (smart contracts) and their data are moving outside of the organizations, into the common shared space, and become part of the integration infrastructure. In some respect, this trend is analogous to how cross-cutting responsibilities of microservices are moving from within services into the supporting platforms.
With blockchain, common data models and now business processes are moving out of the organizations into the shared business networks. Something to note is that this move is not universally applicable and it is not likely to become a mainstream integration mechanism. Such a move is only possible when all participants in the network have the same understanding of data models and business processes; hence, it is applicable only in certain industries where the processes can be standardized, such as finance, supply chain, health care, etc.
Generations of integrations
Having done some chronological technology progression follow-up, let’s have a more broad look at the B2B integration evolution and its main stages.
First generation: system integration protocols
This is the generation of integration technology before CORBA and SOA, enabling mainly data exchange over common protocols but without an understanding of the data, contracts and business processes:
Integration model: client-server, where the server component is controlled by one party only; examples are databases, file servers, message brokers, etc.
Explicit, shared infrastructure: low-level system protocols and APIs such as FTP.
Implicit, not shared infrastructure: application contracts, data formats, business processes not part of the common integration infrastructure.
Second generation: application integration contracts
This generation of integration technology uses the system protocols from previous years and allows applications to share their APIs in the form of universal contracts. This is the next level of integration, where both applications understand the data, its structure, possible error conditions, but not the business process and current state behind it in the other systems:
Integration model: client-server model with APIs described by contracts.
Explicit, shared infrastructure: protocols, application contracts, and API definitions.
Implicit, not shared infrastructure: business processes and remote state are still private.
Third generation: distributed business processes
The blockchain-based generation, which still has to prove itself as a viable enterprise architecture, goes a step further. It uses peer-to-peer protocols, and shares business processes with state across multiple systems that are controlled by parties not trusting each other. While previous integration generations required shared understanding of protocol or APIs, this relies on common understanding of the full business process and its current state. Only then it makes sense and pays off to form a cross-organization distributed business process network:
Integration model: multi-party, peer-to-peer integration, by forming business networks with distributed business processes.
Explicit, shared infrastructure: business process and its required state.
Implicit, not shared infrastructure: other non-process related state.
There are many blockchain-based projects that are taking different approaches for solving the business integration challenges. In no particular, order here are some of the most popular and interesting permissioned open-source blockchain projects targeting the B2B integration space:
Hyperledger Fabric is one of the most popular and advanced blockchain frameworks, initially developed by IBM, and now part of Linux Foundation.
Hyperledger Sawtooth is another Linux Foundation distributed project developed initially by Intel. It is popular for its modularity and full component replaceability.
Quorum is an enterprise-focused distribution of Ethereum.
Corda is another project that builds on top of existing JVM-based middleware technologies and enables organizations to transact with contracts and exchange value.
There are already many business networks built with the above projects, enabling network member organizations to integrate and interact with each other using this new integration model.
In addition to these full-stack blockchain projects that provide network nodes, there also are hybrid approaches. For example, Unibright is a project that aims to connect internal business processes defined in familiar standards such as BPMN with existing blockchain networks by automatically generating smart contracts. The smart contracts can be generated for public or private blockchains, which can act as another integration pillar among organizations.
Recently, there are many blockchain experiments in many fields of life. While public blockchains generate all the hype by promising to change the world, private and permissioned blockchains are promising less, but are advancing steadily.
Conclusion
Enterprise integration has multiple nuances. Integration challenges within an organization, where all systems are controlled by one entity and participants have some degree of trust to each other, are mostly addressed by modern ESBs, BPMs and microservices architectures. But when it comes to multi-party B2B integration, there are additional challenges. These systems are controlled by multiple organizations, have no visibility of the business processes and do not trust each other. In these scenarios, we see organizations experimenting with a new breed of blockchain-based technology that relies not only on sharing of the protocols and contracts but sharing of the end-to-end business processes and state.
And this trend is aligned with the general direction integration has been evolving over the years: from sharing the very minimum protocols, to sharing and exposing more and more in the form of contracts, APIs and now business processes.
This shared integration infrastructure enables new transparent integration models where the previously private business processes are now jointly owned, agreed, built, maintained and standardized using the open-source collaboration model. This can motivate organizations to share business processes and form networks to benefit further from joint innovation, standardization and deeper integration in general.
source https://techcrunch.com/2019/02/05/blockchain-as-integration-evolution/
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The next integration evolution — blockchain
Bilgin Ibryam Contributor
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Bilgin Ibryam is a principal architect at Red Hat, committer and member of Apache Software Foundation. He is an open-source evangelist, blogger, occasional speaker and the author of Kubernetes Patterns and Camel Design Patterns.
Here is one way to look at distributed ledger technologies (DLT) and blockchain in the context of integration evolution. Over the years, businesses and their systems are getting more integrated, forming industry-specific trustless networks, and blockchain technology is in the foundation of this evolutionary step.
Enterprise integration
Large organizations have a large number of applications running in separate silos that need to share data and functionality in order to operate in a unified and consistent way. The process of linking such applications within a single organization, to enable sharing of data and business processes, is called enterprise application integration (EAI).
Similarly, organizations also need to share data and functionality in a controlled way among themselves. They need to integrate and automate the key business processes that extend outside the walls of the organizations. The latter is an extension of EAI and achieved by exchanging structured messages using agreed upon message standards referred to as business-to-business (B2B) integration.
Fundamentally, both terms refer to the process of integrating data and functionality that spans across multiple systems and sometimes parties. The systems and business processes in these organizations are evolving, and so is the technology enabling B2B unification.
Evolution of integration
There isn’t a year when certain integration technologies became mainstream; they gradually evolved and built on top of each other. Rather than focusing on the specific technology and year, let’s try to observe the progression that happened over the decades and see why blockchain is the next technology iteration.
Evolution of integration technologies
Next we will explore briefly the main technological advances in each evolutionary step listed in the table above.
Data integration
This is one of the oldest mechanisms for information access across different systems with the following two primary examples:
Common database approach is used for system integration within organizations.
File sharing method is used for within and cross-organization data exchange. With universal protocols such as FTP, file sharing allows exchange of application data running across machines and operating systems.
But both approaches are non-real-time, batch-based integrations with limitations around scalability and reliability.
Functionality integration
While data integration provided non-real-time data exchange, the methods described here allow real-time data and importantly functionality exchange:
Remote procedure call provides significant improvements over low-level socket-based integration by hiding networking and data marshaling complexity. But it is an early generation, language-dependent, point-to-point, client-server architecture.
Object request broker architecture (with CORBA, DCOM, RMI implementations) introduces the broker component, which allows multiple applications in different languages to reuse the same infrastructure and talk to each other in a peer-to-peer fashion. In addition, the CORBA model has the notion of naming, security, concurrency, transactionality, registry and language-independent interface definition.
Messaging introduces temporal decoupling between applications and ensures guaranteed asynchronous message delivery.
So far we have seen many technology improvements, but they are primarily focused on system integration rather than application integration aspects. From batch to real-time data exchange, from point-to-point to peer-to-peer, from synchronous to asynchronous, these methods do not care or control what is the type of data they exchange, nor force or validate it. Still, this early generation integration infrastructure enabled B2B integrations by exchanging EDI-formatted data for example, but without any understanding of the data, nor the business process, it is part of.
With CORBA, we have early attempts of interface definitions, and services that are useful for application integration.
Service-oriented architecture
The main aspects of SOA that are relevant for our purpose are Web Services standards. XML providing language-independent format for exchange of data, SOAP providing common message format and WSDL providing an independent format for describing service interfaces, form the foundation of web services. These standards, combined with ESB and BPM implementations, made integrations focus on the business integration semantics, whereas the prior technologies were enabling system integration primarily.
Web services allowed systems not to exchange data blindly, but to have machine readable contracts and interface definitions. Such contracts would allow a system to understand and validate the data (up to a degree) before interacting with the other system.
I also include microservices architectural style here, as in its core, it builds and improves over SOA and ESBs. The primary evolution during this phase is around distributed system decomposition and transition from WS to REST-based interaction.
In summary, this is the phase where, on top of common protocols, distributed systems also got common standards and contracts definitions.
Blockchain-based integration
While exchanging data over common protocols and standards helps, the service contracts do not provide insight about the business processes hidden behind the contracts and running on remote systems. A request might be valid according to the contract, but invalid depending on the business processes’ current state. That is even more problematic when integration is not between two parties, as in the client-server model, but among multiple equally involved parties in a peer-to-peer model.
Sometimes multiple parties are part of the same business process, which is owned by no one party but all parties. A prerequisite for a proper functioning of such a multi-party interaction is transparency of the common business process and its current state. All that makes the blockchain technology very attractive for implementing distributed business processes among multiple parties.
This model extends the use of shared protocols and service contracts with shared business processes and contained state. With blockchain, all participating entities share the same business process in the form of smart contracts. But in order to validate the requests, process and come to the same conclusion, the business processes need also the same state, and that is achieved through the distributed ledger. Sharing all the past states of a smart contract is not a goal by itself, but a prerequisite of the shared business process runtime.
Looked at from this angle, blockchain can be viewed as the next step in the integration evolution. As we will see below, blockchain networks act as a kind of distributed ESB and BPM machinery that are not contained within a single business entity, but spanning multiple organizations.
Integration technology moving into the space between systems
First the protocols (such as FTP), then the API contracts (WSDL, SOAP) and now the business processes themselves (smart contracts) and their data are moving outside of the organizations, into the common shared space, and become part of the integration infrastructure. In some respect, this trend is analogous to how cross-cutting responsibilities of microservices are moving from within services into the supporting platforms.
With blockchain, common data models and now business processes are moving out of the organizations into the shared business networks. Something to note is that this move is not universally applicable and it is not likely to become a mainstream integration mechanism. Such a move is only possible when all participants in the network have the same understanding of data models and business processes; hence, it is applicable only in certain industries where the processes can be standardized, such as finance, supply chain, health care, etc.
Generations of integrations
Having done some chronological technology progression follow-up, let’s have a more broad look at the B2B integration evolution and its main stages.
First generation: system integration protocols
This is the generation of integration technology before CORBA and SOA, enabling mainly data exchange over common protocols but without an understanding of the data, contracts and business processes:
Integration model: client-server, where the server component is controlled by one party only; examples are databases, file servers, message brokers, etc.
Explicit, shared infrastructure: low-level system protocols and APIs such as FTP.
Implicit, not shared infrastructure: application contracts, data formats, business processes not part of the common integration infrastructure.
Second generation: application integration contracts
This generation of integration technology uses the system protocols from previous years and allows applications to share their APIs in the form of universal contracts. This is the next level of integration, where both applications understand the data, its structure, possible error conditions, but not the business process and current state behind it in the other systems:
Integration model: client-server model with APIs described by contracts.
Explicit, shared infrastructure: protocols, application contracts, and API definitions.
Implicit, not shared infrastructure: business processes and remote state are still private.
Third generation: distributed business processes
The blockchain-based generation, which still has to prove itself as a viable enterprise architecture, goes a step further. It uses peer-to-peer protocols, and shares business processes with state across multiple systems that are controlled by parties not trusting each other. While previous integration generations required shared understanding of protocol or APIs, this relies on common understanding of the full business process and its current state. Only then it makes sense and pays off to form a cross-organization distributed business process network:
Integration model: multi-party, peer-to-peer integration, by forming business networks with distributed business processes.
Explicit, shared infrastructure: business process and its required state.
Implicit, not shared infrastructure: other non-process related state.
There are many blockchain-based projects that are taking different approaches for solving the business integration challenges. In no particular, order here are some of the most popular and interesting permissioned open-source blockchain projects targeting the B2B integration space:
Hyperledger Fabric is one of the most popular and advanced blockchain frameworks, initially developed by IBM, and now part of Linux Foundation.
Hyperledger Sawtooth is another Linux Foundation distributed project developed initially by Intel. It is popular for its modularity and full component replaceability.
Quorum is an enterprise-focused distribution of Ethereum.
Corda is another project that builds on top of existing JVM-based middleware technologies and enables organizations to transact with contracts and exchange value.
There are already many business networks built with the above projects, enabling network member organizations to integrate and interact with each other using this new integration model.
In addition to these full-stack blockchain projects that provide network nodes, there also are hybrid approaches. For example, Unibright is a project that aims to connect internal business processes defined in familiar standards such as BPMN with existing blockchain networks by automatically generating smart contracts. The smart contracts can be generated for public or private blockchains, which can act as another integration pillar among organizations.
Recently, there are many blockchain experiments in many fields of life. While public blockchains generate all the hype by promising to change the world, private and permissioned blockchains are promising less, but are advancing steadily.
Conclusion
Enterprise integration has multiple nuances. Integration challenges within an organization, where all systems are controlled by one entity and participants have some degree of trust to each other, are mostly addressed by modern ESBs, BPMs and microservices architectures. But when it comes to multi-party B2B integration, there are additional challenges. These systems are controlled by multiple organizations, have no visibility of the business processes and do not trust each other. In these scenarios, we see organizations experimenting with a new breed of blockchain-based technology that relies not only on sharing of the protocols and contracts but sharing of the end-to-end business processes and state.
And this trend is aligned with the general direction integration has been evolving over the years: from sharing the very minimum protocols, to sharing and exposing more and more in the form of contracts, APIs and now business processes.
This shared integration infrastructure enables new transparent integration models where the previously private business processes are now jointly owned, agreed, built, maintained and standardized using the open-source collaboration model. This can motivate organizations to share business processes and form networks to benefit further from joint innovation, standardization and deeper integration in general.
Via David Riggs https://techcrunch.com
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COMPANYCompany name:DropboxCompany url, if any:http://www.getdropbox.com/If you have a demo, what's the url? For non-software, demo can be a video.(Please don't password protect it; just use an obscure url.)Here's a screencast that I'll also put up on news.yc: http://www.getdropbox.com/screencast/ If you do have a Windows box or two, here's the latest build: http://www.getdropbox.com/u/2/DropboxInstaller.exeWhat is your company going to make?Dropbox synchronizes files across your/your team's computers. It's much better than uploading or email, because it's automatic, integrated into Windows, and fits into the way you already work. There's also a web interface, and the files are securely backed up to Amazon S3. Dropbox is kind of like taking the best elements of subversion, trac and rsync and making them "just work" for the average individual or team. Hackers have access to these tools, but normal people don't. It's currently in private beta and I add batches of people every few days.There are lots of interesting possible features. One is syncing Google Docs/Spreadsheets (or other office web apps) to local .doc and .xls files for offline access, which would be strategically important as few web apps deal with the offline problem.FOUNDERSYC usernames of all founders, including you, dhouston, separated by spaces. (That's usernames, not given names: "bksmith," not "Bob Smith." If there are 3 founders, there should be 3 tokens in this answer.)dhoustonYC usernames of all founders, including you, dhouston, who will live in the Bay Area June through August 2007 if we fund you. (Again, that's usernames, not given names.)dhoustonFor each founder, please list (separate line for each item): YC username; name; age; year of graduation, school, degree (unfinished in parens) and subject for each degree; email address; personal url, github url, linkedin url, facebook id, twitter id; employer and title for previous jobs. List the main contact first. Separate founders with blank lines. Put an asterisk before the name of anyone not able to move to the Bay Area.dhouston; Drew Houston; 24; 2006, MIT, SB computer science; ; --; Bit9, Inc (went full time to part time 1/07; leaving in May) - project lead/software engineerAlthough I'm working with other people on Dropbox, strictly speaking I'm the only founder right now. My friend Jeff Mancuso, a great hacker, Stanford grad and creator of Sftpdrive (http://www.sftpdrive.com) is putting together a Mac port, but can't join as a founder right now as a former cofounder of his started an extremely similar company called Sharpcast. My friend and roommate Tom Hoover from MIT is helping out too, but he works with me at Bit9, and a non-solicit clause in my employment contract prevents me from recruiting him (and the VP Eng explicitly told me not to recruit him.)In any case, I have several leads, have been networking aggressively, and fully intend to get someone else on board -- another good hacker and/or a more sales-oriented guy (e.g. the role Matt fills at Xobni). I'm aware that the odds aren't good for single founders, and would rather work with other people anyway.Please tell us in one or two sentences about the most impressive thing other than this startup that each founder has built or achieved.Drew - Programming since age 5; startups since age 14; 1600 on SAT; started profitable online SAT prep company in college (accoladeprep.com). For fun last summer reverse engineered the software on a number of poker sites and wrote a real-money playing poker bot (it was about break-even; see screenshot url later in the app.)Please tell us about an interesting project, preferably outside of class or work, that two or more of you created together. Include urls if possible.Accolade Online SAT prep (launched in 2004) (https://www.accoladeprep.com/sshot2.gif ; it's using play money there but worked with real money too.)How long have the founders known one another and how did you meet? Have any of the founders not met in person?There's a joke in here somewhere.If we fund you, which of the founders will commit to working exclusively (no school, no other jobs) on this project for the next year?DrewDo any founders have other commitments between June through August 2007 inclusive?No; I'm leaving Bit9 in a few weeks to work on this full time regardless of YC funding.Do any founders have commitments in the future (e.g. finishing college, going to grad school), and if so what?No. Probably moving to SF in SeptemberPROGRESSHow long have each of you been working on this? Have you been part-time or full-time? Please explain.3 months part time. About ~5KLOC client and ~2KLOC server of python, C++, Cheetah templates, installer scripts, etc.How far along are you? Do you have a beta yet? If not, when will you? Are you launched? If so, how many users do you have? Do you have revenue? If so, how much? If you're launched, what is your monthly growth rate (in users or revenue or both)?Prototype - done in Feb. Beta - in people's hands now. Version I can charge for: 6-8 weeks?IDEAWhat's new about what you're making? What substitutes do people resort to because it doesn't exist yet (or they don't know about it)?Most small teams have a few basic needs: (1) team members need their important stuff in front of them wherever they are, (2) everyone needs to be working on the latest version of a given document (and ideally can track what's changed), (3) and team data needs to be protected from disaster. There are sync tools (e.g. beinsync, Foldershare), there are backup tools (Carbonite, Mozy), and there are web uploading/publishing tools (box.net, etc.), but there's no good integrated solution.Dropbox solves all these needs, and doesn't need configuration or babysitting. Put another way, it takes concepts that are proven winners from the dev community (version control, changelogs/trac, rsync, etc.) and puts them in a package that my little sister can figure out (she uses Dropbox to keep track of her high school term papers, and doesn't need to burn CDs or carry USB sticks anymore.)At a higher level, online storage and local disks are big and cheap. But the internet links in between have been and will continue to be slow in comparison. In "the future", you won't have to move your data around manually. The concept that I'm most excited about is that the core technology in Dropbox -- continuous efficient sync with compression and binary diffs -- is what will get us there.Who are your competitors, and who might become competitors? Who do you fear most?Carbonite and Mozy do a good job with hassle-free backup, and a move into sync would make sense. Sharpcast (venture funded) announced a similar app called Hummingbird, but according to Jeff (who is good friends with the tech lead) they're taking an extraordinarily difficult approach involving NT kernel drivers. Google's coming out with GDrive at some point. Microsoft's Groove does sync and is part of Office 2007, but is very heavyweight and doesn't include any of the web stuff or backup. There are apps like Omnidrive and Titanize but the implementations are buggy or have bad UIs.What do you understand about your business that other companies in it just don't get?Competing products work at the wrong layer of abstraction and/or force the user to constantly think and do things. The "online disk drive" abstraction sucks, because you can't work offline and the OS support is extremely brittle. Anything that depends on manual emailing/uploading (i.e. anything web-based) is a non-starter, because it's basically doing version control in your head. But virtually all competing services involve one or the other.With Dropbox, you hit "Save", as you normally would, and everything just works, even with large files (and binary diffs ensure that only the changed portions go over the wire).How do or will you make money? How much could you make?(We realize you can't know precisely, but give your best estimate.)The current plan is a freemium approach, where we give away free 1GB accounts and charge for additional storage (maybe ~$5/mo or less for 10GB for individuals and team plans that start at maybe $20/mo.). It's hard to get consumers to pay for things, but fortunately small/medium businesses already pay for solutions that are subsets of what Dropbox does and are harder to use. There will be tiered pricing for business accounts (upper tiers will retain more older versions of documents, have branded extranets for secure file sharing with clients/partners, etc., and an 'enterprise' plan that features, well, a really high price.)I've already been approached by potential partners/customers asking for a web services API to programmatically create Dropboxes (e.g. to handle file sharing for Assembla.com, a web site for managing global dev teams). There's a natural synergy between project mgmt/groupware web apps (which do to-do lists, calendaring, etc. well but not files) and Dropbox for file sharing. I've also had requests for an enterprise version that would sit on a company's network (as opposed to my S3 store) for which I could probably charge a lot.EQUITYIf you're already incorporated, when were you? Who are the shareholders and what percent does each own? If you've had funding, how much, who from, and at what valuation or valuation cap?Not incorporatedIf you're not incorporated yet, please list the percent of the company you plan to give each founder, and anyone else you plan to give stock to.(This question is as much for you as us.)Drew, presently sole owner but saving some stock (a couple percent?) for work done by Jeff & Tom over the summer.LEGALAre any of the founders covered by noncompetes or intellectual property agreements that overlap with your project? Will any be working as employees or consultants for anyone else?Drew: Some work was done at the Bit9 office; I consulted an attorney and have a signed letter indicating Bit9 has no stake/ownership of any kind in DropboxWas any of your code written by someone who is not one of your founders? If so, how can you safely use it?(Open source is ok of course.)NoOTHERSIf you had any other ideas you considered applying with, please list them. One may be something we've been waiting for. Often when we fund people it's to do something they list here and not in the main application.One click screen sharing (already done pretty well by Glance); a wiki with version-controlled drawing canvases that let you draw diagrams or mock up UIs (Thinkature is kind of related, but this is more text with canvases interspersed than a shared whiteboard) to help teams get on the same page and spec things out better (we use Visio and Powerpoint at Bit9, which suck for working collaboratively); some ideas surrounding better web analytics for newbiesPlease tell us something surprising or amusing that one of you has discovered.(The answer need not be related to your project.)
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Parallel Geoprocessing in ArcGIS Pro
ArcGIS Pro is a powerful multithreaded application with unparalleled (no pun intended) spatial analysis and geoprocessing capabilities. Over the last year, including the 2.0 and 2.1 Pro releases, nearly 300 new geoprocessing tools were added which solve new spatial problems, make your work easier, and enable processing of new data types. Some of the new tools include:
New spatial statistics tools that use machine learning to find spatial and attribute clusters in your data
New tools for adding and calculating multiple attribute fields
A new extension toolbox for interpreting, exploiting, and analyzing imagery
A rich set of tools for creating, managing and tracing the new utility network, and generating network diagrams
Many, many other new tools, and countless tool enhancements
Keep checking What’s New in ArcGIS Pro in the coming weeks to see the full list of new analysis and geoprocessing capabilities added to Pro 2.1 and previous releases.
While the quantity of new functionality is undeniably impressive, you might be wondering “What is ArcGIS Pro doing to make my analysis faster?”
♫ Shave and a haircut, 64-bits! ♫
Many tools are enhanced in ArcGIS Pro to provide better performance. For example, the Calculate Field tool was enhanced in Pro 2.1 to support Arcade expressions, which is considerably faster compared to calculations in ArcMap (a date-time calculation on 20,651 features in ArcMap took nearly one minute, while Pro with Arcade takes less than 3 seconds.)
Calculate Field in ArcGIS Pro 2.1 using Arcade
As discussed in this FAQ, geoprocessing in ArcGIS Pro is 64-bit and occurs on a dedicated geoprocessing thread. For most geoprocessing tools performance is roughly equivalent between ArcGIS Pro and ArcMap*, while many tools have been improved and are faster. *ArcMap comparisons use the 64-bit background geoprocessing setup
64-bit geoprocessing does not automatically make tools faster, only able to use more memory for data processing. 64-bit geoprocessing is more robust, results will be more accurate, and processes that previously hang, crash, or run out of memory may be able to complete successfully. Some ArcGIS Pro users on twitter recently shared their success with running a large geoprocessing job.
Listen to this yarn about multiple threads
Likewise, multithreading does not make geoprocessing faster. The multithreading in ArcGIS Pro makes it possible for the geoprocessing thread to run independently from other threads. This means that when a tool is running you can do other things in Pro such as add new data to a map, navigate and make selections in the map, change a layer’s symbology or labels, create and modify a layout, georeference an image, and even find and fill in another geoprocessing tool.
While multithreading is important and will make your work in Pro more productive, many people incorrectly assume it is a performance enhancing drug that will make every tool run in world record time.
Meanwhile, in a parallel universe…
One technique geoprocessing uses to improve performance is parallel processing. Parallel processing is a computing technique which splits up a big job into many smaller jobs and allows multiple CPUs, cores, or processes to work on the big job at the same time, often resulting in faster processing time. More and more geoprocessing tools leverage parallel processing in each new Pro release. In ArcGIS Pro 2.1, 70 geoprocessing tools can run using parallel processing to split a job across multiple cores or processes on your desktop machine. This is more than twice the number of tools that use parallel processing in ArcMap 10.6.
Parallel processing in ArcGIS Pro is controlled by the Parallel Processing Factor. Some tools will use parallel processing by default, while others require you to set the parallel processing factor to turn it on. Refer to each tool’s help documentation to determine how to control parallel processing for the selected tool. While there are many geoprocessing tools that do not support parallel processing, we’ve worked on some high priority analysis and data crunching tools to ensure that these processes can leverage modern hardware and have the best possible performance with improved scalability.
Tools that support parallel processing
The following geoprocessing tools support parallel processing in ArcGIS Pro 2.1.
Analysis Tools
Intersect
Pairwise Intersect
Union
Update
Identity
Clip
Erase
Graphic Buffer
Pairwise Buffer
Pairwise Dissolve
Split
3D Analyst Tools
Intervisibility
Regularize Building Footprint
Classify Las Building
Reclassify
Viewshed 2
Conversion Tools
Multipatch To Raster
Spatial Statistics and Space Time Pattern Mining
Spatially Constrained Multivariate Clustering (Spatial Statistics)
Local Outlier Analysis (Space Time Pattern Mining)
Spatial Analyst Tools
Viewshed 2
Weighted Overlay
Weighted Sum
Zonal Statistics
Zonal Statistics As Table
Reclassify
Fill
Geostatistical Analyst Tools
Areal Interpolation Layer To Polygons
Cross Validation
Densify Sampling Network
Diffusion Interpolation With Barriers
EBK Regression Prediction
Empirical Bayesian Kriging
Create Geostatistical Layer
GA Layer To Contour
GA Layer To Grid
GA Layer To Points
GA Layer To Rasters
Moving Window Kriging
Gaussian Geostatistical Simulations
Generate Subset Polygons
Global Polynomial Interpolation
IDW
Kernel Interpolation With Barriers
Local Polynomial Interpolation
Radial Basis Functions
Data Management Tools (Raster and Mosaic Dataset tools)
Add Rasters To Mosaic Dataset
Analyze Mosaic Dataset
Build Footprints
Build Mosaic Dataset Item Cache
Build Overviews
Build Pyramids and Statistics
Build Seamlines
Color Balance Mosaic Dataset
Compute Camera Model
Compute Control Points
Compute Tie Points
Copy Raster
Export Mosaic Dataset Items
Export Tile Cache
Generate Point Cloud
Generate Raster Collection
Generate Raster From Raster Function
Import Tile Cache
Interpolate From Point Cloud
Manage Tile Cache
Register Raster
Split Raster
Synchronize Mosaic Dataset
Image Analyst Tools
Weighted Sum
Zonal Statistics
GeoAnalytics Tools
In addition to the ArcGIS Desktop tools listed above, ArcGIS Pro can also run tools on ArcGIS Enterprise servers. The ArcGIS GeoAnalytics Server provides a number of tools that perform feature and big data analysis using distributed computing on one or more machines. You can run and use these tools in Pro just like any other geoprocessing tools, using either your local or enterprise data sources as input, as well as big data file shares and feature layers in your portal. The GeoAnalytics tools are available in Pro if you are connected to an ArcGIS Enterprise that has a GeoAnalytics server, and your user account has sufficient privileges.
Calculate Density
Create Space Time Cube
Find Hot Spots
Detect Incidents
Find Similar Locations
Calculate Field
Copy To Data Store
Aggregate Points
Join Features
Reconstruct Tracks
Summarize Attributes
Summarize Within
Create Buffers
Example
I was recently running a Dissolve operation on roughly 20,000 overlapping polygons. While this isn’t a huge process, it still took a few minutes to complete. I was wishing this process would run faster by splitting the operation up and using all 4 cores on my desktop machine. While the Dissolve tool does not support the Parallel Processing Factor, the Pairwise Dissolve tool does. Using the Pairwise Dissolve tool with it’s default parallel processing setting (full parallel processing where the tool distributes the work to all the machine cores), the same dissolve process took less than 3 seconds.
Pairwise Dissolve completed in under 3 seconds
Now that’s unparalleled performance!
from ArcGIS Blog http://ift.tt/2lXsOeh
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