The Wall Street Journal has come out today in favor of Apple in its legal fight with the FBI in an editorial titled “Apple is Right on Encryption.” The editorial notes that the FBI is invoking a law that only allows them to exercise powers Congress has granted, which in this case it has not. The newspaper says the case is not about privacy but about security for all Americans.
A California judge ordered the company to design a custom version of its operating software to disable certain security features and allow the FBI to break the password. Apple has cooperated with the probe but argues that forcing it to write new code is illegal.
Judges Must Follow Laws
The FBI’s assertion that its order is a run-of-the-mill search warrant is false, the editorial argues. The FBI is invoking the 1789 All Writs Act, which grants judges the authority to enforce their orders as “necessary or appropriate.” But the All Writs Act is not a license for anything judges want to do. They can only exercise powers granted by Congress.
Laws of Congress already obligate telecoms, for example, to assist in surveillance collection. But Congress never said the courts can command companies to provide digital forensics or build programs for the FBI, even if needed for a search.
Congress could require companies to create “back doors” into their devices. In the absence of congressional action, however, courts cannot commandeer third parties ex post facto.
An Extraordinary FBI Request
The FBI’s request is extraordinary since the iPhone security methods were legal when they were created and still are. Apple has no more relation to the data on terrorist’s phone than Ford does to a bank robber who uses a Ford as a getaway vehicle.
If the government can require a manufacturer to invent intellectual property that does not exist in order to invade its own products, there is no limiting legal principle.
Order Sets Bad Precedent
Apple is not merely being asked to crack “one phone in the entire world,” as presidential candidate Marco Rubio asserts, the editorial notes. The Justice Department is demanding Apple provide software retrofits in at least a dozen public cases, and local and state prosecutors have stacks of backlogged iPhones they want unlocked too.
If Apple now writes the desired program, the technique will be used in investigations having nothing to do with terrorism as other prosecutors will use the same argument. Such is the “back door by degrees” that Apple CEO Tim Cook has described.
FBI Director James Comey told Congress last week the Apple case was “unlikely to be a trailblazer” and “instructive for other courts.” This is a contradiction.
The FBI Has Other Options
One question is why the phone wasn’t sent immediately to the National Security Agency, which has a formidable decryption unit. Federal specialists probably can hack the phone without Apple’s services, especially considering it is an older model.
This case isn’t about privacy; it’s about the security of all Americans.
Terrorists and criminals will always be able to find an underground encrypted communication channel, so regulating back doors into legal devices accomplishes little national-security benefit.
If Congress is really going to outlaw stronger encryption for law-abiding Americans, it would be a far more dangerous precedent for the courts to do so without guidance from Capitol Hill.
If the debate really is critical to protecting public safety, Comey should appeal to Congress to change the law instead of insisting the courts should resolve a major policy dispute on his behalf.
Featured image from Shutterstock.
Jamie Dimon May Hate Bitcoin, but J.P. Morgan Is Embracing Blockchain
J.P. Morgan Chase CEO has made it abundantly clear that he hates bitcoin, but that hasn’t stopped his firm from adopting the technology that underpins the digital currency system.
J.P. Morgan Launches Pilot Program
On Monday, America’s biggest bank rolls out the next phase of its blockchain pilot program. The effort will facilitate a faster, more secure transfer of cross border payments between J.P. Morgan and other banks, including Royal Bank of Canada and Australia and New Zealand Banking Group.
Although the new program will not trade cryptocurrency, it will use the landmark record-keeping technology that underpins it. The Wall Street Journal reports that J.P. Morgan will use the same blockchain technology behind digital currency Ethereum.
Despite widespread concern over cryptocurrency, financiers are enamored with blockchain. They, like many others, say the technology can significantly increase the speed of cross-border payments. The system currently in place is extremely complex, and requires multiple streams of communication between various participants. The blockchain has the potential to cut down transaction time from as much as 15 days to mere hours.
The pilot program aims to achieve a secure distributed ledger across financial institutions, enabling banks to work together to process transactions. Connecting transaction data through a shared network will greatly reduce the number of steps it takes to verify and process transactions.
J.P.’s embrace of blockchain doesn’t mean he’s going to warm up to cryptocurrency. His latest criticism of bitcoin came on Friday when he said it had “no actual value” and that “governments are going to crush it.” He did, however, give a glowing review of blockchain.
“We actually use it. It will be useful for a lot of different things,” Dimon said at a conference in Washington, as quoted by The Wall Street Journal. “God bless the blockchain.”
Featured image courtesy of Shutterstock
Cryptocurrency Adoption Will Lead to Free Money Transfers, According to Top Tech Investor
The rapid adoption of cryptocurrency will soon pave the way for free global money transfers, according to a top technology investor.
Cathie Wood, the CEO of Ark Invest, says cryptocurrencies like bitcoin are going to spearhead a system of free money transfers worldwide. She cites the already huge reduction in conversion fees from fiat currencies into crypto and back again. The current rate for those transactions is 2-3%, which is a fraction of the 7-8% money transfer services like Western Union charge.
But Wood says crypto transfer fees could soon fall to zero as companies prioritize valuable transaction information above anything else.
The cryptocurrency market approached record highs over the weekend, hitting a total value of $176.6 billion. Bitcoin’s market cap surged above $90 billion last week and reached a high of $96.7 billion recently. That surpassed the capitalization of major equities like Goldman Sachs and Morgan Stanley.
If bitcoin were a stock, it would be the 15th largest member of the Nasdaq and the 58th largest on the New York Stock Exchange.
Computing Power as a Commodity
In Wood’s view, that the growing value of cryptocurrency will lead to the commoditization of bandwidth and computing power.
“It’s interesting that you’ve got corn and oil and copper trading on the exchange but you don’t have computing power, and bandwidth, and storage,” Wood said, according to CNBC. “Well we think that’s going to happen because of blockchain technology and all of the cryptos that are coming along.”
Woods has placed special emphasis on Ethereum, a unique platform that operates more like a “cryptocommodity” than anything else.
Ark Invest is the author of the widely cited whitepaper, Bitcoin: A Disruptive Currency. In it, the firm argues that cryptocurrency has the potential to be the most disruptive development since the Internet. The investment manager controls $1.7 billion of asset funds focused exclusively on emerging technologies.
Featured image courtesy of Shutterstock
Jamie Dimon Doesn’t Want to Talk About Bitcoin Anymore
Jamie Dimon doesn’t have anything to say about bitcoin anymore. The head of J.P. Morgan Chase & Co has been heckled by the blockchain community since he declared cryptocurrency to be a “fraud,” and that he would fire any employee trading it for being “stupid.”
Bitcoin’s New Record
Dimon also doesn’t think much of bitcoin’s new record high. The virtual currency spiked more than 8% on Thursday to surpass $5,200.00 for the first time.
“I wouldn’t put this high in the category of important things in the world, but I’m not going to talk about bitcoin anymore,” Dimon said Thursday, as noted by Bloomberg.
J.P. Morgan has taken a less adversarial approach to cryptocurrency. In addition to handling bitcoin-related trades – something that came to light after Dimon’s warning – the financial giant is keeping its options open. J.P. remains “very open minded” to possible uses of cryptocurrencies “if they are properly controlled and regulated,” according to Chief Financial Officer Marine Lake.
Mainstream Appeal Growing
The growth and widespread adoption of cryptocurrency hasn’t been lost on the financial community. Earlier this month, Goldman Sachs CEO Lloyd Blankfein tweeted that his firm is weighing the possibility of trading cryptocurrency.
Fidelity Investments is also mining cryptocurrency, and making a lot of money doing it. Fidelity says its chief motivation for mining isn’t profit, but learning about the growing cryptocurrency market.
Increased mainstream adoption of bitcoin is seen by many as a necessary precursor to a more stable currency. Countries like Japan are spearheading adoption by introducing favorable regulation of the cryptocurrency space. But regulatory approval has not been uniform.
Russia recently became the third major economy in the span of a month to put the clampdown on cryptocurrency trading. China and South Korea have also implemented new controls on the market, focusing heavily on initial coin offerings.
Featured image courtesy of Shutterstock
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