Charles Hoskinson - Strawman Authentication 03-05-2020

Charles Hoskinson - Strawman Authentication 03-05-2020

(Written by @Eric_Czuleger)

On May 3rd Charles Hoskinson sat down to discuss strawman authentication on Cardano. This is a whiteboard video, so we encourage everyone to watch the whole thing for additional information.

Brief Summary:

  • Current modalities of authentication are outdated and inefficient.

  • Counterfeiting is a trillion dollar business and each luxury brand has independent ways of attempting to stop this criminal behavior.

  • IOHK and the University of Wyoming are developing a hardware authentication solution which allows customers to confirm the veracity of their goods.

  • This will take the form of a small, low cost chip which can be placed in goods.

  • The goal of this is to create a foundational standard which can be used by multiple businesses and brands.

Current solutions

Let’s say that you have a handbag. This lives in a supply chain. There are stages in this that terminate in the retail endpoint. As the handbag goes through each stage of the supply chain things can go wrong. It is an open question where anti-counterfeiting is introduced into these stages. This could look like invisible inks, holographic tags, serial codes and other options to maintain authenticity. There are usually special groups of individuals who work in the supply chain who add in this authenticity component. However, this system is currently inefficient.

Counterfeiting is a trillion dollar business and there are many sophisticated solutions coming online. However, most of these solutions are not consumer friendly. If a consumer purchases a handbag they may receive a certificate of authenticity or see a serial code. But, they have no idea if this is actually connected to something real. Furthermore they cannot confirm authenticity at a store. It is possible to get a domain expert to authenticate it, but oftentimes fakes are being made in the same factory as the genuine article. This makes confirming authenticity very difficult.

Hardware tokens

At the University of Wyoming lab we are working on designing a chip which will be a special secure hardware module. It will be capable of several cryptographic operations. You can think of Intel SGX as an example of this. Basically, the idea is to use secure circuits which are tamper resistant and isolated from the rest of the operating system. This can be used to store and use private keys.

This is desirable because these chips can be very small. They can have RFID or NFC involved in their workings. They can also be extremely cheap and operate at a low power. They can sign and store a single signature at a low price point. The WYO Lab will explore what can be done in a reasonable price window to complete all of the capabilities.

Prototyping and building

The first step of this is to come up with a design philosophy and specifications around the prototype. This is an iterative process so many prototypes will be developed. The prototype will then be sent to a finisher who will build the market-ready product. This will all be open source and live in the Cardano ecosystem. This is a strawman solution. A strawman is an initial solution which can be stress tested. The first strawman will involve issuing an authentication token. This will be done by a special role in the supply chain, we will call this the authenticator.

In the handbag example, at some point in the supply chain, the chip will be inserted into the bag. The authenticator will then examine the history of this bag and chip. They will then send a transaction sending an authentication token to the trusted platform module (TPM). Once the private key has been embedded in the asset it cannot be removed. This is because it cannot be taken out of the chip. However, a challenge and response protocol can be generated.

This means, once the handbag is owned with the chip and the token then a questioner can tap the phone on the bag. Through NFC or RFID the challenger can ask the bag if it is real. Essentially checking if the bag has a legit token. A user will tap the phone and the chip will generate a signature and return the query to the questioner. The questioner will be able to check the Cardano blockchain to see if the token is legitimate. This gives a high degree of certainty that the bag is real.

Additional value

In addition to storing the private key for a token the history of the object can also be stored. This includes where it was made, the store of sale, and chain of ownership. This gives us a beautiful chain of custody which may impart greater value. There is a difficulty in the strawman proposal. What if someone were to remove the chip?

This doesn’t help a counterfeiter too much. If the chip were removed it could be put into a new bag and a customer could be fooled, but this is a one-to-one transaction. A counterfeiter would need a legit bag to put their chip on. This makes it much more difficult to make many counterfeits and reap larger profits. One way around this would be to implant another chip which is in communication with the authentication chip. This would make it hard for the individual to know which chip is the authenticator.

This process is all a large step forward because the chips are programmable and they can develop over time. It also allows consumers to directly interact with the product. At the retail point, there could be a master key or process which issues transactions to add metadata to the good at the point of purchase. By doing this it becomes the authentication certificate. This would also allow secondary market royalties, reauthentication, or loyalty protocols.

Establishing loyalty

By showing that a verified owner had the product, there could be new or rare products offered to only their owners. These loyalty systems can be deployed among anyone in the system of people who have purchased luxury goods. This can be tokenized as a “right to buy” asset. This can be transferred to someone else for a price. This is an example of a loyalty and membership system.

This generates benefits to the consumers. It allows authentication, monetizing membership to a club of owners, and secondary sales royalties. At the moment, this is a strawman solution. We will need to build better solutions along the way. This is essentially what the University of Wyoming is currently working on.

Connecting identity

The output of this will be open source so everyone in Cardano will be able to use this as a platform. If it is successful we could also place the chip in a usb key as a one time signature. Ultimately, this will be coupled with other authentication schemes. We believe that it will be coupled with our identity standard called Prism and this will be paired with the Cardano multi-asset standard. It also takes us from one-to-many to one-to-one transactions in terms of counterfeiting.

Later on we will be able to build on this scheme. This could include adding in metadata based machine learning. Probability could then be added into the supply chain. This could look at the geography of the chip. If the bag or item was previously seen in one country but it shows up across the world there is a high probability that it was counterfeited.

The beauty of these systems is that they are layered, composable and they use solid foundations. This is the emergence of combining a blockchain with a trusted hardware module and a cellphone. When these are all added together we have a robust solution. This is also a very cheap system and therefore it is scalable.

Luxury goods go at a very high price point and they can be secured for a dollar or less. Accounting is done for free and it is a global system. This means that the application is universal for all luxury brands based on a common framework. This means that the consumer cannot be shut out of the system. This gives individual analytics for the retailer as well.

Encryption and communication

The system also gives a channel for the authenticator to communicate with the buyer. Once a purchaser is tethered to the product, discounts can be pushed to verified buyers. This is essentially what we are looking at. It is an academic, public\private partnership that generates the foundation for real life applications.

Bringing counterfeiting from a one-to-many to a one-to-one transaction modality helps cut out a good deal of the trillion dollar industry. It also allows us to create a universal platform for all businesses to use. We have also discussed using it in a biopackage so that it can be implanted into livestock. This could include inoculations, ownership, and other metadata. The sky’s the limit in terms of this authentication solution. It will come coupled with the Cardano ecosystem as well as our identity solution.