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Building a Responsible Cyber Society…Since 1998

The digilocker beta project launched by the Government of India seems to be set to introduce a precedent which is ultra-vires the Information Technology Act 2000/8.

According to the information available the Digi Locker can be used to store important documents of the public such as marks cards, PAN cards etc in e-form. They can also be submitted to authorized Government departments for various services with an “e-sign” of the document owner.

The concept of e-sign which is proposed to be adopted by technologists advising the Government appears to be not in accordance with the provisions of the Indian Information Technology Act. According to the proposal, the public and private key pair for e-sign would be generated on the CA’s systems and not under the control of the signer. This would amount to a compromise of the Private Key ab-initio.

Further, use of the private key which is known to be compromised may be considered a contravention of ITA 2008.

This web based private key generation and storage is a procedure adopted by some foreign Certifying authorities and it appears that the technology is being recommended to the Indian Government. However, this system may seriously affect the “Non Repudiation” nature of the Indian digital signature system as we know today.

Once the system is used by a Government department, it would set a precedent which will be followed by other organisations also and hence the legal status of the entire digital signature mechanism will be adversely affected.

It would be preferable if the Government pauses to think before it leaps.



Bitcoin in new form?

Posted by Vijayashankar Na on March 14, 2015
Posted in bitcoin  | 2 Comments

Bitcoin has been in discussion for some time. In India the response for Bitcoin has been mixed. While initially it attracted the attention of entrepreneurs setting up echange services, the RBI frowned upon the system and ED moved in to conduct raids on some of the exchanges because it was felt that there was violation of foreign exchange regulations involved in the exchange transactions. This dented the enthusiasm and more or less killed the initiatives.

One of the main reasons for the RBI responding to the system with an unapproving look was that Bitcoin had been earlier associated with criminal activities and continue to be the preferred currency of the underworld. Coupled with this the claim of the Bitcoin operators that it is an “Alternate to legacy currency” threatened the regulators that the economy could be adversely affected if Bitcoin popularity grows.

Naavi has held that Bitcoin as a category of “Virtual Currency” is an “Electronic Document” and is recognized as such under ITA 2000/8. Whether it is a currency alternative or a virtual commodity or just a “pointer” to which a closed community ascribes a value is a matter of how the community would like to use the concept. Naavi has also highlighted that the system of “Virtual Currency” is a technology which has a great potential to be used by the regulators themselves. In fact Naavi’s old patent applied system of “Digital Value Imprinted Instrument System” itself did place faith on a server based authentication of a transaction and conversion of legacy currency to customized currency by the user himself. Presently some form of such limited currencies are in use both in the form of prepaid virtual cards as well as closed payment systems.

Now, today’s report in news papers state that IBM is working on a “Bitcoin-like” system (Refer this article). This system is supposed to use the “Block Chain Technology” and will eliminate the need for Banks and Financial institutions to authenticate a transaction and use the Block chain type of authentication. From the reports it appears that the system will convert legacy currency into some form of virtual currency which the spokes person refers to as “Token”. It is not clear however how the availability of back end fund is being authenticated without involving the financial institution.

In contrast, what I would like to suggest is for the regulator like RBI to start a new Virtual Currency on its own or convert the current stock of notes into virtual notes gradually by withdrawing the paper currency in parts and replacing them with virtual currencies. What can be done in this system is to enable RBI to track every transaction. In such a system the availability of stock is authenticated against the base block authenticated by RBI and further authentication of transactions can be done by others who can be rewarded with appropriate commissions.

If RBI sheds it’s reservation on virtual currency, we can discuss the alternate possibilities which will satisfy the RBI as well as the Government and yet will make the technology work for revolutionalizing the nation’s currency system. This would be far more economical than printing new One rupee plastic notes which RBI seems to be thinking. The virtual currency system has not only the prospect of better economy but could be a better security against organized counterfeiting by enemy countries.