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1. Introduction

As the transition to a digital society is accelerating in recent years, especially after the coronavirus outbreak, the expectations of the European Citizens for a safer digital environment are growing. There is then an urgent need to combat cybercrime. In two different articles we will address, in particular, the surging phenomenon of the ransomware attacks and how this issue is being tackled within the European Union. In this contribution we will introduce the relevant phenomenon (Chapter 2). In addition, it will be assessed what are the legislative and policy frameworks in place in the European Union for facing this issue (Chapter 3).

2. The ransomware attacks

Ransomware can be described as a type of malware (like viruses, trojans, etc.) that infect the computer systems of users and manipulates the infected system in a way, that the victim cannot (partially or fully) use it and the data stored on it. The victim usually shortly after receives a blackmail note by pop-up, pressing the victim to pay a ransom (hence the name) to regain full access to system and files 1.

The criminality resorts to different types of tactics to achieve their finalities. Ransomware attacks have the primary goal of making monetary gains by way of unlawful means. Ransomware typically encrypts target files and displays notifications, requesting payment before the data can be unlocked. Ransomware demands are usually in the form of virtual currency, such as bitcoin. This because these types of payments are difficult to be tracked2.

Ransomware attacks have certainly a global impact.

A report issued on 2021 has revealed that the frequency and the complexity of ransomware attacks increased (by more than 150% in 2020 such that ransomware can now be defined as one of the greatest threats that organizations face today regardless of the sector to which they belong 3.

The above findings speak volumes on how this issue is serious and of concern for all the world. Consequently, it does not come as a surprise that it has been clearly recognized nowadays that ransomware is a prime item in agendas for meetings on strategy among global leaders 4.

In the fight against ransomware, several challenges need to be addressed. One of the main issues results in the lack of coordination and collaboration between the agencies and the authorities all over the world. There is indeed a lack of legislation in many countries that clearly criminalises ransomware attacks5.

This problem holds true also for the European Union given that: (i) it is made of different Member States which, in some cases, have different internal law frameworks when it comes to cybersecurity and modalities to tackle the ransomware problem; (ii) the issue must be addressed also with reference to the States which are external to the European Union (in which the ransomware phenomenon flourishes).

3. How the European Union is dealing with the issue

Considering all the above, in the following chapter we will look at how the European Union is trying to face the ransomware attacks.

3.1. The European Union legislative interventions

The first step towards the creation and development of an EU cybersecurity ecosystem was the adoption of a cybersecurity strategy in 20136. This strategy identified the achievement of cyber-resilience and the development of industrial and technological resources for cybersecurity as its key objectives. As part of this strategy, the European Commission proposed the EU Network and Information Security directive 2016/1148 (NIS Directive)7.

In particular, the NIS Directive8 sets out that the EU Member States must have certain national cybersecurity capabilities and that there shall be a cooperation in the exchange of information amongst the same EU countries. Moreover, according to the NIS Directive, the EU Member States shall promote a culture of security across sectors very relevant for the EU and which rely on ICTs such as energy, transport, water, banking, financial market infrastructures, healthcare and digital infrastructure 9.

It is interesting to note that the NIS Directive limited to provide for measures by way of which the EU States shall increase their attention when it comes to cyber-attacks. On the other hand, it did not envisage a common and specific framework (for example in terms of sanctions to be applied) for tackling cyber-crimes (such as the ransomware attacks).

That is probably why in June 2017, the EU tried to reinforce its global response to the cyber-attacks (including ransomware) by establishing a Framework for a Joint EU Diplomatic Response to Malicious Cyber Activities (the so called Cyber Diplomacy Toolbox)10.

This framework basically allows the EU and its Member States (by way of an initiative to be taken by the Council) to use all necessary measures ... to prevent, discourage, deter and respond to malicious cyber activities [and thus also to the ransomware attacks] targeting the integrity and security of the EU and its member states .... In particular, the Cyber Diplomacy Toolbox gives the possibility to the Council to impose ... sanctions on persons or entities that are responsible for cyber-attacks or attempted cyber-attacks, who provide financial, technical or material support for such attacks or who are involved in other ways ... 11.

Finally, also in the attempt to reinforce the attack to the malicious cyber activities (such as the ransomware) a revised version of the NIS Directive (to be named NIS2 Directive) has been proposed by the European Commission in 2020. In particular12:

The proposed NIS2 Directive though is now still under discussion13.

3.2. The European Union policy interventions

The European Union has then dealt with the issue of the ransomware attacks also pursuing specific policies of international cooperation on this topic.

In particular, the European Union has soon realized that this problem was global and that it was thus necessary to tackle it also involving the other stakeholders.

That is why the European Union signed for example a joint EU-U.S. statement for working together in the fight against ransomware through law enforcement action, raising public awareness on how to protect networks as well as the risk of paying the criminals responsible, and to encourage those states that turn a blind eye to this crime to arrest and extradite or effectively prosecute criminals on their territory ...14.

Moreover, the EU takes part on a regular basis in international summits (together with important partners such as U.S.A., India and Australia) where it is discussed how to counter this plague on a global scale15.

4. Conclusions

As we have seen above, the current framework set by the European Union to tackle the ransomware attacks is rather complex and worthy to be carefully assessed.

In a subsequent article to be published soon on Lexology, reference will then be made to the main actors in charge of dealing with such phenomenon in Europe and to the strengths and weaknesses of the current EU system of defence against this invasive form of cyber-criminality.

Read more:
The European Union's efforts to tackle the phenomenon of ransomware attacks (Part I) - Lexology

GORZOW WIELKOPOLSKI, Poland, July 25 (Reuters) - Construction sites, factory assembly lines and warehouses across central Europe are scrambling to fill vacancies after tens of thousands of Ukrainian men left their blue-collar jobs to return home after Russia invaded their country.

Ukrainian workers had flocked to central Europe in the past decade - drawn by higher wages and aided by an easing of visa requirements - filling jobs that weren't highly paid enough for local workers in construction, the automotive sector, and heavy industry.

Many of these workers have returned home to help the war effort since Russia invaded on February 24, abruptly worsening labour shortages in some of Europe's most industrialized economies.

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Reuters spoke to 14 company executives, recruiters, industry bodies and economists in Poland and the Czech Republic who said the departure of Ukrainian workers was leading to rising costs and delays in manufacturing orders and construction work.

Before the Russian invasion, Ukrainians were the largest group of foreign workers in central Europe. Poland and the Czech Republic hosted Ukrainian workforces of around 600,000 and more than 200,000 respectively, according to industry trade groups.

The Employers of Poland trade group, which represents 19,000 companies, estimates that around 150,000 Ukrainian workers, mainly men, have left Poland since the start of the war.

Wieslaw Nowak, chief executive of Polish tram and railway line builder ZUE Group, said one of its sub-contractors recently failed to complete work related to laying tracks because nearly all of its 30 Ukrainian workers had left.

"Many companies are looking for employees on a massive scale at various construction sites due to large outflows," he told Reuters.

"It certainly affects the cost and pace of work because if someone loses several dozen employees at the same time rebuilding a team takes far more than a matter of a few days."

While the European Central Bank said in June an influx of Ukrainian refugees was expected to ease a euro zone labour shortage, the opposite seems to be happening in Europe's industrialised economies outside the currency bloc.

Hundreds of thousands of Ukrainian refugees, mainly women and children, who arrived in the region are not an easy fit for many of the vacant positions. Often the jobs are in physically demanding sectors such as construction, manufacturing or foundries where legal limits apply on how much female workers are allowed to lift.

From training female refugees to operate forklift trucks to recruiting new workers in Asia, companies are scrambling to find innovative ways to plug the gaps in their workforces, the company executives told Reuters.

But for many firms struggling to recover from the economic impact of the COVID pandemic, and now facing sharp rises in energy costs and inflation following the war, the sudden scarcity of labour poses a severe challenge.

"The loss of Ukrainian workers has deepened the problems companies are facing," Radek Spicar, vice president of the Czech Federation of Industry, told Reuters. "Companies say they can't cover all the demand from business partners: they deliver with delays and pay penalties."

With industrial production contributing to 30% of GDP, the Czech Republic ranks as the EU's most industrialised nation. Poland follows closely behind at 25%.

Before the Russian invasion, Germany-based recruiter Hofmann Personal had more than 1,000 Ukrainian candidates due to arrive in the Czech Republic between March and June, mostly for jobs in the automotive, logistics and manufacturing sectors.

The companies expecting those workers are now struggling to fill those openings, said Gabriela Hrbackova, Hofmann Personal's managing director in the Czech Republic. The country has the lowest unemployment rate in the European Union of just 3.1%.

"If this cannot be resolved quickly and opportunities for recruiting foreign candidates are not strengthened, it will have major implications, especially for manufacturing companies," Hrbackova told Reuters.

"Companies lack hundreds of employees for positions of production operators, qualified manufacturing positions such as welders, (machine) operators, metal workers and forklift drivers."

Executives and trade groups said the impact of Ukrainian workers' departures is being felt particularly hard in emerging Europe because the region is less automated than more developed European Union economies, such as regional heavyweight Germany.

For Scanfil (SCANFL.HE) -- a Finnish company specialised in electronics manufacturing, assembly and production outsourcing -- the swift loss of workers from the labour market in Poland, where it has operations, reinforced plans to boost automation.

"Automation is possible in some positions but not everywhere," said Magdalena Szweda, human resources manager of Scanfil Poland in Myslowice. "We still have a need in many workplaces for human hands so it doesn't resolve the problem."

The chief economist at BNP Paribas Bank Polska, Michal Dybula, said it was clear the loss of Ukrainian workers would harm the Polish economy - the sixth-largest in the European Union - at least in the short term, based on both economic data and conversations with local businesses.

However, it was too soon to quantify the scale of the impact, he said.

Petr Skocek, director of German automotive supplier Brose Group's facility in the Czech city Ostrava, near the Polish border, said the past inflow of Ukrainian workers had been a boon to businesses because of their qualifications, work ethic and similar culture.

"This channel has now stopped," he said.

The staffing issue comes on top of supply chain problems for manufacturers, who face soaring costs for energy and materials due to the war and lingering disruptions to supply chains from the pandemic.

The producer price index - a measure of inflation for businesses - hit nearly 25.6% in June in Poland and 28.5% in June in the Czech Republic.

Some companies are bumping up salary offers to attract replacement workers, seeking to lure local workers and stave off competing firms for the limited number of Ukrainians.

"We're searching for Ukrainian workers on the market, offering more money," said Maciej Jeczmyk, chief executive of Poland-based manufacturer InBet, which makes prefabricated materials for construction. "We are adapting almost every week."

To cope with shortages, Polish staffing firm Gremi Personal said their client companies had shifted men to more physically demanding jobs and hired Ukrainian refugee women to replace them.

"So, for example, a man would move from the production line to the logistics department where they have to carry heavy things that have a legal limit for women," the firm's deputy director Damian Guzman told Reuters.

The shortage has also forced companies to rethink how they work and look further afield to countries like Mongolia and the Philippines where language, travel and visa issues makes it difficult to quickly fill vacancies.

"The problem is that the number of workers brought from these other countries is not high enough to fill vacancies," said Marcos Segador Arrebola, the chief executive of recruiter GI Group Poland.

He said the number of Ukrainian workers in emerging Europe's largest economy increased 38-fold over the past 13 years.

Companies such as construction firm Inpro in Poland are also turning to pre-fabricated elements to keep construction projects on time. Others are extending working hours and training women for positions traditionally occupied by men, such as operating fork lifts.

Wojciech Ratajczyk, chief executive of staffing firm Trenkwalder Poland, said Poland had open vacancies for 50,000 logistics workers, most of them forklift drivers.

He said that more than 600 women answered an advert sent to 2,000 refugees about learning how to operate forklifts. A few dozen recently started a 4-week course organised in conjunction with companies.

One participant is Olha Voroviy, a former sales manager who found work in automotive supplier Faurecia's Polish warehouse after fleeing her home in Ukraine.

"It is a hard work ... but I need to work and make money and there was no other job in Gorzow," Voroviy told Reuters during a break in a certification course that will pave the way to a higher paying job in the warehouse.

"In Ukraine, I was working with my mind and here in Poland Im working physically."

(This story corrects to make clear open vacancies are in Poland not company in comments from Trenkwalder Poland in paragraph 37)

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Writing by Michael Kahn, Reporting by Michael Kahn in Prague and Anna Koper in Warsaw, Additional reporting by Andrey Sychev, Hedy Beloucif, Malgorzata Wojtunik in Gdansk; Editing by Alison Williams

Our Standards: The Thomson Reuters Trust Principles.

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Exodus of Ukrainian workers hits Europe's emerging economies - Reuters

EU treaty reforms have progressively increased the power of the European Parliament by making it a co-legislator with national governments in many important policy areas. But have these reforms had a positive impact on the EUs democratic legitimacy? Drawing on a new study, Miriam Sorace demonstrates that decisions made jointly between national governments and the European Parliament tend to match public opinion more closely than those made by governments alone. This suggests that further empowering the Parliament and reducing the use of unanimous decision-making would help tackle the EUs democratic deficit.

Scholars disagree over the effect that territorial weights have on the democratic quality of a political system. Some argue that fully democratic legislatures need to vote simply by ideological majorities in most policy domains i.e. those that affect all citizens as individuals rather than territories and/or do not generate permanent minorities. Others argue that for large, decentralised political systems, territorial vetoes are always required, and do not see a plausible link between embedding territoriality in legislative institutions and democratic deficits.

In a recent study, I have looked at whether territorial vetoes in decision-making make it difficult for a political system to deliver the policies that citizens want by looking at the case of the European Union. The EU is a heavily territorial political system, which is often challenged on democratic deficit grounds, and which is currently undergoing constitutional reflection, as the Conference on the Future of Europe process attests. Examining the EU is particularly salient, since many policy challenges are, in our globalised world, supranational in nature; and since the EU is taken as a model by many other global governance institutions.

In the EU, some important policy issues are still exclusively decided by the Council of Ministers (with one minister from the executive branch of each member state) via unanimity. The European Parliament has been progressively empowered, most notably through the codecision reform, which gives it the same veto powers as the Council, effectively making it a co-legislator. The codecision reform has, however, been applied in stages: different policy areas were assigned codecision in different treaty reform rounds, and often only subsets of the policy area were assigned codecision.

I leverage this staggered application of codecision a reform that weakened the weight of member states in EU law-making by looking at the case of EU employment and social policy. In EU employment and social policy, codecision was only applied in 1999 with the Amsterdam Treaty, and only to a subset of such policies: those that were assigned the cooperation procedure before 1999. Whilst the cooperation procedure granted slightly more powers to the European Parliament, its role was still largely consultative, and the territorial chamber (the Council of Ministers) retained its nearly absolute veto power.

I thus compare EU employment and social policies that were decided under the most territorial procedure (consultation) to EU employment and social policies that were decided by cooperation before 1999 and by codecision after 1999. This setup allows for a difference-in-differences causal analysis and means we can control for time-varying characteristics that might impact on EU policy and public opinion, such as the role of economic downturns, as well as characteristics specific to each sub-domain of EU employment policy (for example the salience of policy proposals).

The texts of EU employment and social policies were analysed by samples of online human coders and were placed on the pro-worker or pro-business side on the basis of a thoroughly piloted and validated text analysis codebook. Each EU policy was then matched to European public opinion positions on the economic left-right scale (using Eurobarometer data as well as data from Devin Caughey, Tom OGrady and Christopher Warshaw). The main outcome measured is the standardised difference between EU policies and European public opinion.

I find that EU policies decided by codecision more closely track shifts in public preferences than those decided using other decision rules. Figure 1 below shows the main results from the analysis graphically by plotting the policy-opinion standardised distances over-time and by policy sub-topic/group. The image shows that post-1999 legislation decided by consultation (the most territorial procedure) is farther from public opinion than legislation adopted under codecision.

This means that EU legislation in employment policy tended to further deviate from the public mood after 1999. Had codecision not been introduced, we would have therefore seen an overall increase in policy-opinion mismatches in this policy area post-1999 (the complicating effect of enlargement on the Council-led aggregation of European public opinion might be a reason for this post-1999 trend). Legislation decided by codecision also appears to better track the public mood than that decided by cooperation.

Figure 1: Absolute policy-opinion difference by treatment group

There are some signs, therefore, that codecision a reform that fundamentally changed how EU laws are passed by increasing the powers of the European Parliament and majoritarianism in the Council has indeed improved the democratic credentials and the democratic legitimacy of EU policies (measured as the policy-opinion link).

This has significant implications for international organisations, and it speaks to some important EU reform proposals that are currently animating the Conference on the Future of Europe. The backlash against globalisation is, according to some, partly due to international organisations having a democratic deficit. If international organisations are serious about tackling their democratic deficits as they acquire salient, redistributive policy competences, moving away from territorial, inter-state bargaining should be prioritised.

These findings furthermore lend credence to the expectation from democratic theory that strongly territorially weighted decision-making rules can hurt the democratic legitimacy of policy outputs. My study thus has implications for any political system that strongly relies on territorial representation: democratic discontent, in fact, is expected to be higher in such systems since their policies are expected to track public opinion preferences less well.

For more information, see the authors accompanying paper at the Journal of European Public Policy

Note: This article gives the views of theauthor, not the position of EUROPP European Politics and Policy or the London School of Economics. Featured image credit: CC-BY-4.0: European Union 2022 Source: EP

The rest is here:
Strengthening the European Parliament has brought EU decisions closer to the views of the public - London School of Economics

Nightly protests in North Macedonia over the past week have left dozens injured. At the heart of the turmoil is the small Balkan countrys long-running quest to join the European Union, a process that has faced one hurdle after the other.

The most recent obstacle is a veto by EU member Bulgaria. A French proposal for a compromise to address Bulgarias concerns has divided North Macedonia, sparking the sometimes violent protests. Frances plan also met deep objections in Bulgaria and helped to bring down the government, which had accepted the compromise.

What is the dispute about?

North Macedonia has been an EU candidate for 17 years. The country emerged from the breakup of Yugoslavia in the 1990s and sought to forge a strong national identity. But in a region where borders and ethnicities have shifted and overlapped over centuries, it was beset by problems from the start.

The countrys chosen name, Macedonia, sparked outrage in neighboring Greece, which said the term harbored expansionist aims against its own province of the same name and was an attempt to usurp Greek history and culture. Athens held up Skopjes EU and NATO membership bids for years, until a 2019 deal was reached that included the smaller country changing its name to North Macedonia.

But the following year, neighboring Bulgaria blocked the renamed nations attempts to join the EU, accusing Skopje of disrespecting shared cultural and historic ties. Among Bulgarias key demands were acknowledgment that the language of North Macedonia derived from Bulgarian, and the recognition of a Bulgarian minority.

The size of the Bulgarian community in North Macedonia is a matter of contention. Official data from the 2021 census put it at 3,504 people, or about 0.2% of the population. Bulgaria has doubted the figure, noting that about 90,000 of North Macedonias roughly 2 million population received dual Bulgarian citizenship over the last two decades based on their family roots. About 53,000 more applications are pending.

Why does it matter?

North Macedonias EU bid is tied to a similar bid by neighboring Albania. Both countries see joining the 27-nation bloc as a means of securing stability and prosperity in an increasingly unstable world. The EU prospects of the Western Balkan countries gained increased attention in the wake of the blocs efforts to bring Ukraine closer following the Russian invasion.

What is the French proposal?

France held the rotating EU presidency between January and June and so has been deeply involved in negotiations to break the deadlock. EU leaders held a summit with Western Balkan nations last month, during the same week they made Ukraine and Moldova candidates for EU membership.

French President Emmanuel Macron hoped to present unblocking the EU bids of North Macedonia and Albania as a major success. On Thursday, the French Embassy in Skopje posted a message from Macron.

Once again, North Macedonia has reached a crucial moment in its history. Seventeen years after receiving candidate status, a historic opportunity has opened: . The choice is yours, he said.

Macrons proposal envisages concessions from both sides. The government in Skopje would commit to changing its constitution to recognize a Bulgarian minority, protect minority rights and banish hate speech.

The French leader stressed the proposal doesnt question the official existence of a Macedonian language, but he noted that, like all deals, it rests on compromises and on a balance.

How was the proposal received?

The compromises in the French proposal led to rifts in both countries.

Bulgarian Prime Minister Kiril Petkovs centrist government was toppled in a no-confidence vote on June 22. A junior governing partner quit the fragile four-party coalition, describing Petkovs willingness to lift the veto of North Macedonia as a national betrayal. An early election could result in a stronger presence in parliament of nationalist and pro-Russia lawmakers.

The National Assembly already has approved the proposal, but legislators set additional conditions for agreeing to North Macedonias EU membership. They included proper constitutional protection for Bulgarians living in North Macedonia, and no assumption that Bulgaria would recognize Macedonian as a separate language from Bulgarian.

In North Macedonia, both President Stevo Pendarovski and the government of Prime Minister Dimitar Kovacevsk backed the proposal as a reasonable compromise. Accepting it will be neither a historic triumph, as one camp would call it, nor a historic failure or debacle, as those in the other camp say, Pendarovski said.

The government has stressed the proposal does not endanger national interests or identity. But the center-right main opposition party, the VMRO-DPMNE, as well as others, disagree, saying the deal favors Bulgarian demands that question North Macedonias history, language, identity, culture and heritage.

Biljana Vankovska, a law professor at the Saint Cyril and Methodius Universitys Institute for Security, Defense and Peace, slammed the French proposal as bowing to the nationalistic and chauvinistic demands of Bulgaria.

It is unbelievable that a small nation was asked to give up its language, history and constitution-making powers to external powers in order to start the EU accession process, she said.

Political analyst Albert Musliu, head of the Association for Democratic Initiatives think tank, argued the proposal offers North Macedonia a chance to start membership talks with the EU.

If you ask me whether it is fair, then yes, the proposal is unfair, but international order is not based on fairness, he said.

Whats next?

Bulgaria has accepted the French proposal, which now requires the backing of North Macedonias parliament. The text is now at committee level in parliament. No plenary session has been scheduled.

Read more from the original source:
Explained: What's behind North Macedonia's long road to the European Union? - The Indian Express

This is an opinion editorial by Beautyon, the CEO of Azteco and a contributor at Bitcoin Magazine.

A group of bitter, twisted computer illiterates in the beleaguered European Union have managed to convince the European Council that bitcoin is money, that Bitcoin wallets are actual wallets that hold actual balances of money and that they should be regulated. This is of course totally insane and an idea borne out of profound ignorance.

Since it is not possible to have a rational argument with people like this, another, better strategy of dealing with these violent types must be formulated and implemented. Theyre fixated on the idea that bitcoin is money and, from the seed of this mistaken idea, a monstrous Pandoras Box of evil has been opened.

Bitcoin is not money. If you seek compliance you are asking for trouble. People who want to see the widespread and rapid adoption of Bitcoin should not seek tight regulation and the blessing. Beautyon

In order to avoid the unethical attacks of the dribbling geriatrics in the United States and the delusional EU socialists, Bitcoin wallet software developers must devise a strategy to stay out of the crosshairs of the very misguided apparatchiks hell-bent on damaging Bitcoin businesses.

Every law that touches Bitcoin uses deceptive language as definition and pretext. These definitions come from ambulance chasers and not computer scientists or software developers. By re-contextualizing Bitcoin wallets, it will be possible to totally escape the onslaught of destruction being planned by the EU and U.S. legislators.

This is how you do it.

Bitcoin wallet developers, quite naturally, have centered on using the conventions of money to translate what is happening under the hood into something ordinary people can understand. There is no coin management or UTXO information displayed to users in the consumer grade Bitcoin wallets: BlueWallet, Wallet of Satoshi, Samourai, Pine, Phoenix, Muun; all of that is hidden away because it is of no use to consumers.

No normal person can deal with coin control, UTXOs or anything like that.

Instead, a set of familiar, easy to understand and simple conventions has been borrowed from the world of banking to make everything in Bitcoin understandable to normal people.

This is why Bitcoin wallets have taken on the appearance, nomenclature and styling of banking apps, which normally look something like these apps from Halifax and Lloyds respectively.

Bank apps from Lloyds and Halifax. Obviously bought off the shelf from the same developer.

Below is a picture of Coinbases phone app, which looks exactly like a bank app.

Coinbase phone app

Now Airbitz:

Airbitz dashboard

When a normal, ignorant, computer-illiterate person from the EU government looks at any Bitcoin app, they recognize it as a financial tool because it looks exactly like the financial apps theyre familiar with. As for what is going on under the hoods of these very different classes of tools, they have absolutely no clue. They only see the surface and make all their judgements based on that alone. This is why they reflexively conflate Bitcoin with money and think that the balance in a Bitcoin wallet is analogous to the fiat balance in a banking app.

There is a lot of talk about using Blockchains to improve data integrity, but what all these solutions fail to address is what I call The Flat Screen Dilemma. Just because something is displayed on a screen, it does not follow that it is true. The Flat Screen Dilemma

The fact of the matter is very different, however. Bitcoin apps show you the total of the UTXOs that you have control over by virtue of you being in possession of the private key. That is a sum of UTXOs; it is not a single balance. Furthermore, that money is not on the device. What is on the users device is an app that stores a cryptographic key (a string of text) that allows you to sign messages for broadcast to the Bitcoin network. Bitcoin wallets do not contain or receive bitcoin. They simply tell you what your private key can sign for on the block chain.

By saying this, I am obviously simplifying the process. But the simplification I am presenting here is more accurate than saying a Bitcoin wallet receives and stores bitcoin, which never, ever happens and never has happened. It is also wrong to characterize a Bitcoin wallet as unhosted if it can sign a message on command of a user without reference to anyone else. There are no wallets in Bitcoin at all. Its just another analogy.

Bitcoin is a database. It is not a payment network nor is value sent over it at all. There are no wallets either. Signed messages are what are sent to the network for inclusion in the public database. It is a database used to keep a record of who controls which outputs. It is not and never has been money in the conventional sense. Just because people use this database as money doesnt mean that bitcoin is money. Just because people use the word wallet does not mean that there are actual Bitcoin wallets that hold bitcoin the way a leather wallet holds cash.

Using the word wallet for the sake of user experience is a convention to help make the primary function of tools understandable for users. Those conventions are a choice, not a rule and they are not a universal truth, either. That means that anyone can choose any convention or any analogy they want to compare what happens in their Bitcoin app. It is entirely possible that oil traders could use the block chain to denominate barrels of oil using barrels as measurement. Today, one barrel of oil is 0.0048 bitcoin/barrel. In an oil traders wallet this would be represented as 100 if the trader had one hundred barrels showing on his device as allocated to his private key in a UTXO.

In this scenario, which is totally plausible, no one would claim that bitcoin is oil but maybe they would? Apparatchiks are completely insane and insane thinking is what youd expect from them.

BlueWallet does nothing more than present the user with conventions users can understand. It is not an unhosted wallet; it is a block chain viewer and signing device. In no way, shape or form is a Bitcoin wallet on a mobile phone a financial tool of any kind. If very stupid people were to classify a signing device as a financial tool, then many other software tools would be captured by that insanity immediately. BlueWallet could pivot to the oil industry tomorrow and start calling itself OilWallet. The fact that people use bitcoin as money is irrelevant to bitcoins nature. They exchange it for goods and services and money while OilWallet is used to manage the exchange of barrels of oil. Common to all of this is Bitcoin is only a database; what you impute to it is up to you and has nothing to do with its fundamental nature.

WhatsApp uses exactly the same encryption techniques as Bitcoin does to authenticate users to each other. You have a pair of cryptographic keys that you use to encrypt, decrypt and sign messages so that the other person receiving your call or texts or pictures knows it came from you and could have only come from you. Users of WhatsApp are not exposed to how all of this works, in the same way that users of Bitcoin wallets are not shown the text of their private keys. The software takes care of all of that for the user and simply gives them information that is useful to them. In the case of WhatsApp, that useful information is text messages. In Bitcoin it is the sum of UTXOs that are associated with your private key that are written into the public database of the chain of blocks.

So what is the answer? I hear you bleating.

The answer is to call Bitcoin wallets viewers and signers.

If wallets were to rebrand as bitcoin viewers, to better reflect their function and distance themselves from the language of the financial industry, no one could argue that they are financial tools or unhosted wallets.

That is literally what all Bitcoin wallets do: they act as viewers or, to analogize, Windows on the block chain, showing you which outputs are controllable by you.

When you send bitcoin to someone (note how I put send in quotes, because bitcoin is never sent anywhere; it is not like money) you take their public key (what is called a Bitcoin address) and use your private key to sign a message granting control of those bitcoin to the recipients address. Had the money convention been taken to the logical conclusion, Bitcoin addresses might have been called Bitcoin account numbers. This signing of a message has more in common with contracts than it does with money handling. This further breaks the absurd Swiss bank account in your pocket imagery. Sent, received, deposit, payment, account all of these words must be abolished from Bitcoin wallet interfaces, the Bitcoin Lexicon and the overall nomenclature or the reckless, dangerous and very harmful conflation of bitcoin with money will continue.

When these messages are broadcast to be added to the public chain of blocks, either from your own full node, which is a copy of all the messages ever incorporated into the block chain, they are incorporated once the network of database administrators decide the addition should be made. Database administrators not miners. Are you starting to understand? Mining is what companies do to extract precious metals from the earth. Precious metals like gold, which actually is money, unlike bitcoin. All of these analogies and the language from the financial world must be abolished from the lexicon of Bitcoin companies.

Once the message is accepted as legitimate by the network, your block chain viewer will be able to see that the signature you made has been added to the public record and the sum of your UTXOs will be smaller than they were before the message was sent. In the current wallet convention, this is expressed as a single number, sometimes juxtaposed with a conversion into fiat with the approximately equal to sign (). All of this is to help you understand but is not a reflection of what is really happening, or an absolute prerequisite or necessity.

Is Liquid bitcoin money?

There are already watch-only tools from Bitcoin companies like the great Samourai Wallet. Sentinel allows you to scan your keys and then whenever the chain of blocks is updated, it will show you the status of the UTXOs you control on the block chain.

By the bizarre, irrational and stupid thinking of the EU, Sentinel is an unhosted financial services application because it shows you a balance in bitcoin as a single number. If it is not a financial services application, why not? Are they going to claim that a tool that watches a database is a wallet? No one is asking these questions because they dont understand how Bitcoin works at any level other than analogies.

Samourai Wallet Sentinel app

And dont get me started on metal storage devices.

Is this an unhosted Bitcoin wallet? (Photo/Cryptosteel)

In the end, there is going to have to be a U.S. Supreme Court case to force the venal and stupid legislators to obey their oaths and stop interfering with the free speech of American software developers. Bitcoin is not money it is speech and no lawmaker can interfere with the speech of U.S. citizens. I explain more about this in Why America Cant Regulate Bitcoin

Once this is settled by case law, the benefits for the U.S. will be enormous. All software developers working in Bitcoin will run to incorporate in the country and base their operations in Florida. No one anywhere in the EU will dare to start a Bitcoin wallet company because the ignorant apparatchiks there cant tell the difference between a chat app and a Bitcoin app (pro tip: there is no difference).

When this happens, hundreds of billions of dollars from all over the world will flow through Bitcoin wallet companies being run from America, and those companies will be paying taxes in the U.S. The entire worlds financial infrastructure and tooling will come from America and flow through America for Uncle Sam to get his slice. America wins again.

Upon reading this, there will be many stupid people out there who will cry, This is just semantics! Those people dont use Bitcoin wallets, dont have any bitcoin, dont run Bitcoin businesses of any kind and are as ignorant as the EU idiots and U.S. geriatrics who want to cripple Bitcoin.

When this goes to the U.S. Supreme Court, it will not be them paying the legal bill, though they will reap the world-changing benefits of software developers working with the Bitcoin database free of arbitrary, unethical and unconstitutional restrictions hampering their ability to display the UTXOs you can assign with your block chain viewer and signer.

This is a guest post by Beautyon. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

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The European Unions Attack On Bitcoin Is An English And Math Comprehension Problem - Bitcoin Magazine