Advanced Cryptography in Digital Finance

I'm excited to share this Case Study for Quantum Entropy Injection into HSMs for Post Quantum Cryptographic (PQC) Key Generation that our amazing PQC team and I recently completed.   In cybersecurity, entropy is the measure of randomness in a string of bits. In cryptography, entropy is used to produce random numbers, which in turn are used to produce cryptographic keys. As entropy increases, randomness gets better, keys become more difficult to determine, and security improves. Entropy is also important for the generation of random numbers and other critical security parameters such as seeds, salts, and initialization vectors for cryptographic algorithms.   Financial institutions must deal with the constant risk of cyber-attacks, underlining the responsibility to maintain and strengthen digital security for customers’ trust and integrity. A foundational step for addressing these issues is generating stronger cryptographic keys with better entropy (as part of a broader Defense in Depth PQC strategy). Using random bits (from quantum sourced entropy) that are proven for improved randomness and unpredictability is pivotal for both today’s classical cryptography and tomorrow’s quantum resistant cryptography.   Wells Fargo, Thales, and Quantinuum, working in collaboration, demonstrated the ability to generate strong cryptographic keys within the cryptographic boundary of a Thales Luna HSM, a FIPS 140-2 level 3 cryptographic module with external entropy. The keys were generated using random bits with verified quantum entropy acquired from the Quantinuum Origin trapped ion-based quantum computer and validated using the Bell Test to prove it met the threshold for quantum entropy. This cryptographic solution gives Wells Fargo a proven quantum entropy source to generate ultra-secure keys that can be designed and deployed at scale.

We’ve witnessed seismic shifts in technology over the decades—from mainframes to PCs, the rise of the internet to social commerce, centralized systems to decentralized architectures powered by blockchain. Programming languages have evolved from COBOL and C to Julia, Rust, and Elixir. And now, we’re entering a new frontier: from traditional statistics to agentic AI. In cryptography, the journey from plaintext to ciphertext has been shaped by innovations in symmetric, asymmetric, and hashing algorithms. But one breakthrough is poised to redefine the balance between data utility and security - 𝐇𝐨𝐦𝐨𝐦𝐨𝐫𝐩𝐡𝐢𝐜 𝐄𝐧𝐜𝐫𝐲𝐩𝐭𝐢𝐨𝐧. Imagine a world where sensitive & encrypted data can be analyzed and trained with AI / ML models without ever revealing the raw information. It’s a paradigm shift with real-world implications: 𝐇𝐞𝐚𝐥𝐭𝐡𝐜𝐚𝐫𝐞: Researchers can run cross-institutional analyses on encrypted patient data, maintaining HIPAA compliance while accelerating patient-centric solutions.  𝐅𝐢𝐧𝐚𝐧𝐜𝐞: Banks can deploy fraud detection ML models on encrypted client data—enhancing security without sacrificing insight. 𝐑𝐞𝐭𝐚𝐢𝐥: Retailers can leverage it to analyze encrypted customer purchase patterns and personalize experiences based on encrypted 2P/3P data. Many more use cases around supply chain collaborations can be unlocked. As regulations tighten and cybersecurity threats grow more sophisticated, technologies like homomorphic encryption will be foundational to the next wave of secure digital transformation. We no longer have to choose between protecting data and unlocking its value. This innovation rewrites that equation.

Privacy-Enhancing Technologies for Digital Payments: Mapping the Landscape – BIS Working Paper No. 1242 🔍 How can we balance financial privacy, auditability, and compliance in the age of digital payments? The Bank for International Settlements – BIS has published a comprehensive study on privacy-enhancing technologies (PETs) for digital payments, outlining the trade-offs between privacy, compliance, and financial security. The paper classifies solutions along the dimensions of privacy vs. auditability and institution-based vs. technology-based approaches, mapping the current state and future of privacy-preserving financial systems. Key Findings 🔹 Privacy in Digital Payments: The shift to digital currencies, stablecoins, and #FinTech solutions raises concerns about data security, surveillance, and financial autonomy. 🔹 Hard vs. Soft Privacy: Hard Privacy relies on cryptographic solutions (e.g., Zero-Knowledge Proofs, Homomorphic Encryption, Anonymity-Enhanced Signatures) to protect financial data by default. Soft Privacy relies on institutional safeguards and regulatory oversight, offering law enforcement conditional access to payment data. 🔹 Trade-offs in Digital Payments: Privacy-enhancing solutions must balance consumer protection, law enforcement needs, and commercial data monetization. 🔹 Emerging PET Solutions: Advances in Zero-Knowledge Proofs (ZKPs), Multi-Party Computation (MPC), and Trusted Execution Environments (TEEs) offer promising paths to privacy without compromising auditability. Authors & Contributors 📖 Authors: Raphael Auer, Rainer Boehme, Jeremy Clark, Didem Demirag 🔍 Institution: Bank for International Settlements – BIS Summary The future of digital payments depends on privacy-conscious technology, ensuring financial transactions remain secure, auditable, and resistant to misuse. The report highlights the need for regulatory frameworks that support both privacy and compliance, exploring solutions such as tokenization, programmable money, and selective disclosure mechanisms. As #Blockchain, #AI, and decentralized finance (#DeFi) continue evolving, privacy-enhancing technologies will shape the next generation of secure digital payments. 📌 Source: https://lnkd.in/ghKe22hX #AI #Blockchain #FinTech

The Dubai Financial Services Authority (DFSA) published the report "Cyber and Artificial Intelligence Risk in Financial Services: Strengthening Oversight Through International Dialogue". The publication follows the DFSA’s inaugural Cyber and AI Risk Regulatory College, held in May 2025, which brought together 70 senior representatives from 18 financial authorities across the Middle East, North America, Europe, Africa, and Asia. It analyzes overall #cyber-risk, with focus on #quantum and #AI. On qauantum, it concludes: 👉 Quantum computing poses a direct threat to current public-key cryptography, which underpins secure communications across the financial sector. 👉 Without a timely and coordinated transition to PQC, financial stability could face significant risks within the next decade. 👉 Proactive steps toward PQC adoption should begin well ahead of widespread global standardisation and cross-industry implementation efforts. According to the report, a pathway toward #PQC could involve: 📌 raising awareness of quantumvulnerable cryptographic systems and building a cryptographic inventory; 📌 completing a risk assessment – including implications of ‘harvest now, decrypt later’ tactics, where encrypted data is collected now with the intention of decrypting it once CRQCs emerge; 📌 developing a quantum resilience roadmap, including a hybrid scheme during the transition while classical and PQC would coexist; and 📌 piloting PQC solutions for high-risk infrastructure and monitoring industry developments. It highlights that the tranisition represents not only a technical shift, but also a strategic transformation spanning risk, compliance, operations, and a long-term data management programme. My take: Regulatory and supervisory focus keeps growing in the financial sector, transforming the transition on a topic expanding from cybersecurity into risk and compliance teams. https://lnkd.in/dpxZ-7TE

#QuantumTuesday meets #FinanceWorld 🚀 Is your financial messaging ready for the quantum storm? 🌩️  As a former Quantum Physicist and The Outsourced Quantum IP Manager & Strategist for quantum companies across the globe, I've spent countless hours navigating the uncharted waters of quantum technology. From superconducting qubits to quantum key distribution (QKD), the stakes have never been higher. But here's the thing - while the world is mesmerized by the quantum possibilities, the real challenge lies in securing our future financial messaging against the looming quantum threats. The race isn’t just about building the fastest quantum computers; it’s about safeguarding the very backbone of our financial systems - secure messaging. Quantum computing isn't a distant future; it's knocking on our doors, and those who aren't prepared will find themselves at the mercy of this disruptive technology. So, what’s the secret sauce? Let’s dive into the insights from the latest report published by the Quantum Economic Development Consortium (QED-C®) titled "Quantum Technology for Securing Financial Messaging". 🔥 Here’s what you need to know: 1. PQC + QKD = Ultimate Defense: 💥 Post-Quantum Cryptography (PQC) and Quantum Key Distribution (QKD) are your dynamic duo! While PQC upgrades our current cryptography for a quantum future, QKD offers a virtually unbreakable key distribution method. Together, they form an impenetrable shield for your financial messaging. 2. Time is of the Essence: 🕒 The quantum threat may seem years away, but the risk of "harvest now, decrypt later" means you need to act NOW! Institutions need to start transitioning to quantum-resistant technologies today. 3. Collaboration is Key: 🔗 Don’t go it alone! The report emphasizes the need for collaboration between financial institutions, government agencies, and tech companies. Together, we can create a quantum-secure network that protects us all. 4. Build Quantum Expertise: 🎓 The financial sector must invest in quantum expertise. Whether it’s hiring quantum professionals or partnering with academic institutions, building this knowledge base is non-negotiable. 🔮 Ready to quantum-proof your financial systems? The future waits for no one - prepare today, secure tomorrow! Let’s connect and explore how we can make quantum security your competitive advantage. 🌟 👉Quote of the Day:  "Quantum threats in sight, secure your tech tonight - fortify, collaborate, and shine bright!" by Dr. Benjamin DELSOL (PhD, LL.M)😉👍😎🚀 ID Quantique Grégoire Ribordy Sara Fatale Peter Bordow Wells Fargo Scott Buchholz Deloitte John Buselli IBM Terry Cronin Toshiba Carl Dukatz Accenture Mehdi Namazi Qunnect Simon Sinisha Patkovic Bruno Huttner John Prisco Tahereh Rezaei Dr. Keeper Layne Sharkey ODE, L3C Catherine Simondi Colin Soutar Jeff Stapleton

Advancing Cryptography with AI: The Fusion of Secure Computation and Machine Learning The intersection of #cryptography and artificial intelligence is transforming secure communications and data protection. As AI-driven models become more integrated into cybersecurity, they introduce both opportunities and challenges in cryptographic security. Mathematical Foundations: #Lattice-Based Cryptography and AI One of the most promising areas in post-quantum cryptography is lattice-based cryptography, which relies on the hardness of problems such as the Shortest Vector Problem (SVP) and Learning with Errors (LWE). Given a lattice Λ in n-dimensional space, an attacker must solve: min(||v||) for v in Λ, where v ≠ 0 This problem is computationally intractable under both classical and quantum settings. AI models, particularly deep reinforcement learning, have been explored for heuristic attacks on lattice structures, but well-parameterized lattice-based schemes remain resilient. Homomorphic Encryption Meets AI Homomorphic encryption (HE) enables computations on encrypted data without decryption. AI-driven optimizations for Fully Homomorphic Encryption (FHE) schemes, such as BFV and CKKS, improve efficiency by dynamically adjusting the polynomial modulus q and ciphertext noise δ during computations: δ’ = δ * exp(-λt) where λ is a learning rate parameter optimized using machine learning techniques. AI-enhanced cryptographic compilers now predict optimal parameters for FHE, reducing computational overhead in privacy-preserving machine learning applications. Zero-Knowledge Proofs (ZKP) and AI Security AI models require robust authentication mechanisms to prevent adversarial attacks. Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge (zk-SNARKs) are being leveraged for AI model verification. In proving a deep learning model’s accuracy without revealing the model itself, zk-SNARKs require proving knowledge of a solution w to a polynomial equation Q(x, w) = 0 without disclosing w: Exists w: Q(x, w) = 0, such that Verifier(P, x) = 1 Neural network verification can leverage zk-STARKs, a quantum-secure alternative that eliminates trusted setups and scales efficiently. AI-based heuristics optimize proof generation complexity by reducing redundant constraints in polynomial commitment schemes. Conclusion By integrating #AI with cryptographic primitives, we enhance secure multi-party computation (MPC), differential privacy, and encrypted machine learning. Future advancements in adaptive AI-driven cryptographic proofs and quantum-resistant key exchange protocols will shape the next generation of autonomous, trustless security frameworks. This fusion of mathematics, cryptographic security, and AI optimization is paving the way for a zero-trust, privacy-centric digital era. #Cybersecurity #MachineLearning #PostQuantum #HomomorphicEncryption #QuantumComputing #DeepLearning #ZeroTrust #WyvernSecurity More to come, Duchess of Cybersecurity®

Europol Warns Banks: Prepare for Quantum Computer Risks Now A Europol-led cybersecurity body has urged Europe’s financial sector to immediately prepare for quantum computing threats, warning that these emerging technologies could break widely used encryption methods within the next 10 to 15 years—or sooner. Key Concerns for the Financial Industry • Quantum computers could compromise encryption used to protect customer confidentiality, financial transactions, and digital signatures. • Authentication processes and peer-to-peer communications could become vulnerable to quantum-based attacks. • Regulatory bodies and major financial institutions, including central banks from the U.S., EU, and UK, are now focused on transitioning to quantum-safe cryptography. Who’s Involved? • The Quantum Safe Financial Forum, established by Europol, includes key players such as: • European and U.S. central banks • Major financial firms like Allianz, Santander, Barclays, BNP Paribas, Mastercard, and Moody’s • European banking associations Regulatory and Security Implications • No New Laws Needed (Yet): The forum believes that current EU data protection laws already require financial institutions to maintain strong encryption, so new regulations are not necessary at this stage. • Urgent Need for Post-Quantum Cryptography (PQC): Banks must begin adopting quantum-resistant encryption now to future-proof sensitive data and financial systems. • Potential Acceleration of Quantum Threats: Although practical quantum decryption capabilities are expected within 10-15 years, rapid advances in quantum hardware could shorten this timeline. What’s Next? • Industry-Wide Shift to Quantum-Safe Encryption: Financial institutions must evaluate their cybersecurity frameworks and begin upgrading encryption standards. • Ongoing Collaboration Between Banks & Cybersecurity Experts: The forum will continue monitoring quantum computing risks and advise on security measures. • Increased Investment in Quantum Security Research: Banks and governments will likely fund initiatives in post-quantum cryptography to stay ahead of potential threats. This warning from Europol signals an urgent need for banks to act now to protect global financial data from future quantum-powered cyberattacks. Institutions that fail to prepare could face severe security breaches, undermining trust in the financial system.

Quantum Leap Forward: MAS and Banque de France Pioneer Post-Quantum Cryptography The Monetary Authority of Singapore (MAS) and the Banque de France have successfully completed a trial of post-quantum cryptography (PQC). This innovative technology is poised to revolutionize online security in the face of the quantum computing era.This trial focussed on quantum-resistant cryptographic algorithms for the signing and encryption of emails. The goal was to strengthen the current level of security for electronic communications in the future, while retaining compatibility with existing Internet standards, technologies and communication channels. Why is this significant? Quantum Threat: Advanced quantum computers could potentially crack current encryption methods, compromising sensitive data. PQC Solution: PQC offers a robust defense, using algorithms resistant to quantum attacks. Future-Proofing: This collaboration ensures the security of digital transactions and communications for years to come. The Future of Quantum As quantum technology continues to evolve, we can anticipate a future where quantum computing drives breakthroughs in various fields, from medicine to risk management to science. Quantum computing has the potential to revolutionize risk management. By processing Big data and complex simulations, quantum algorithms can identify hidden patterns and assess risks more accurately. This could lead to more effective risk mitigation strategies in future. However, it's crucial to develop quantum-resistant security measures to safeguard our digital world.