It is said that there are three kinds of companies: those that have been hacked, those that will be hacked, and those that don’t know they have been hacked.
Cybercrime has evolved alongside the digital market—it seems with every new technology has come a way to take advantage of it for nefarious purposes.
And with every tech or regulation designed to prevent fraud and theft, criminals have found ways to work around.
Cybercrime has cost an estimated $3 trillion in 2015 and that figure is expected to double by 2021, according to Cybersecurity Ventures. As the report notes, “this represents the greatest transfer of economic wealth in history, risks the incentives for innovation and investment, and will be more profitable than the global trade of all major illegal drugs combined.” These aren’t lone wolf hackers; this is a major criminal enterprise.
The fact is, there will always be cybercrime because it’s relatively easy and there is so much money to be made. The barriers to entry are low—anyone with the right software and a little knowledge can attack any person or institution’s information and digital funds. No army of security guards or unbreakable vault can protect what is intangible.
Further, there is little deterrent—very few cybercriminals are ever caught, and even fewer are actually prosecuted and punished for their crimes.
So, what does this mean for the burgeoning cryptocurrency market? It means a significant challenge, but not one that can’t be met.
Cryptocurrency has the potential to dramatically change how we handle finances from personal banking to international enterprise. However, it is still very much a nascent market and is experiencing volatility as more and more vendors jump in the game and investors heap funding upon them.
The very idea behind cryptocurrency is “encryption,” a concept that many equate with security without actually knowing what that means. And, as it turns out, it doesn’t mean the same thing to everybody.
There are more than 1500 coins currently operating, each backed by different technologies and security measures, and there is no standardization even within the industry. By its nature cryptocurrency is decentralized, open source technology. How do you know who is qualified to call a coin secure and who isn’t?
Laws are no real help yet either. Governments across the globe still don’t quite understand cryptocurrency and certainly have not been able to effectively regulate it yet. Many agencies are fighting for control of information security and cyberspace, and there is still a severe dearth of knowledge of technology or digital security within those agencies.
The lack of standards and regulation has left cryptos open to attack, even as they tout their security capabilities. Criminals have stolen about $1.2 billion in cryptocurrencies since the beginning of 2017, according to a May 2018 report from the Anti-Phishing Working Group. APWG leaders attribute this surge in theft to the popularity of Bitcoin and Ethereum, plus the emergence of so many new coins, bringing focus to a valuable yet unregulated market sector.
To add to the security issue, in Europe, the recently implemented General Data Protection Regulation (GDPR) has been said to make investigating and prosecuting cybercrime even more difficult by restricting access to the data needed to uncover and prevent theft.
Despite the massive security hurdle, cryptos are experiencing a growth bubble as investors salivate over the profit potential. But, the security of each one of those coins is put to the test, non-stop, by thieves and fraudsters. There’s a harsh lesson in store for those investors who don’t do due diligence of the technology and people behind the cryptocoins to ensure they are backed by actual security experts and not those simply jumping on the bandwagon with false claims and/or poorly implemented security.
The entire cryptocurrency market will reach a total value of $1 trillion this year, according to Jesse Powell, CEO of the Kraken digital currency exchange. Even if that estimate is on the high side, there’s no question that cryptos are a high-value market and will continue to be an attractive target for theft and fraud.
The cryptocurrencies that do survive the onslaught of threats will do so because they implement end-to-end security measures that exceed NSA-level standards. These new coins will stand apart from first generation cryptos by harnessing the knowledge of experts with decades of security experience. These are the cryptos that will change how the public and private sectors manage their informational and financial security and lead the charge toward a new ecosystem of accessible, efficient and secure transactions.
About Dr. Robert Statica
Dr. Robert Statica is CEO of BLAKFX, and former CTO and co-founder of encrypted messaging platform, Wickr. With more than 25 years of experience in both private and public sectors, Dr. Statica is considered one of the foremost experts in cyber-defense, cryptography, and AI in the world. He co-authored the patents for Wickr’s underlying technology, which exceeds all military and intelligence community standards for top-secret communications, making it the only secure messenger not hacked since its creation in 2012. Prior to his latest venture, BLAKFX, he was SVP of Technology and Research for DarkMatter, where he designed Katim, the most secure smartphone in the world that prevents eavesdropping and spying.