Cryptocurrency Banking: In BOT We Trust
“In BOT We Trust.” Will this be the motto inscribed on every bitcoin and other cryptocurrency in the near future? I don’t think so.
That is the problem right now with the 1,600+ pseudo-currencies trying to gain market legitimacy in a world of skeptics, government regulators, and entrenched central banks around the globe, not to mention merchants of malware and ransomware targeting cryptocurrencies. There is still the need for universal trust with this new banking approach and all the blockchain automation that goes along with it.
In some cases, cryptocurrency accounts have become slush funds for paying off virtual criminals using malware and ransomware demanding 21st century “protection” against cyber shutdowns and data center intrusions.
Many people, investors, bankers, and government regulators need to fully understand this emerging trend before more money is poured into it. I do not see this critical education happening at the rate it should happen in this financial area, which is gaining more blind acceptance on a daily basis. Are some people being set up to fail?
What about the banks themselves? Are they on top of this emerging FinTech technology or are they wishing it would just go away?
Where is the education?
At the recent ABA (American Banking Association) Conference in Nashville, there were no classes on cryptocurrencies. Shouldn’t banks be trying to understand what might be their biggest competition in decades?
Shouldn’t bankers have a solid understanding of the next wave of automated applications using blockchain technology dealing with currencies, payments, and executing transactions? Are they relying on the assumption that cryptocurrencies will never be accepted? They already might be too late in making that assumption.
Another interesting observation on the courses that were offered at the ABA conference was in a session on AI (Artificial Intelligence) and Big Data. The presenter talked about how all the data collected had to be “very accurate in order for the applications to work properly.”
Wow. Was that just a recent huge discovery in banking information systems or was this something that should have been attributed to the old Data Processing phrase over 40 years ago, “Garbage in, garbage out”?
What happened to all the crack IT departments of banks? They were always on the “cutting-edge” in applications, hardware, real-time operating systems, and data centers supporting those applications. Did banks go too far in laying off good systems people who had experience?
Now with “next-generation people,” who may not have the depth of experience they should have, are banks and their systems people re-working concepts that were already solved years ago? Are they are trying to re-invent the wheel and also solve basic systems problems that were fixed 30-40 years ago? I don’t call that progress.
Many investors, bankers, and government regulators also need to understand this emerging trend of cryptocurrencies before more crimes of fraud and theft are committed in the banking and financial areas.
New types of ransomware are starting to permeate the market. One of the big malware applications is “cryptojacking” according to a recent CSO article.
Cryptojacking doesn’t even require significant technical skills. According to the report, “The New Gold Rush Cryptocurrencies Are the New Frontier of Fraud,” from Digital Shadows, cryptojacking kits are available on the dark web for as little as $30.
Well, with “safecracking tools” available to people for a minimal amount of money, expect there to be a lot of virtual crime and lost accounts within this new banking segment which includes crypto-mining.
Crypto-mining is when you have computer resources set up to “mine cryptocurrencies.” Some have figured out how to use corporate systems as well as personal computers as shadow resources to “mine” coins. This leads to the cybersecurity question of: Are corporate resources being used by someone else to “mine” currency? What about the computer in your own house? Has malware somehow taken over and started using unused cycle time?
With more enterprises, including banks and other financial institutions, dependent on Cloud Computing, complex networks, and more mission critical applications, you would think crypto-jacking cybersecurity measures along with constant testing and systems monitoring would be an integral part of any new initiative. System diagnostics, especially those to uncover misuse of computer capacity, should be running on every system at this point.
“Users embarking on strategic network implementation projects are beginning to realize they cannot afford half-baked testing procedures that fail to root out the bugs before they turn into bloodsucking monsters on operational budgets.”
I wrote the above statement over 22 years ago in a Management Strategies article for Network World. Evidently, many companies and their executives have not come too far when it comes to working out all the security bugs and initializing cyber defenses for a complex system.
Testing out facilities before they go online is critical.
When it comes to cryptocurrencies, banks need to do a lot more research and educate their people to understand this emerging competition and make sure that their systems are impermeable to malware. Some malware can quietly take over the computing power to mine cryptocurrencies.
When it comes to blockchain technology, the driving force behind cryptocurrencies has been assessed as: “The core properties of decentralization and resistance to modification make blockchain attractive for some security technology, but some of those properties also make it unlikely to work well for other applications.”
Blockchain technology can be modified. Not all cryptocurrencies are running on the same blockchain platform, so the coin that you choose to invest in may have some different characteristics. There are many variations.
Before putting any money into any coin, you should research to find out what version of blockchain capabilities is being used. Is it all out there in plain sight to review, or does it have some hidden manipulative features where every time someone buys a coin, the founders of the coin get another coin in their bank? Or for every ten coins bought or mined, they get two into their account?
Like so many other system inventions and network technologies before it, blockchain technologhy should not be viewed as the universal solution or silver bullet to solve every crypto security issue or financial application.