Cyber security has recently become a major concern for large companies, governments and individuals in line with the rising number of hacking attacks and the leakage of large amounts of data.
In recent times, US companies including JP Morgan, Fidelity Investments, Sears Holdings, Home Depot, Michaels Stores, Neiman Marcus and Target were hit by cyber attacks. That resulted in the loss of large amounts of vital consumer personal information such as credit card numbers, passwords, home address and social security numbers.
In response to the attacks, companies have increased their spending on online security, as they search sophisticated methods to combat data breach.
However, the current approach to addressing these problems, ring fencing, surveillance, detection and tracking is leading us to an "Orwellian future" in the name of consumer protection, according to Trevor Murphy, chief technology officer at secure Bitcoin storage solution company BitStash.
Murphy added that the use of bitcoin and solutions like that would be a better approach, and government agencies and consumer watchdog organisations need to start looking at these solutions.
IB Times UK interviewed Murphy on how bitcoin and similar solutions could solve the problems of cyber security breach to a great extent. He discusses below how data theft impacts economies, the problem with the existing approach to protect consumer data and the role of bitcoin in preventing data theft among other things.
Q: How do you assess the severity of recent data breaches?
A: In general, we assess severity based on the type and quantity of data stolen. So, by this measure, even small amounts of data stolen relating to national security would be considered very severe. Likewise, large amounts of consumer personal information stolen, credit card numbers, passwords, home address, social security numbers and so on, is considered very severe.
Since 2013, over one billion consumer records have been stolen by hackers. This is at an estimated cost of over $5bn, which at the end of the day gets passed down to consumers. So, we are in an era where securing personal information requires higher and higher security and surveillance, by merchants, banks and the government agencies.
The system of credit card processing, introduced in the 1940s and 1950s and perfected in the 1970s and 1980s, was never designed for the 21st century; a century in which the internet and the open source community and the dark web accelerate technology innovation at a pace far more rapid than slow moving merchant and banking infrastructure can keep up with. So there is a battle being waged, and the hackers only have to win a small percentage of the time to make a very big dent on our society.
Q: What are the possible measures to prevent data breaches?
A: It really comes down to innovation, and a fundamental re-thinking of what it means for a consumer to spend money. As it stands today, a simple trip to the grocery store or buying gifts online at Christmas, subjects hundreds of millions of people to potential fraud, identity and credit card theft. These are crimes that may affect their credit record, their finances and therefore their ability to work.
The current approach to addressing these problems, ring fencing, surveillance, detection and tracking is leading us as a society down a very slippery road. This approach means everything we do, every dollar we spend, our location, every one we talk to, it all needs to be monitored and tracked, relationships mapped, algorithms applied just to catch a very small number of bad actors causing a very large amount of damage.
There is a better approach and government agencies and consumer watchdog organisations that truly care about consumer protection need to start looking at these solutions, before we lose ourselves in the Orwellian future unfolding in the name of consumer protection.
Q: How does Bitcoin play a major role in preventing data theft?
A: To solve issues around online data security, one first needs to recognise that at a fundamental level, it can never be made totally secure. Never. Technology and innovation evolve too rapidly, information and knowledge travel too quickly, making yesterdays' high tech security the plaything of tomorrow's hackers. So, recognise that data available online cannot be made secure, and then re-organise around those principles.
Bitcoin and solutions like it, solve these problems, because they do not require us to expose personal information just to buy a pizza. Every transaction is done with a bearer instrument that does not give the receiver any information that might be used or stolen to exact future payments, or perform any fraud. It's just like cash, only designed for the 21st century, designed for the world we live in now. It protects consumers from identity theft, fraud, and reduces the massive costs associated with processing transactions, opening up global economies and bringing massive new consumer markets into an integrated 21st century economy.
Q: What are the changes needed in existing regulation to use Bitcoin as a better medium of transaction?
Fundamentally, regulators need to recognise the importance of consumer protection, and recognise that the talk about money laundering and crime in the context of Bitcoin is a canard. Illegal activities are a tiny percentage of the global economy, and will occur no matter what forms of currency are used. Regulators should be focused on protecting the consumers whose data today is stolen, traded and their money spent before they get home from Home Depot or Target or whatever restaurant they just ate at.
The costs to the economy and to individual consumers is just too high, and the risks associated with the evolution of the Orwellian society designed to monitor and track everyone's movements and habits just to secure a credit card purchase are not ones to be taken lightly.
We are in an exciting time. The pace of innovation and the globalisation of our economies have huge potential to lift millions out of poverty and create new and exciting businesses. As a society, we should foster that innovation and guide it so that it improves everyone lives. We have an opportunity as a society to change direction and move away from large centralised repositories of data and indeed control, to a more decentralized, lower impact approach. We should embrace this opportunity, because the current path leads us to a future that few would consciously choose.
(Murphy is the CTO of secure Bitcoin storage solution company BitStash that stores Bitcoin and other crypto currencies with total security. Co-founding TradingEdge in 1997, Trevor was responsible for the design and development of the first electronic fixed income trading platform, BondLink, which eventually became responsible for billions of dollars in daily transactions. He has been involved in numerous other startup companies and provides consulting services to Venture Capitalists, Financial Services and Fortune 500 companies.)