Cryptocurrency – real concerns

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17 November 2017 | 0

Paul HearnsPredictions are hard, goes the old axiom, especially about the future.

However, when one is not only spot on, but indicative of a whole new direction for an issue, it is worth noting.

Many people will, by now, have heard of cryptocurrencies, if not Bitcoin itself.

These, essentially, are a system of digital currencies that are entirely outside the control of banks and governments.

They are used primarily for online trading, but many bricks and mortar organisations have accepted them as payments, such as Microsoft, Expedia and RE/MAX London, the real estate franchise business.

“Expect to see more of this type of activity, where increasingly creative ways of surreptitious mining emerge.”

Transaction processing
Typically, cryptocurrencies can be generated by hosting and processing the infrastructure necessary to facilitate and record the transactions of the currency. These systems are open, distributed ledger systems that have solved the dual spend issue, whereby a coin of the currency can not only be verified as legitimate, but every time it is spent, it is recorded in a public ledger system, ensuring that it cannot exist in multiple instances, or be spent more than once by one possessor.

A major impact of this is that the systems behind these distributed ledgers, blockchain technologies, have now taken on a life of their own and have applications in areas such as healthcare record processing and supply chain assurance, as well as the financial sector.

But, the key point here is that, in theory, anyone can set up a cryptocurrency processing and mining operation, for such is the terminology. Now in reality, to be able to process enough transactions to actually be rewarded with a coin of the currency takes a fairly hefty amount of processing power, and often involves high end servers equipped with parallel processing capabilities such as paired sets of GPUs. Still, in theory, anyone could do it, with a bit of know how and hardware access.

And this is the critical point here.

Prediction
In June of 2013, speaking to TechPro, information security guru Mikko Hyppönen of F-Secure, said that cryptocurrencies had the potential to change the security landscape. He said that in the past, cybercriminals were interested in targeting consumers for their identities, credit card and banking details for obvious reasons. However, he said that cryptocurrencies would prompt a change in behaviour from the criminals as they sought to gain control of the burgeoning ranks of ‘smart’ devices connected to the Internet.

At the time, the term Internet of Things (IoT), to most people, meant a fridge connected to the Internet that could order more milk when you ran out, or a coffee pot that could be controlled by app.

Hyppönen said that these devices would be targeted by cryptocurrency miners to be co-opted into networks of massively parallel processing capability to mine cryptocurrencies.

Organised network
Earlier this year, Newsweek reported on IBM research indicating that a script derivative of the Mirai botnet malware was being used to hijack IoT devices for Bitcoin mining.

There had been previous instances of this, but the IBM research showed that this had now developed to a sophisticated and organised level.

Furthermore, The Register reported just this week that a number of web sites, from those of ladies of the night in Las Vegas to South American government, as well more than 30,000 others, had been hacked to inject scripts for mining the cryptocurrency Monero.

Bitcoin success
The prescience of Hyppönen’s prediction is astonishing, but it obviously did not go far enough. The success of Bitcoin is now driving other such cryptocurrencies, and also the means by which to generate them. Expect to see more of this type of activity, where increasingly creative ways of surreptitious mining emerge.

However, the motivation behind cryptocurrencies is not purely monetary. It is also about independence, something that seems to be a bit baffling for the traditional financial world.

The venerable Wall Street Journal recently did a piece on Bitcoin that prompted something of a backlash.

Many readers came back with feedback and criticism, which in fairness, the reporters fessed up to.

There were various comments about a lack of understanding, and criticism of comparisons with other currencies and financial markets being used as examples.

The main criticism though, was that Bitcoin, being outside the control of banks, financial institutions and governments, is, at its core, unlike any other currency and therefore its fortunes are not determined by the usual factors for a currency.

Deep concern
This is altogether true, and at the same time, deeply worrying. Not only does it validate the criticisms that cryptocurrencies, in general, are a good way to process illicit payments without the need to launder, it also validates the concerns of the likes of Hyppönen that they will spawn entirely new types of cybercrime.

While blockchain seems now poised to be a source of great good in its applications, cryptocurrencies, now out of the bag for good, may well have a dark period before they can contribute to the same end.

 

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