Cryptocurrencies present a continental shift in monetary systems, but also risks
There is a network of cybercriminals operating across borders. It is notably difficult to track them, or even trace the money as they make use of Blockchain, the technology behind Bitcoin cryptocurrency. Even when they are eventually found, it may be difficult to arrest them and impossible to recoup lost assets. Despite these concerns, the emergence of new cryptocurrencies continues to pick up speed even within non-criminal communities with the value of cryptocurrency transactions expected to surpass $1 trillion (USD) in 2017; 15 times the value of the previous year.
In my view, this is largely because cryptocurrencies also present opportunities to change some of the fundamentals of the current financial system to remove the “middleman” presenting new frontiers for Africa and its sizeable ‘unbanked’ population. However, this model is only sustainable if it is secure and consumers have confidence in that security.
The Harvard Business Review acknowledges that blockchain technology is complex, but the idea is simple. At its most basic, Harvard Business Review describes blockchain as a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value – money, titles, deeds, music, art, scientific discoveries, intellectual property, and even votes – can be moved and stored securely and privately.
On the other hand, blockchain also holds the potential to help people transfer money faster and at a lower cost. For lower income individuals (including the unbanked), blockchain could offer easier access to the economy. Considered to be the ‘trust fabric’ of cryptocurrencies, blockchain is a shared database consisting of a ledger of digital transactions or ‘blocks’ maintained by a group of networked computers over the Internet. Each encrypted block contains the history of every block that came before it (timestamped to the second), to act as an element of connectedness, commerce and credit, all in one. With blockchain technology, a world of possibilities opens up.
To date, blockchain technology seems to have presented transparent, auditable records of transactions while ensuring trust. In fact, according to Deloitte, Blockchain could potentially help improve cyber-defense as the platform can secure and prevent fraudulent activities through consensus mechanisms, and detect data tampering based on its underlying characteristics of immutability, transparency, auditability, data encryption and operational resilience; provided typical systems and network cyber security controls, due diligence, practice and procedures are all in place.
Both public and private networks assume that chain protocols are already in place and that the user already has several internal security layers; however, in most situations this is not the case. Ideally security controls should include installation of:
Organisations that are shifting towards Blockchain should also ensure that at a Boardroom level, they take ownership of an overall cybersecurity programme that includes:
Within blockchain use, it is important to make sure that it provides advanced security controls including:
When storing cryptocurrencies, it is important to consider:
Cybercriminals always seek the easiest attack base and if they have to choose between a system that is difficult to hack verses one that that has little or no security, they will always opt for the latter. However, in the grand scheme of things, security concerns remain minimal for blockchain, but the socioeconomic impacts on Africa could prove profound.
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