The New York Times recently published an article entitled “Hacked vs. Hackers: Game On”. That article warned of the growing dangers of “hackers” breaking into our credit card and banking accounts:
“The impact on consumers has been vast. Last year, over 552 million people had their identities stolen, and nearly 25,000 Americans had sensitive health information compromised—every day.
“Over half of Americans, including President Obama, had to have their credit cards replaced at least once because of a breach, according to the Ponemon Group, an independent research organization.”
Of the world’s 7 billion people, over one-half billion have had their identities stolen by hackers. In just one year.
About 110 million Americans have replaced their credit cards due to digitized assaults by hackers. This number implies that, if you have and use a credit card, there’s at least a 50% probability that hackers will get into your account and possibly steal some of your funds.
But there are things in the digitized universe that are even more valuable than your identity and credit card accounts. For example,
“. . .the value of those stolen credit cards, which trade freely in underground criminal markets, is eclipsed by the value of the intellectual property that has been siphoned out of United States corporations, universities and research groups by hackers in China .
“And this year, American companies learned it was not just Beijing they were up against. Thanks to revelations by the former intelligence agency contractor Edward J. Snowden, companies worry about protecting their networks from their own government.“
We are surrounded by hackers. Some are private hackers who are criminals. Some are hackers employed by foreign governments whose actions are effectively legal because they operate beyond the jurisdiction of the US government. And then, there’s the US government, whose hacking is legal in the same sense that President Nixon once observed, “If the President does it, that means it’s legal.”
The potential losses are growing:
“If the tech sector cannot persuade foreign customers that their data is safe from the National Security Agency, the tech industry analysis firm Forrester Research predicts that America’s cloud computing industry stands to lose $180 billion—a quarter of its current revenue—over the next two years to competitors abroad.”
If you’re hoping for a technological solution to the hacker problem, don’t hold your breath:
“We’re slowly getting combinations of new technologies that deal with this problem,” . . . . Edward Snowden revealed that the N.S.A. might have been grabbing data from companies like Google, Yahoo, Microsoft and Facebook in unencrypted form as it passed between their respective data centers. Now, they all encrypt their traffic as it flows internally between their own data centers.
Apparently, the only strategy that’s currently effective for protecting your data and identity is data encryption—and even that can’t be guaranteed to always work. Instead,
“There is growing recognition that there is no silver bullet. Firewalls and antivirus software alone cannot keep hackers out . . . . People are recognizing that existing technologies aren’t working. It’s almost impossible to think of a company that hasn’t been hacked—the Pentagon’s secret network, the White House, JPMorgan — it is pretty obvious that prevention and detection technologies are broken.”
The hackers are smarter and more dedicated than the corporations and the government and certainly smarter than you and I.
There are implications:
1) The risk of using digital credit and debit cards is growing and might decline in the future.
2) To be safe from hacking, some computer will be physically isolated from the internet. But if we must abandon the internet to protect our data, the internet will be less useful and less used.
3) “Smart phones” used to process monetary transactions will undoubtedly be hacked and drained of their digital funds. (There’s an app for that!) People will begin to see that the convenience of digital currency may be outweighed by the inconvenience of digital theft. “Smart phones” might not be quite so “smart”.
4) If the internet can’t safely process digital currency transactions, its utility and growth may be significantly reduced; the survival of big online retailers like Amazon.com may be threatened; the internet’s single biggest industry (porn) could collapse; online stock investing may become a thing of the past; online gambling and Forex “investing” might fail; anything you do today with digital currency over the internet might be restricted or even terminated.
5) Online shopping is threatened and might not overwhelm brick and mortar stores in the foreseeable future.
6) Use of cash or checks in monetary transactions at “brick and mortar” stores, might begin to rise as people try to protect their wealth by moving away from digital monetary devices and back to a more physical monetary medium.
7) The value of commercial real estate and shopping malls might not be destroyed by the internet. Prices for retail real estate might even begin to rise.
8) For now, digital currencies are the easiest to steal or counterfeit. Next easiest are paper currencies like checks or paper dollars. The hardest currencies to steal or counterfeit are precious metals. Unless computer technology can be devised that takes the risk out of digital currency, people may begin to reject digital currencies and go back to more “primitive” currencies like paper and precious metals.
Ironically, the hackers might play a role in saving brick-and-mortar stores and the use of non-digital forms of payment like checks, cash and even gold.