It's clear that digital avenues are now the preferred method for building wealth. Whether it’s more established markets with modern innovations like forex trading, or the relatively newer investments in cryptocurrencies, the transaction volume curves are generally at an uptick.
More devices and servers coming online means growing complexity. It also means a growing potential attack surface for criminals, and thus a bigger need for strong cybersecurity options.
Below, we'll take a look at how this digital revolution is playing out, and the dangers that lie therein.
The Shift to Digital Finances
In many parts of the world, everyday commerce is quickly going cashless. This means a greater need for digital safeguards and security infrastructure. Here are the digital trends that matter most when it comes to investing.
Machine Learning
Machine learning and the development of artificial intelligence are going to bring more ordinary laymen into the world of investing. Growth hacker Noah Mitsuhashi calls it the ‘democratisation’ of investment. Natural language processing removes technical barriers by making complex tasks more human and convenient, which we’ve already become accustomed to with modern search functions. In addition, Mitsuhashi notes, the software speeds up investment by analyzing large quantities of information and extracting what investors need to know into digestible format.
Digital Wealth Building
Today, trading through manual means is difficult and wildly out of date. Many are flocking to popular platforms that provide a way into wealth building online without the need to wade through difficult terminology, complicated setups, and other time-consuming obstacles.
Platforms such as Coinbase have lowered some of the barriers to trading in cryptocurrency through a simplemobile or web interface. FXCM similarly makes forex trading possible through multiple different platforms, including scaled services for institutions such as hedge funds. Many of these established platforms make trading online safer, and with as low a spread between bid and ask price as possible.
IoT, Cryptocurrency and Blockchain
We’ve recently written about how the IBM Watson IoTTM Platform is leveraging machine learning capabilities to integratedata from things to blockchains, which makes the data more secure.
Since blockchains are cryptography-based, trustless and open, fraud and data theft on the blockchain itself has a very low likelihood, as every transaction is immutably recorded across every copy of the ledger. And because many investments, most notably cryptocurrency, make use of blockchain technology, they also benefit from these security advantages.
Ongoing Security Risks and Concerns
As useful as these digital tools are in improving security, it's a general rule that no system is unhackable or flawless — especially when highly flawed humans are involved.
Individual and institutional foul play is still possible in the digital sphere, as in the cases of the ‘Russian Laundromat’ or the more recent Wirecard scandal. In the crypto space, the proceedings of a Japanese court are only now taking the infamous Mt.Gox case from 2014 towards a resolution. According to the World Economic Forum, central bank digital currencies also face multiple threats.
At a smaller scale, since data such as cryptographic keys are often stored on device storage media such as flash memory, this means they are only as secure as the device they are on.The growing prevalence of credit card fraud, and sometimes just simple theft of digital devices, proves that even saving these keys separately isn't a failsafe. Additionally, the general lack of technical literacy and consequently lax security practices for most users could lead to a higher incidence of fraud or cyberattacks.
Some of these issues will improve with greater education on security best practices, including policy changes for regulatory and judicial institutions. In the meantime cryptography, software, and hardware design improvements can continue to try to close the vulnerabilities.