Thursday, January 8, 2015

Part 1: Bitcoin, Internet Security and Consumer Safety

With the holiday season over, now is an important time to reflect on our economic and structural security online and at retail locations. When consumers shop, they put valuable information about their identity out into the open. While the majority of consumers never think twice about swiping their credit card or putting their personal information online, the cold reality of identity theft and personal information leaks are alive and well. Some reports state that in America, “A new identity fraud victim was hit every two seconds...with the number of victims climbing to 13.1 million over the year...”(Rogers) Beyond credit cards, online security relating to mobile applications, social media and recent scandals with Sony and Apple show how vulnerable this system truly is.

Many pundits and “experts” will discuss how we need to revamp the infrastructure, placing chips into cards and using solutions like iPay to “move forward”. These talking heads miss the entire point (maybe on purpose) and avoid the true problem: centralization. The question is rarely brought up;

What if the system itself is inherently flawed? What if there is no real solution to fixing this infrastructure? What if the solution is not patching and building more on top of an already cracked foundation, but replacing the entire infrastructure with a new, systemically different philosophy and platform? This of course, is the distributed model of decentralized, consensus based technology.

Take for instance the new hyper chatter of Apple Pay and it's “revolution” in the payment space. Here we have a centralized model, based on a single company taking millions of consumer credit cards, storing them on localized servers and then allowing for touchpay and other means of payment to vendors. While many may respect Apple for their contributions to smart-phone technology, Apple simply cannot handle the disruptive and consistent attacks by hackers around the globe. Hackers need not look anywhere else, but towards Apple to think, “Hey, Apple is now holding X million credit cards, time to focus here.” A centralized point of infrastructure is a point of failure. And we've seen this with Apple, during the recent “Celebgate” attack on Apple iCloud.

If scandalous pictures of celebrities can get hackers to break the Apple protected wall, millions of credit cards will do that much quicker. Do we really want to trust Apple with our personal information if they cannot even contain top-level A-list celebrity pictures?

Now, many individuals will understand this centralization model and it's inherent failures, but they often seek to see real world examples of this distributed and decentralized model. Fortunately for us, there are many examples, with the biggest names being BitTorrent, Bitcoin( Blockchain Technology) and the Dark Web. A notable example is the move of peer to peer technology from Napster to BitTorrent. What we saw here was the State intervening in a peaceful activity of sharing via Napster, which exposed to individuals the issue of the centralized model. This lead to creative and entrepreneurial pushes towards solving an issue that wasn't visible before. From Napster, we end up with BitTorrent and the technologies as mentioned above.

BitTorrent is a peer-to-peer way to distribute information and data over the Internet, without having a central point of failure. While there are some centralized aspects of torrents, such as the indexing pages where users can find certain information, these “centralized” parts are merely the leaves, not the root. While these websites can be shut down, it doesn't disable the protocol of BitTorrent itself. However, there are new applications, such as Tribler, which uses internal searches via P2P networks rather than by websites to find torrent information. Moreover, removing these “leaves” of the tree actually strengthen the tree as a whole, due to the resiliency of the market and programmers in the space itself. As with anything on the open market, when a flaw or issue is detected, market participants see profit and opportunity, eliminating that issue, which then strengthens the system itself.

Stay tuned for Part 2
Thanks for reading, please share! Sharing is caring!

Harrison Fischberg is a Bitcoin entrepreneur, writer and enthusiast

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