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THOUGHT LEADERSHIP
By 14 June 2019 | Categories: Thought Leadership

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With Bitcoin experiencing a price rally recently, interest in this and other cryptocurrencies are regaining momentum. The potential disruption from these digital currencies, especially in Africa, can be significant for traditional financial service providers. However, as Riaan Badenhorst, Managing Director of Kaspersky Africa, argues, security must remain an imperative.

“It does not matter whether you decide to invest in Bitcoin, Ethereum, Ripple, or any of the other cryptocurrencies, the reality is that having a payment mechanism that cuts out the middleman, i.e. banks, can have massive potential for developing markets on the continent.”

Take Zimbabwe as example. When inflation forced authorities to print $100 trillion notes (worth approximately R570 in today’s money) a few years ago, some turned to Bitcoin to transact. In fact, many analysts believe cryptocurrencies are great ways to overcome hyperinflation in certain local markets.

Even though Bitcoin is far from its peak of $19,783 reached in December 2017, the recent resurgence reflects renewed interest in the potential that cryptocurrencies can provide not only businesses, but consumers as well.

“However, as with any technology innovation, cyber threats are a clear and present danger. For one, attackers are infecting devices not to compromise data, but rather to use their computational resources for cryptocurrency mining. That is not to say data-focused malware will stop. Instead, cryptocurrencies present a new channel for attack.”

Moreover, cryptocurrency exchanges will continue to be targeted especially during times where investment opportunities during currency fluctuations occur. The Lazarus APT Group is a prime example of a hacking collective that targets financial entities, especially crypto-exchanges, through backdoor attacks that seek financial gain.

According to Kaspersky research, cybercriminal interest in cryptocurrencies was still high in the first quarter of this year. It uncovered an unusual scam mailing scheme where cybercriminals sent messages in the name of a CIA employee with access to a case file on the recipient for possession and distribution of digital pornographic materials involving minors. However, a ransom of Bitcoin is then typically demanded to make the ‘case go away’.

“While ransomware attacks are not new, how malicious users leverage cryptocurrencies and their inherent security features to protect tracking them, is cause for concern. In Africa, well-known for its 419 scams, having access to a more sophisticated platform (through cryptocurrencies) and tapping into the growth of mobile devices on the continent, provide cybercriminals with a wealth of opportunities to expand their operations.”

So, even though the market capitalisation of cryptocurrencies dropped from approximately $566 billion in 2017 to slightly more than $128 billion last year, it is still a massive environment considering the market capitalisation was only $17.7 billion in 2016.

“The investment interest for many people, not only in Africa but globally, is still there. It is important to remember that with the security of access to the digital wallet becoming the responsibility of the individual, that person becomes the central point of failure. If investors therefore do not take cybersecurity seriously, they could easily lose their funds to a compromised email opened or a dangerous link being clicked on.”

Irrespective of the digital innovation happening in the world around us, cyber security must always be part of the journey. If one assumes that data is safe, then the chances are good that it will be compromised sooner rather than later.

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