Mobile phones are by far the most popular form of telephone communication: There are 321 million mobile phones in service in the US, and as of 2012, there were 313.9 million people in the US. Yes, there are more phones in service in the country than there are people. In another industry that was once entirely independent of telecommunications, payments, over 1 billion credit and debit cards are actively in use. For the next two and a half days, I will be at the Money2020 conference in Las Vegas, discovering how these once-separate industries are merging, and how mobile has a growing potential to become America's favorite method for both communication and
The Money2020 conference is dedicated to the discussion of the payment industry -- its past, present, and future. Panels, talks, and keynote speeches are being held all day, along with discussion about the global expansion of the payments industry, the growth of mobile payments, digital currencies like Bitcoin, gift cards, and the criminal ramifications of having online and mobile payment options.
Today I am focusing on cyber crime as it is not only fascinating, but much more rampant than most of us want to believe.
Cyber Crime and Data Security
First up at the conference was a panel discussion on cyber crime, data security, and privacy rights with private-sector business leaders.
David Abouchar, the Senior Director of Product Management at ControlScan, kicked off the session by simply saying that not enough is being done to curtail Internet financial fraud. According to Abouchar, two-thirds of all websites contain exploitable vulnerabilities. Very dryly, he stated, "We're just not doing the basic hygiene" of keeping online payments clean of fraud and crime. His company's solution is to actually breach companies' websites and data -- without bad intentions, of course -- to really understand how hackers and criminals can exploit the majority of websites.
Abouchar's talk was informative and he was obviously very knowledgeable, but I found Siva Narendra, CEO of secure mobile financial transaction and identity solutions company Tyfone, much easier to follow, thanks to his liberal use of metaphors. Case in point: "You take your keys with you when you leave home." In this instance, Narendra was speaking about the difference between home security and Internet security. When you leave your house or apartment, you lock the door, and unless a thief uses other means, your possessions are safe. There is a tool -- a key -- to lock and unlock the door, and you keep it with you. When it comes to the Internet and passwords, however, companies and applications have our information. They have our key -- our password -- because we give it to them in the first place so that we can verify our identity and access whatever content or information we want, be it our Facebook
(NASDAQ:FB) account or our email account. Because our password is not in our pockets but rather on the cloud, it is vulnerable.
Narendra believes that one solution to Internet security is physical devices that function as passwords that you can actually carry in your pocket. However, as he realistically noted, it is easier for people to have passwords than for them to have physical devices that must be purchased and toted around. And what if that device itself was stolen? It still might be an improvement, however, as a full "90% of the passwords used globally are vulnerable," according to Narendra.
Impact of Global Criminal Organization
The next panel I attended was supposed to be one that included government employees, a Secret Service agent, an IRS special agent, and an FBI agent, but of course, the government is shut down, so they couldn't make it. (At least it made for a great joke that everyone was in on.) In their place was the session's mediator, Scott Dueweke, a senior associate of Booz Allen Hamilton (who I have plans to meet with Monday afternoon for an interview). Dueweke parsed his contacts for ex-government employees and found Dave Dunn and Erik Rasmussen, both employees of FIS Global, and both former law enforcement agents who specialized in digital security.
The conversation was predominantly about online payment platforms, such as the legitimate and accepted PayPal
(NASDAQ:EBAY), the up-and-coming but still troubled Bitcoin, and the now totally blocked Liberty Reserve, which at its height became essentially a black market bank. The essence of the panel could be distilled down to one simple statement Dueweke made: "If Al Capone was alive today, he'd be using these systems to move money."
Something that became very apparent was that these guys are in favor of regulation, of bringing legitimacy to Bitcoin and its brethren through strict and enforceable rules. The three panelists weren't specific about what exactly those rules and regulations would be, but this example helped the audience grasp the point: Dave Dunn brought up his own mother. He hypothetically asked her, "Mom, would you rather transfer money with Bitcoin, which is backed by math, or the US dollar, which is backed by the US government?" He remarked that she would obviously choose the dollar because she (along with the majority of people) simply trusts the US government more than an online mathematical system that is often used by hackers, criminals, and others who want their payments to remain totally anonymous.
(For more on Bitcoin and its math-based backing, read The Basics on Bitcoin: 11 Things to Know About This Suddenly 'Hot' Digital Currency.
Making a joke, Dueweke asked if Dunn's mother would have given that same answer even after last week's government shutdown. Dunn said yes, even still. So the idea around regulation and rules for online currencies is to make them trustworthy and to guarantee their legitimacy to customers. All three panelists did note, however, that this is just really hard to do with digital, online currency.
These folks were all in favor of regulation, while the first panel was notedly and explicitly anti-regulation. I will follow this dichotomy in the coming days.
John Muller, General Counsel for PayPal
I must admit, John Muller's speech was relatively unexciting, though he did paint a very eloquent picture of PayPal's evolution, perhaps laying a blueprint for how other online payment platforms can come to the mass market. He did say one bold thing that caught my attention, mostly due to the environment in which he said it: "Fundamentally, payments are a means to an end and not an end in themselves." The whole reason people are at this conference is because they see mobile payments as a growing industry, and, in truth, it is. However, Mullen brought a new perspective to the general conversation here, which is that payment is just a means of obtaining something else, which leads me to the last event of the night.
"There Is No Problem on the Planet That Can't Be Solved."
The keynote address came from Peter Diamandis, founder of the X Prize Foundation, and definitely ended the evening on a positive note -- and one that tied business and innovation together naturally. He said, "The world's biggest business opportunities are the world's biggest problems." And you know he means it: Diamandis founded the organization that had a $10 million prize go to the company that could put a commercial craft in space. That competition was the genesis of an entire industry, consisting of Richard Branson's Virgin Galactic and Tesla
(NASDAQ:TSLA) CEO Elon Musk's SpaceX, to name a few of the big players.
In fact, Diamandis's speech was so impressive and inspiring that I plan to write a story just on it when I return to New York on Wednesday. Until then, follow me on Twitter to get a glimpse of what is going on out here in Las Vegas.
For more information on cyber security, please read When It Comes to Privacy, It's Facebook, Google Vs. Small Tech.
Follow me on Twitter: @JoshWolonick and @Minyanville