Mobile Commerce Success Depends On Mobile Currencies

Google's 10 Big Bets On The Future

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Let's stipulate two things. First, the general public will soon use smartphones to conduct all sorts of mobile commerce -- way beyond buying coffee and a scone. I'm talking banking, purchasing goods and services in person and online, paying bills, sending money to family and friends, and placing stock trades. While physical forms of payment aren't going away, all signs point to the increasing acceptance of electronic banking and payments for goods and services. That's true whether banks and retailers are ready or not.

Second, attention-grabbing negative headlines aside, digital currencies such as bitcoin will completely change the mobile payment landscape. Don't believe me? The IRS classified bitcoin as an "asset" for taxation purposes. The New York State Department of Financial Services has invited applications from entities interested in trading virtual currencies. When something is taxable and tradable, it's time to take it seriously. (By the way, "bitcoin" has two meanings. There's Bitcoin with a capital "B," meaning the P2P network platform, and "bitcoin" with a lowercase "b," meaning the currency, abbreviated to BTC.)

BTC, Ven (for which my firm, ValidSoft, provides a transaction authentication framework), Ripple, and dozens more currencies vary on code and architecture. Some are decentralized/peer-to-peer; others are centralized and managed by an administrator. Some, like BTC and Ripple, are demand-driven and trade like commodities -- which explains, in part, the volatility of their pricing. Others, such as Ven, are asset-backed, with value secured by a basket of currencies, commodities, and carbon credits.

[Where should app developers focus their mobile security efforts? Read Mobile App Development: 5 Worst Security Dangers.]

Crypto-currencies are naturals for mobile commerce thanks to their speed, portability, and ability to conduct global transactions at low cost. Transactions are instant, person-to-person, and free to transmit. The disruptive impact on the payments infrastructure will be massive.

These two trends are on a collision course caused by a lack of security. We'd better shift gears -- fast.

Before we place our trust
The security surrounding virtual currencies is wholly inadequate. Fraudsters long ago tuned botnets to mine bitcoin and sniff out the digital signatures of digital wallets. Emboldened, they turned their focus to exchanges, which now have become prime targets. Mt. Gox is the most recent catastrophic casualty, and as long as vulnerabilities remain, trust will be difficult to come by.

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Device encryption is the simplest way of screening a connected device from prying eyes, and there are many off-the-shelf tools and products that do this. Apple recently introduced fingerprint biometrics; with Samsung, PayPal, and others following suit, biometrics soon will be a mainstream technology.

I believe that one of the most promising approaches is mobile biometric voice verification. It works on any network, on any connected device, and is extremely easy to enroll and use. It is tuned specifically for mobile devices

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