Mobile Commerce Success Depends On Mobile Currencies - InformationWeek

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4/25/2014
12:06 PM
Pat Carroll
Pat Carroll
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Mobile Commerce Success Depends On Mobile Currencies

Digital currencies are a "killer app" for mobile commerce. We must get security and regulations right.

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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.

(Source: Antana/Flickr)
(Source: Antana/Flickr)

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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Pat Carroll is the executive chairman and founder of ValidSoft, a global supplier of cybersecurity and transaction authentication solutions utilized by banks, financial services companies, and governments to secure and authorize payment transactions. He has more than 25 years ... View Full Bio

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SachinEE
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SachinEE,
User Rank: Ninja
4/29/2014 | 3:25:07 PM
Re: Re : Mobile Commerce Success Depends On Mobile Currencies
Since their introduction, bitcoins have attracted a lot of attention both from the people that use them and those that do not alike. Though there have been positive feedbacks from people that have tried using the bitcoins in the past, it is unfortunate that the negative stories associated with this virtual currency have been the ones that have received the greatest attention. In particular, the stories indicating that bitcoins can and have been used for money laundering purposes are rather worrying so I think that a lot will have to be done to increase user confidence in the currency before it can receive large scale adoption throughout the world.
SachinEE
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SachinEE,
User Rank: Ninja
4/29/2014 | 3:22:07 PM
Re : Mobile Commerce Success Depends On Mobile Currencies
Am not an expert in online trading, not by a long shot, but I am one of millions of people around the world who carry out a significant proportion of our total financial transactions online. I have also been following very keenly the stories and developments that have surrounded BTC, which is the most popular virtual currency at the moment (though probably not the most widely used), and from what I have seen is that the greatest impediment to the growth of virtual currencies is the lack of trust between the providers of the currencies and the people that are meant to use them in the long run.
petey
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petey,
User Rank: Strategist
4/28/2014 | 9:07:52 AM
niche play
No offense but I think bitcoin is a solution is search of a problem. Regardless of whether it becomes mainstream, there exists a real need to securitize and streamline economic transactions. The IRS loves to find new sources of income so I'm not sure just because the IRS recognizes something as an asset indicates it is the new normal. I admire your enthusiasm but remain highly skeptical this will be anything more than a niche play.
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