Protecting your crypto-currency, normal currency, with biometrics
You haven’t had to look far to see news about Bitcoin over the past few months; the value of the crypto-currency has soared, topping $60 000 for the first time and showing no signs of slowing down. This rapid increase in value has seen the total value of all Bitcoin exceeding the market valuation of many of the leading companies, including Facebook and Tesla.
For investors looking to diversify their portfolios, Bitcoin offers a tantalising opportunity, and for those already holding the crypto-currency, they’ve already seen the benefits.
The volatility of Bitcoin and other crypto-currencies is legendary, but this is far from the only risk facing people deciding to hold Bitcoin. In 2011 Stefan Thomas, a US-based programmer, was gifted 7 002 bitcoins, worth $2-$6 each. He stashed them away in an anonymous digital wallet and they’ve since become worth over $220 million. The problem is that Thomas forgot the password to unlock this fortune, leaving it all but lost in the ether.
While Thomas’ case is extreme, it’s not an isolated example. There are many stories of people going to extreme measures in, often vain, attempts to recover the passwords that would unlock access to their Bitcoin fortunes.
“The problem that users all face is that the passwords that digital wallets use have to be highly secure,” says Simon Marchand, Chief Fraud Prevention Officer at Nuance Communications. “With millions of dollars tied up in these systems, they make an attractive target for hackers and the anonymous nature of Bitcoin means that if your wallet is compromised, then those funds are gone forever.”
Traditional password has had its day
Access to crypto-currency wallets has traditionally been controlled and managed by passwords and other knowledge-based credentials. However, as anyone who has had to reset their password on a secure system will tell you, secure passwords are impossible to remember. And hardware wallets still aren’t widely used by the general public.
According to research, 38% of individuals forget a password at least once a month and the systems for resetting these passwords have created a fertile ground for fraudsters.
Digital wallets aren’t just for crypto-currencies; however, more and more we’re seeing the emergence of digital wallets as a critical part of the financial services landscape.
“South Africa is ahead of a lot of other countries when it comes to digital wallets,” says Marchand. “With various initiatives appearing in the past 12 months, we see banks, telcos, phone manufacturers and start-ups all bring their own unique offering to a market that has proven to be very receptive to this new payment method.”
However, one of the main challenges remains: how to facilitate a seamless onboarding and ensure safe and rapid portability of these different digital wallets. Simply replying on traditional passwords isn’t going to be effective, as they are insecure and easily compromised. On the other end of the spectrum, hardware wallets can be lost or won’t offer the same recovery capabilities (if at all) when a passphrase is forgotten.
“Looking for an alternative, biometrics immediately come to mind. Using the latest biometrics technologies with centralised checks facilitates onboarding and transfer of digital wallets from one device to another,” he says. “It guarantees a higher level of security to consumers while helping organisations of all sizes fight fraud more effectively.”
A golden age in authentication
He explains that voice biometrics uses sophisticated algorithms and artificial technology to analyse more than 1 000 voice characteristics – from pronunciation to size and shape of the nasal passage. Using it is convenient as a user only needs to say a short phrase, such as: “My voice is my password.” Each human voice is as unique as a fingerprint and so this type of technology can be used to confirm whether someone is who they say they are based on how they sound.
It's also possible to layer an additional biometric system on top of voice authentication, with behavioural biometrics being one of the least obtrusive. Behavioural biometrics measures the most minute details – such as how an individual holds their phone, how they type and even whether they pause once they finish a task – in order to create an expected profile and identify a person. By layering these systems, it’s possible to create an authentication system that is not only easy to use, but also is almost impervious to fraud attacks.
“With crypto-currencies such as Bitcoin playing an increasingly influential role in the payment ecosystem, protecting and securing them has never been more important,” he says. “Diminishing the risk of both password loss and password theft potentially saves investors millions.”