Chair: Martin Gill

Peter Tan – ASIS Professional Standards Board (Singapore)
Aidan Larkin – Founder and CEO at Asset Reality (UK)
Michael Gips – Principal at Global Insights in Professional Security (US) 

Key points

Michael Gips reflects that the traditional view has been to trust a currency that is backed by governments, and trusting cryptocurrency requires a leap of faith. It is based on the principles a currency can build in its own checks and balances. People are invited to trust the system and the technology but there are points of failure, as he says most cannot audit computer code, and the attached software adds further vulnerability.  Nor can you use cryptocurrency in McDonalds, many people don’t use it and others don’t understand it. And while there are many types some are Ponzi schemes. Caution is needed because: what regulation is there is variable; criminals are a few steps ahead and while law enforcement is catching up, the environment is still a risky one.

Peter Tan starts by outlining the market potential and its influence can be measured in many different ways, take for example the fact that

Wall Mart is appointing a director with a responsibility for cryptocurrencies, not to trade in it (yet at least) but to be at the heart of exploring the possibilities. You will hear him discuss cyber, financial and political risks and a reference to an article in The Economist highlighting the potential for chaos. Certainly the value of bitcoin is fluctuating and countries are finding their way, some like El Salvador viewing it as legal tender, others such as China having banned it. It will never replace currencies and there are endemic weaknesses in bitcoin which will render its algorithms vulnerable inside a decade. For criminals there are opportunities, on the dark web for sure, but there are on lots of offences with normal currencies too.

Aidan Larkin is an advocate of cryptocurrencies. He concedes they will not be accepted in Starbucks, but nor is gold, which does not make gold useless. There are many advantages too: trading can be undertaken in a transparent way; savings can be made on transfer fees; there are many use cases; it brings a trading mechanism for those who don’t have a bank; assets can be traced, including for criminals. Indeed, he invites us to think as to why criminals are using a traceable asset? There are tools law enforcement can use but they are less skilled than criminals in this area and often don’t have the resources. There are successes, he points to the IRS and the Metropolitan Police in London as they focus on the big offences. The spread of cryptocurrencies does not mean the end of traditional currencies any more than kindles indicate the end of books. That said, despite some regulation indicated by the existence of fines, it is a risky space.

Many big names, such as the big retail banks, have yet to engage, that will be pivotal the panel suggest. For now we have a new kid on the block which presents new opportunities and creates new security risks. It is daunting that criminals are proactive and ahead of the game but there is nothing new there; cryptocurrencies do not have a monopoly on security vulnerabilities. We are advised to trade with care but to keep a watching brief at least, this is here to stay and new and positive opportunities will exist for those who are well positioned.

Martin Gill
19th August 2021