Friday, January 17, 2014

Lab Notebook: a computer security disaster waiting to happen.

Legacy computing systems are notoriously difficult to retrofit for new threats. Recently, Target got hacked, with in a possible loss of 110 million user records (including mine). Now, the banks have discovered that their good old ATMs need to be upgraded to new software to be ready for new hacking dangers. According to Bloomberg Newsweek,

When ATMs were introduced more than 40 years ago, they were considered advanced technology. Today, not so much.
Inside every ATM casing is a computer, and like all such devices, each one runs on an OS. Microsoft’s 12-year-old Windows XP dominates the ATM market, powering more than 95 percent of the world’s machines and a similar percentage in the U.S., according to Robert Johnston, a marketing director at NCR (NCR), the largest ATM supplier in the U.S.

For banks, investing into a massive upgrade of an old computer system would be a waste of money because customers are switching to mobile payments. We can deposit checks, pay bills, and invest with a smartphone. The only thing we can't get from the smartphone is beer physical cash. A lot of startups and established companies, including Square and PayPal, are going after this market. The success of BitCoin is also a strong indicator that physical banking is dying.

If the banks don't invest in a rigorous new security system, old ATM networks will become a juicy target for hackers. Like any other parasites, hackers love weak targets: newborns and elderly, a legacy ATM system being the latter. A computer security disaster with a major ATM network will speed up the adoption of digital currencies immensely. A great financial play would be to buy a lot of bitcoins, then hack an ATM system just to scare people into using the new technology.

tags: innovation, deontic, payload, system, money, business

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