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Showing posts with label PayPal. Show all posts

Saturday 6 March 2021

The future of money is digital, but is it bitcoin?

 

Don’t be surprised if by the end of the current decade, the e-wallet on your smartphone resembles a multicurrency account. But instead of dealing with commercial banks, you may be a customer of central banks. Several of them, in fact

 

THE idea that much of today’s cash use will shift to digital tokens is neither faddish nor outlandish, as long as you don’t start equating the future of money with bitcoin.

Sure, governments will borrow some elements of the distributed ledger technology behind private cryptocurrencies, but they will very much want to retain control of what circulates as money in their economies. Some will succeed.

Don’t be surprised if by the end of the current decade, the e-wallet on your smartphone resembles a multicurrency account. But instead of dealing with commercial banks, you may be a customer of central banks. Several of them, in fact.

Sound far-fetched? Apart from the Bahamian Sand Dollar, there’s no official online currency in mass circulation yet.

Still, digital yuan pilots are gathering pace as Beijing aims for a possible rollout coinciding with the 2022 Winter Olympics.

Sweden may be the next major nation to follow suit. The Bank of Japan has no immediate plans, but it acknowledges the possibility “of a surge in public demand” for official digital cash going forward.

Even in the US, which is only toying with the concept, digital payment vehicles that don’t rely on traditional bank accounts can increase financial inclusion among cash users, according to a September 2020 paper by Federal Reserve Bank of Atlanta president Raphael Bostic and others. Treasury Secretary Janet Yellen says a digital dollar is “absolutely worth looking at”.

Once China and the US are both in the fray, virtual money is bound to become a tool for wielding global influence by carving up the world into new currency blocs. That’s because any token will have dual uses outsidethe issuing nation’s borders.

The dollar or yuan that pops up in a phone wallet in Indonesia or India – backed by a solemn promise of taxpayers in the US or China – could be used for buying goods, services or assets internationally.

Just as easily, this new money can end up replacing domestic currency in people’s daily lives. Although this is no different from traditional dollarisation that occurs in countries plagued by inflation and exchange rate volatility, the convenience and accessibility of central bank-issued digital cash could enable “substitution at a faster pace and larger scale,” according to Tao Zhang, a deputy managing director at the International Monetary Fund (IMF). To stay in control of monetary policy, authorities in smaller economies will need their tokens to be attractive in domestic situations.

The goal for bigger nations may be different: China and the US may want to offer add-ons that make the E-CNY or the Fedcoin the preferred choice for foreigners in settling international claims.

An efficient future will be one in which all central banks’ digital currencies are interoperable. In other words, they’ll interact with one another – and with private-sector alternatives including bitcoin, says Sky Guo, the chief executive of Cypherium.

The US enterprise blockchain startup is a member of the Fed’s Faster Payments Council and of the digital monetary institute of the Official Monetary and Financial Institutions Forum, or OMFIF, a central banking think tank.

Guo is working on the challenges that will arise when sovereign money gets digitised:

How to process high volumes of transactions quickly, cheaply, and with a strong consensus among registries updated automatically across a network? How to give people a sense of privacy in everyday payments, even after the anonymity of cash is lost?

Central banks will have to make choices. Not all smartphones can run advanced virtual machines, effortlessly executing the software code for automated contracts.

Choose the wrong technology, and the unbanked population might once again get excluded. Ditto for overseas remittances, a US$124 trillion-a-year opportunity for tokens to replace an expensive network of correspondent banks moving money by exchanging SWIFT messages.

But it won’t work for small transfers if the computing power to verify transactions in a decentralised network costs too much. The ideal technology doesn’t necessarily have to be a blockchain, but it should be something “lightweight, flexible and capable of working with legacy systems,” Guo says. Above all, the distributed ledger must be transparent.

There will be other obstacles. “A driving force for lobbying against central bank digital currencies has been established among payment processing giants like Paypal, Venmo and Stripe,” Guo tells me. “Fedcoin won’t need these intermediaries to send funds.

As these companies fall victim to innovation, it’ll be interesting to see how they try to protect themselves from disruption.”

Paypal Holdings Inc, which owns the person-to-person service Venmo, contests Guo’s assertion as false. Supporting and distributing central bank digital currencies is part of Paypal’s vision of an inclusive future, CEO Dan Schulman told investors last month.

Former Bank of England governor Mike Carney, who has proposed an alternative to the dollar through a network of central bank digital currencies, recently joined the board of Stripe Inc.

One way to resolve the tension may be to co-opt the private sector. As IMF economists Tobias Adrian and Tommaso ManciniGriffoli have argued, an official virtual currency could be like Apple’s IOS operating system, with commercial banks and e-money providers running apps on top of it.

The Apple Health app may be fine for a lay user; an athlete will want something more sophisticated. Money could go the same way.

Countries will also have to cooperate with one another. Take M-CBDC Bridge. The project for 24/7 cross-border remittances using central bank digital currencies was begun by the Hong Kong Monetary Authority and the Bank of Thailand, but has now been joined by the central bank of the United Arab Emirates and the People’s Bank of China. ─ Bloomberg

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The future of money is digital but is it Bitcoin?

https://www.deccanherald.com/business/business-news/the-future-of-money-is-digital-but-is-it-bitcoin-958338.html 


The future of money is digital, but is it bitcoin?

 

 

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Wednesday 22 August 2012

Buy Malaysian shares, sell Facebook stocks?

Malaysia ranked in top spot by Morgan Stanley analysts for third quarter investment

PETALING JAYA: The local bourse may see renewed interest among investors as robust domestic demand and government spending on infrastructure drive earnings among companies.

Morgan Stanley Research analysts said in a recent report that the country was ranked at the top spot for the third quarter based on valuation, profitability, earnings and performance.

“Malaysia's attractive ranking is driven by a combination of attractive dividend yields, under ownership levels, improvement profitability and relatively strong performance momentum,” they said.

They added that the country's current dividend yield of 3% was higher than its three-year average. They said that according to EPFR Global, a funds flow and asset allocation data provider, investors continue to position the Malaysian stock market 210 basis points underweight compared to the MSCI Asia ex-Japan benchmark.

They said profitability in terms of return-on-equity basis has improved to 12.7%, higher than the three-year average. “One quarter relative price performance for MSCI Malaysia has also been strong as it was the second best performing market in Asean,” they said.

While MSCI South-East Asia consensus earnings growth estimates had been revised down by 23 basis points last week, MSCI Malaysia earnings were revised up by 54 basis points.

“MSCI Thailand estimates was revised down the most, by 41 basis points, followed by MSCI Singapore 40 basis points, MSCI Indonesia 10 basis points and MSCI Philippines 4 basis points,” they said.

They said consensus growth estimates for 2012 were 14.4% for Malaysia, Indonesia (9.3%), Philippines (8%), Singapore (3.1%) and Thailand (14.2%).

On a year-to-date basis and relative to the performance of MSCI Asia ex-Japan, MSCI Malaysia declined 1.5%, MSCI Indonesia contracted 7.2%, MSCI Thailand gained 9.2%, MSCI Singapore rose 12.4% and MSCI Philippines jumped 14.7%.

On a sectoral basis, Malaysian utilities was revised up 94 basis points while industrials was revised down 35 basis points.

Meanwhile, The Institute of Chartered Accountants in England and Wales said in a report that although growth prospects for Asean had fallen substantially in line with the deteriorating conditions around the world, “Malaysia is still going fairly strong as domestic demand remains relatively buoyant.”

It said that like other countries such as Indonesia and the Philippines, the basic story of rising middle class incomes in Malaysia persisted despite diminished prospects for investments due to lower profits for exporters.

It forecasts growth to slow down to an annual average of 3.8% in the second half (after growing 5.1% in the first half) due to external headwinds.

“Elections this year or next year bear some political risk, but in the event of a peaceful outcome, growth should rise by 3.5% in 2013. A recovery of its trading partners should see the country's gross domestic product rise by 4% in 2014,” it added.

By FINTAN NG  fintan@thestar.com.my

Is Facebook director signalling to others to rush out of Facebook stocks?

19.16  -0.85 / -4.26%

SAN FRANCISCO: Peter Thiel was the first investor to take a gamble on Facebook Inc. Now some people are wondering whether, in selling most of his stake, the Facebook board member is signaling to others that it's time to rush for the exits.

Thiel, the co-founder of PayPal who invested in Facebook in 2004, sold roughly $400 million worth of Facebook shares last week as the first restrictions barring insider selling were lifted.

The sales, which were conducted as part of a stock sale plan that Thiel entered into in May, have dealt another blow to Facebook's reputation among some investors in the wake of a rocky debut that has wiped out roughly 50 percent of its market value. And it has raised questions about whether Thiel's move conflicts with his responsibilities as a Facebook director.

"It's a vote of no-confidence from a board member," said Max Wolff, an analyst at Greencrest Capital.

"If he wants to serve primarily as a self-interested investor, that's fine. But then you can't be the on the board. Boards of directors are not made up of people whose primary interests are in their checkbook," said Wolff, who said he believed Thiel should resign from the board.


A spokesman for Thiel declined to comment.

"From a shareholder standpoint, if a VC is going to be on the board you'd like to think that they still have a large position in the company and that they're interested in making it be more valuable," said Walter Price, a portfolio manager at RCM Capital Management which does not own Facebook shares. "It sends a mixed message when they sell most of their stock and they still stay on the board," he said.

The 44-year-old Thiel still owns roughly 5.6 million shares of Facebook, worth around $107 million at Tuesday's closing price of $19.14 per share.

That stake means he still has "skin in the game," said James Post, a professor of management at Boston University who specializes in corporate governance issues.

"The worst you can say is that it may reflect perhaps a questionable judgment about getting rid of all these shares at a time when such big questions are looming about Facebook's future," said Post. But he said he believed that Thiel's sales do not disqualify him from serving on the board.

The stock sales are the latest in a seemingly endless string of setbacks and controversies to plague Facebook since its highly anticipated IPO in May.

The world's No. 1 online social networking website, with roughly 955 million users, experienced brisk demand for its shares when it was a private company and became the only U.S. company to debut with a market value of more than $100 billion.

But technical glitches with the Nasdaq stock exchange marred the stock's first day of trading and concerns about the company's slowing revenue growth have pressured the company's shares since then.

Thiel, who has an undergraduate degree from Stanford University in philosophy and a law degree from Stanford Law School, was among Facebook's first believers.

He invested $500,000 in Facebook at a $5 million valuation in September 2004, seven months after the company was created by Mark Zuckerberg in a Harvard dorm room. In 2006, one of Thiel's investment firms, the Founders Fund, participated in a $27.5 million funding round along with Greylock Partners, Meritech Capital Partners and Accel Partners.

The Facebook investment is by far the most successful of Thiel's investments, which have also included stakes in LinkedIn Corp , Yelp Inc and SpaceX.

Thiel sold 16.8 million shares of Facebook at the IPO for $38 a share, for total proceeds of roughly $640 million. And he sold a significant number of shares through a private transaction in 2009.

Facebook, which declined to comment on Thiel's stock sales, said in its prospectus in May that the company believes Thiel should serve on the board because of his "extensive experience as an entrepreneur and venture capitalist, and as one of our early investors."

It's common for early investors, such as venture capitalists and angel investors, to have seats on the boards of companies they've backed. And venture firms typically distribute shares of the company to their limited partners following an IPO, so that the venture fund's investors can get a return on the investment.

But there are no "hard and fast rules" for when those investors should exit the board after a company's IPO, said Nick Sturiale, a partner at venture capital firm Jafco Ventures.

"It's usually a discussion between the CEO and the board member and the partnership whether they stay, and for how long," he said.

John Doerr, a partner at venture capital firm Kleiner Perkins Caufield & Byers, is on the board of Google Inc and was on the board of Amazon.com Inc until 2010 - both companies that Kleiner funded.

If the fund that a director represents sells its stake after the IPO, the director should also consider stepping down, said Charles Elson, a University of Delaware finance professor specializing in corporate governance.

The topic sparked a lively debate on Tuesday, as venture capitalists and technology company executives unleashed a rash of Twitter messages and blog posts to defend or criticize the insider sales.

Fred Wilson, a principal with Union Square Ventures, noted in a post on his personal blog that insider selling is to be expected following an IPO.

"Those who took the risk of losing all the capital they bet on 20 year old Mark Zuckerberg are entitled to their return," wrote Wilson.

Earlier report from print edition

WASHINGTON: If you bought Facebook shares in the May initial public offering (IPO) and held onto them, by Monday you would have lost more than half your investment and not see any encouraging signs of making your money back.

Three months after the largest tech share issue ever on US markets, Facebook fell to a new low below US$19 (RM60) a share, compared to the US$38 (RM120) underwriters charged for the 421 million shares they sold.

Although the stock bounced back to close at US$20.01, IPO investors were still holding huge losses with not much hope of a quick reversal, analysts said,.

Some key investors were still cashing out on Thursday and Friday, billionaire Peter Thiel, who invested in Facebook first in 2004, sold off nearly 80% of his huge holding, according to a filing with the Securities and Exchange Commission on Monday.

Thiel's average price for 20.6 million shares was US$19.73 still a handsome profit for such an early backer of the website, but not a demonstration of confidence in the company's potential to rebound.

Facebook raised US$16bil when it went public on May 18, giving it a nominal market value of a stunning US$104bil and raising hopes of a new dotcom boom on US markets.

The company's business promise was huge marketing access to the 900 million users of the world's leading social network and data about them that marketers prize.

But analysts said that the large number of shares sold, the high IPO price, and the overall skittishness of investors in a soft overall economy, had undermined market support for the company.

“They just put way too many stocks out at once... before the market was ready to absorb so many shares,” said Michael Pachter of Wedbush Securities.

The price struggled around the US$30 range in the weeks after the issue, with the underwriters undergoing a beating and lawsuits for allegedly having privately lowered their earnings forecasts for the company days before the IPO.

The shares then fell to the low-US$20s range at the end of July when Facebook issued an uninspiring quarterly earnings report.

And last Thursday the price plummeted when a ban on pre-IPO investors such as Thiel selling their shares was lifted many apparently sold.

That lockup applied only to 270 million shares. A further 1.2 billion shares, those controlled by Facebook employees, will be freed from lockup on Nov 14.

While undoubtedly Facebook founder Mark Zuckerberg and other top figures will hold on to most of their shares, anything added to market liquidity is, at this point, downward pressure on the price.

Analysts are debating whether the stock is now a bargain based on Facebook's earnings potential.

“Over the long term, the trade is about the fundamentals of the business, and the fundamentals remain very positive,” Pachter told AFP. He called the problem of a share oversupply “just noise”.

Social media expert Lou Kerner also downplayed the selling pressure.

“We remain very positive,” he said. “Facebook will figure how to monetise mobile, the dollars will find their way.”

New York University finance professsor Aswath Damodaran was more sceptical. After Facebook's quarterly earnings report, he cut his original US$27 a share “intrinsic value” estimate to below US$24.

“The earnings report was a disappointment to markets, revealing less revenue growth than anticipated and an operating loss.” But at US$19, he still is not sure of the investment's merit, given the potential overhang of sellers.

“Facebook remains a company with vast potential (their user base has not shrunk), no clear business plan (is it going to be advertising, product sales or something else) and poor corporate governance,” he wrote on his blog Musings on Markets.

“Eventually, the intrinsic' truths will emerge, but it may be a long time coming.”

Another longtime bear on the stock, Trip Chowdhry of Global Equities Research, retains deep doubts even at US$19 a share. “Facebook doesn't have the technology to monetise social actions,” he said. “With what we know right now, the price should be in the low teens.” - AFP

Citadel urges U.S. to okay Nasdaq's Facebook IPO payback plan

NEW YORK: Citadel LLC urged U.S. regulators to approve Nasdaq OMX Group's $62 million compensation plan for firms harmed by Facebook's May 18 glitch-ridden initial public offering.

Citadel's market making unit bought and sold over $3.8 billion worth of Facebook stock during the IPO and "incurred losses protecting retail investors from the problems caused by Nasdaq," the firm said in a letter on Tuesday to the Securities and Exchange Commission.

Nasdaq filed its all-cash plan with SEC in July.

Regulations cap the exchange's liability at $3 million a month for problems caused by technology issues, and the Facebook accommodation plan would temporarily raise that amount, though not to a level anywhere near the upward of $500 million lost by the major retail market makers in the IPO.

"While the extent of exchange immunity from liability for mishandling orders is an important and complex public policy issue, we submit that any commission consideration of this issue should be addressed at a later time," Citadel said.

Citadel lost around $30 million due to the IPO, a person familiar with the situation previously told Reuters.

Wednesday is the deadline for interested parties to submit comment letters to the SEC on Nasdaq's proposal.

The other top retail market makers involved in the IPO were Swiss bank UBS AG, Knight Capital Group, and Citigroup's Automated Trading Desk.

UBS said it lost more than $350 million when the lack of timely order confirmations by Nasdaq caused UBS's internal systems to re-enter orders multiple times.

A spokeswoman for UBS, which has said it may take legal actions against Nasdaq to recover the full extent of its losses, said the firm had no comment.

Knight said it lost $35.4 million due the IPO. A spokeswoman at Knight said it is still unclear as to whether the firm will formally comment on Nasdaq's reimbursement plan. A source familiar with the firm's plans told Reuters Knight is likely to accept Nasdaq's offer.

A spokesman for Citi, which sources have said lost around $30 million, could not confirm if the firm would submit a comment letter.

The all-cash $62 million reimbursement plan is $22 million larger than Nasdaq originally proposed. The prior proposal was made up mostly of trading rebates, which drew loud protests from other exchanges and market makers.

A Nasdaq spokesman could not immediately be reached for comment. Spokesmen for New York Stock Exchange operator, NYSE Euronext, and No. 3 U.S. equities exchange, BATS, said their companies did not plan to file comment letters with the SEC. A spokesman for No. 4 exchange, Direct Edge, was not immediately available for comment.

In a regulatory filing on August 3, Nasdaq said it is the subject an investigation by the SEC, as well as eight lawsuits by investors and one by trading firms, for its role in Facebook's problematic debut.

While Nasdaq said it believes the lawsuits are without merit, it said it expects "to incur significant additional expenses in defending the lawsuits, in connection with the SEC investigation and in implementing technical changes and remedial measures which may be necessary or advisable." - Reuters

Facebook at half-price: Which way now? 


WASHINGTON: If you bought Facebook shares in the May IPO and held onto them, by Monday morning you would have lost more than half your investment -- and not see any encouraging signs of making your money back. 

Three months after the largest tech share issue ever on US markets, Facebook fell to a new low below $19 a share, compared to the $38 underwriters charged for the 421 million shares they sold.

Although the stock bounced back to close at $20.01, IPO investors were still holding huge losses with, analysts said, not much hope of a quick reversal.

Some key investors were still cashing out -- on Thursday and Friday, billionaire Peter Thiel, who invested in Facebook first in 2004, sold off nearly 80 percent of his huge holding, according to a filing with the Securities and Exchange Commission Monday.

Thiel's average price for 20.6 million shares was $19.73 -- still a handsome profit for such an early backer of the website, but not a demonstration of confidence in the company's potential to rebound.

Facebook raised $16 billion when it went public on May 18, giving it a nominal market value of a stunning $104 billion and raising hopes of a new dotcom boom on US markets.

The company's business promise was huge: marketing access to the 900 million users of the world's leading social network and data about them that marketers prize.

But analysts said that the large number of shares sold, the high IPO price, and the overall skittishness of investors in a soft overall economy, have undermined market support for the company.

"They just put way too many stocks out at once... before the market was ready to absorb so many shares," said Michael Pachter of Wedbush Securities.

The price struggled around the $30 range in the weeks after the issue, with the underwriters undergoing a beating and lawsuits for allegedly having privately lowered their earnings forecasts for the company days before the IPO.

The shares then fell to the low-$20s range at the end of July when Facebook issued an uninspiring quarterly earnings report.

And last Thursday the price plummeted when a ban on pre-IPO investors such as Thiel selling their shares was lifted -- many apparently sold.

That lockup applied only to 270 million shares. Another 1.2 billion shares, those controlled by Facebook employees, will be freed from lockup on November 14.

While undoubtedly Facebook founder Mark Zuckerberg and other top figures will hold on to most of their shares, anything added to market liquidity is, at this point, downward pressure on the price.

Analysts are debating whether the stock is now a bargain based on Facebook's earnings potential.

"Over the long term, the trade is about the fundamentals of the business, and the fundamentals remain very positive," Pachter told AFP. He called the problem of a share oversupply "just noise".

Social media expert Lou Kerner also downplayed the selling pressure.

"We remain very positive," he said. "Facebook will figure how to monetize mobile, the dollars will find their way."

New York University finance professsor Aswath Damodaran was more skeptical. After Facebook's quarterly earnings report, he cut his original $27 a share "intrinsic value" estimate to below $24.

"The earnings report was a disappointment to markets, revealing less revenue growth than anticipated and an operating loss."

But at $19, he still is not sure of the investment's merit, given the potential overhang of sellers.

"Facebook remains a company with vast potential (their user base has not shrunk), no clear business plan (is it going to be advertising, product sales or something else) and poor corporate governance," he wrote on his blog Musings on Markets.

"Eventually, the 'intrinsic' truths will emerge, but it may be a long time coming."

Another longtime bear on the stock, Trip Chowdhry of Global Equities Research, retains deep doubts even at $19 a share.

"Facebook doesn't have the technology to monetize social actions," he said. "With what we know right now, the price should be in the low teens."

Tuesday 22 May 2012

Thiel's college dropout plan in bubble education

Thiel's college dropout plan scrutinized by '60 Minutes'

Investor and entrepreneur tells the CBS news magazine that a college degree is unnecessary for financial success, but critics call his program an elitist ploy. 


Billionaire investor Peter Thiel.

Peter Thiel's plan to pay college students to develop their promising concepts instead of attending to school is attracting students as well as critics.

Best known as a co-founder of PayPal, the Silicon Valley investor and entrepreneur has also made early-stage investments in companies such as Facebook, LinkedIn, and Yelp. Now he's investing in college students, awarding fellowships of $100,000 each to youth under 20 years old, essentially encouraging them to drop out of college to become entrepreneurs.

In an interview for tonight's "60 Minutes," Thiel tells Morley Safer that his program is a viable alternative to what he sees as a largely ineffective university system in which costs far outweigh benefits.

"We have a bubble in education, like we had a bubble in housing...everybody believed you had to have a house, they'd pay whatever it took," says Thiel. "Today, everybody believes that we need to go to college, and people will pay -- whatever it takes."

He also notes that a college degree is not necessary to land a high-paying job.

"There are all sorts of vocational careers that pay extremely well today, so the average plumber makes as much as the average doctor," Thiel tells Safer.

Critics call Thiel's plan an elitist ploy that only encourages others to drop out or not attend college at all.

"Peter Thiel has made so much money that he is out of touch with the real world," Vivek Wadhwa, an entrepreneur who teaches at Duke and Stanford, told Safer. "He doesn't understand how important education is for the masses."

"What I worry about is a message that's getting out there to America that it's okay to drop out of school, that you don't have to get college. Absolutely dead wrong."

"60 Minutes" airs at 7 p.m. PT/ET on CBS stations. Full segment embedded below.



Steven Musil
by
Steven Musil is the night news editor at CNET News. Before joining CNET News in 2000, Steven spent 10 years at various Bay Area newspapers.  

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Sunday 19 June 2011

Hackers, not all hack for the heck of it! Who are the anonymous hackers? Beware of Seduction!





By HARIATI AZIZAN sunday@thestar.com.my

Some do it for fun or fame, others to make a political statement. But a bigger number of hackers are now doing it for money.

THEY brought down the CIA website and attacked Sony, Nintendo and a few tech companies with links to FBI and the US Senate. They wanted to expose the online weaknesses of these entities, “for the Lulz”, they bragged.

But what is grating the American authorities and security experts most about the group who carried out the cyber attacks, Lulz Security, an offshoot of the notorious activist hacker group Anonymous, is that they used basic hacking “tools” available for free online.

One irate network security expert, Paul Ducklin of Sophos, even branded them “a bunch of schoolboys” who did something as intellectually challenging as “boasting in the playground about who's got the hottest imaginary girlfriend”.

 
Beware: A hacker group threatening to attack Malaysian government websites.

It sounds like sour grapes to me, laughs a local IT student and part-time hacker who only wants to be known as “W”.

“This is the democratisation power of technology; it is now easy for anyone to start hacking,” he says.

Technological advancement has inadvertently lowered the bar for hacking, concurs Nigel Tan, the Asia-South principal consultant at online security company Symantec Corporation (Malaysia).

“In the past you have to write the programme yourself. Now there are toolkits available online, and you can create your own malware easily using these toolkits,” he says.

Symantec believes that the availability of these kits are likely responsible for the increase of malicious attacks on the Internet.

As its recent Internet Security Threat Report showed, there were more than 286 million new cyber threats last year, compared with 120 million in 2008.

But you don't really need statistics to show how rampant cyber attacks are growing.

Since last December, the world has been bombarded by a flurry of hacking incidents the highest-profiled possibly being the hacking of PayPal, MasterCard, and Visa by Anonymous in support of WikiLeaks' Julian Assange.

In March, the database of marketing group Epsilon was rampaged and millions of email addresses were stolen. In April and May, Sony's PlayStation network was attacked, more than once, exposing some 77 million users' data.

And in the past three weeks, the security of the International Monetary Fund, CitiBank, the Spanish police, Google, the CIA and our own government websites was breached.

While many of the hackers prefer to remain in the dark corners of the Internet, there seems to be an increase of groups like Lulz and Anonymous who want to grab their 15 minutes of fame for their hacking activities.

New breed

In their claim to fame, Lulz went as far as to open up a hotline to get public suggestions for their next target. The hotline number is said to spell out LULZSEC and callers are reportedly greeted by a male voice heavily tinged with a French accent, which then apologetically explains that “Pierre Dubois and Francois Deluxe” are unavailable because they are “up to mischief on the Internet”.

The group is obviously relishing the limelight, publicly taunting the authorities, not even bothering to hide (or purposely exhibiting) their telephone area code.

Despite their pop cultural references they use the Guy Fawkes masks popularised by the comic book and movie V for Vendetta for their public image Anonymous is less playful.

The “hacktivist” group's activities are self-proclaimed as acts of political activism. In its attack on the Malaysian government websites, for instance, Anonymous announced that it was a protest against the Government's decision to block a few file-sharing websites, which they claim is an infringement of Malaysians' human rights.

The open stance aside, the real identities of these two groups are difficult to detect, as international security personnel who have been tasked to trace them are discovering.

Anonymous, which has been around for almost a decade, for one, is a loose group made up of an indefinite number of members.

As one admirer was quoted: “If you claim you are a member of Anonymous, then you are a member.”

There is a cautionary tale on the web of how one man, HBGary Federal chief executive officer Aaron Barr declared war on Anonymous, only to find himself at their mercy.

In February, Barr had claimed that he had successfully uncovered the real identity of the group's top honchos and announced that he would expose them. Before he knew it, his website was hacked and his database compromised. Important files were deleted while his phone system was crosswired.

Anonymous also took control of the company's email, leaking confidential business emails and dumping thousands of others. The whole attack cost HBGary Federal million-dollar losses and he retracted his claims.

As Anonymous announced later, the company was taken down by five of its members, which included a 16-year-old girl, another slap in Barr's already burning face.

A young Malaysian hacker who only wants to be known as Ahmad shares that many of his peers look up to Anonymous not only because of their political activism but also their technical prowess.

Says the IT student, “It is now easy to hack into different systems, but it is not easy to cover your tracks. Anonymous is master at it.”

Ahmad, however, concedes that he finds it strange that Anonymous has targeted Malaysia. “Sure, they have clearly stated their intentions, but I am still trying to wrap my mind around what it has to do with them. Why is Malaysia important to them?”

W believes that the web may be the final frontier for activism, as promoted by Anonymous and the growing breed of hactivists. “In the last few years, the Internet has been a useful tool for activists to get their message out and to mobilise supporters. Maybe now it is time to carry out their activism campaign in cyberspace itself.”

When asked if he had taken part in the recent Anonymous-initiated cyber attack on Malaysian government websites, Ahmad profusely denies any involvement, but he admits that he and his friend have hacked into other websites before.

“We like to challenge each other, as a test of our IT skills. Many of us do it for fun, just to see if we can get in. We don't steal the data or do any other harm. We have also hacked for classroom lessons' after being assigned tasks of hacking into a few websites to learn about cybersecurity,” he reveals.

For many young hackers, he says, many do it to get noticed by security firms.

“It is still a new area and there are not many professional' hackers those who work with security firms to hack into their systems after they install it to ensure that the systems are really secure. Then there are companies who hire hackers to test the security of new programmes. Our hacking activities are like our auditions or resumes,” he shares.

Symantec's Tan, however, alerts that while these so-called harmless “fun hacking” and hacktivism activities appear to be growing, a bigger number of hackers are doing it for money lots of it.

“I believe that in the last few years, there was a major shift in hacking those who are doing it for fame or fun have decreased. Now hackers are doing it for money. It is big business. Those who are making a big noise are the minorities; more prevalent are those who are involved in the underground economy activities. They are more quiet and targeted in their attacks and would rather keep below the radar so that they can continue their work longer,” he cautions.



Who do the anonymous hackers represent?

THE STAR SAYS

THE flap over the hacker attack of the Malaysian Government's portal has come and gone as swiftly as the click of a mouse.

However, the scale of the problem and the magnitude of the issues around it remain considerable.

To avoid unnecessary confusion, it is important to spell out the issues at stake before dwelling on the justness or otherwise of any particular motive.

In this specific instance, the hackers in the collective international identity of Anonymous had targeted the official websites of a sovereign nation.

Since it was not an attack on a political party or individual personalities but on an entire country's online representation, the hackers are culpable of anything from vandalism to subversion.

The attack was also not against any sinister policy of the Government but rather against its obligated move to block file-sharing websites that allow unlawful downloading of films and music.

Thus Anonymous is merely a group of selfish persons seeking to benefit personally from the work of professional artistes at the latter's expense.

Their motivation was therefore neither just nor defensible.

They are an accessory to illegal and unethical activities, if not also guilty of those activities themselves.

The fact that Malaysia became the first country in the region to block file-sharing websites does not detract from the rights and wrongs of the issues.

A country such as Malaysia has been besieged by various parties clamouring for better enforcement of laws against copyright piracy.

Whatever the record of such enforcement on the street, the clampdown on illegal file-sharing websites is certainly a plus especially when most infringements these days are being committed this way.

At the same time, for a government to resist Internet censorship despite the temptations is definitely commendable.

Attempts to liken Anonymous to Wikileaks are also grossly misplaced.

Wikileaks did not try to deface or destroy websites or to steal official secrets, but only to relay information of public interest to the public domain against the wishes of governments claiming to work for the public.

If hackers had any righteous values or morals, they would have applied their skills to attack websites spewing race hatred and child pornography, among others.

They fact that they do not, and that they have had to remain anonymous, speak volumes about their lack of scruples.

Seduction on the web

LIKE the spider luring the fly into his web, hackers are “seducing” their victims and luring them to their websites.

A major way for cybercriminals to obtain confidential data is by creating fake websites to host malicious software (malware) or to trick you into providing this information (phishing), says Nigel Tan, the Asia-South principal consultant at online security company Symantec Corporation (Malaysia).

Symantec's study shows that spikes in hacking and phishing occur during major events in the world, like the recent British Royal Wedding or the tsunami tragedy in Japan.


Hackers take advantage of these events to get people to click on links to their fake websites so that they can steal people's confidential information.

“It is human nature to get the latest update of an important global event or to see pictures of a tragedy. Hackers exploit this by sending emails with links for pictures or stories on the event or tragedy,” he says.

“When someone clicks on the link, they will be taken to the fake website where their confidentiality will be compromised or their computer may be affected.”

However, it remains a challenge to determine whether a website is genuine or fake other than the obvious spelling and grammatical errors (many fake websites are rush jobs) or shoddy infrastructure and programming.

Worse, sometimes you can go to a trusted website which has links to websites or advertising that may not be genuine and contain malware or phishing mechanisms.


Sometimes, all you have to do is to click the link and you will taken to a website that will affect your computer.

“We call this drive-by download,'” says Tan.

Password

Password is another easy prey for cyber criminals. With many websites out there now requiring users to register, most people are resorting to using personal information like date of birth or address as their password. Worse, people are increasingly using the same password for everything.

“It is understandable that people will not remember if they use different passwords, but the danger of using the same password for everything is that once a website or your email is compromised by a hacker, they will have access to everything else.”

Fortunately, it is not too difficult to strengthen your password, says Tan, advising people to use at least eight letters in a combination of capital letters, small letters, numbers and symbols.

If you use the same password, you can have variations on it by adding different letters or numbers or symbols, the significance of which should only be understood by you.

“Another effective safeguard is to segmentise your passwords by having one set of password for communication, another set for websites and another for banking and shopping online,” he elaborates.

Technology has also enabled hacking activities to be more targeted, so like those living in big houses in affluent areas who are targeted by burglars, those with bigger bank accounts or higher profiles, for instance, will be more susceptible to cyber attacks and need to be more vigilant on the Net.

Botnet alert

Another growing threat is hackers using our identity or computer to launch an attack.

Citing the recent gov.my hacking as an example, Tan says that while an individual may not be a direct focus target of most hackers, they may be a part of the attack without realising it.

The more common modus operandi is for hackers to use our personal information to get access to their target website. A method that is growing rampant is to control our computer to do their dirty work.

Explains Tan: “Now, hackers do not create malware to crash the computer, they want it to be alive. What they do is to plant malware called botnets (which are like sleeper spies) that will stay quietly in the background in your computer until they are activated by the Master to hack into official websites or to send spam emails that will phish information or crash a website.”

For example, if a hacker wants to spam people, they will just activate the malware they have planted in the different computers around the world and something like a pyramid scheme will be at work (the number of spams spread exponentially).

“The computer owner may not be doing anything but his or her computer will be hard at work. This trend is growing, especially now with broadband; so many people are connected 24 hours a day, even when they are asleep,” says Tan.

It is thus vital that people ensure that their computers are well-protected.

“One thing to remember is that although it is getting easier for cyber criminals and hackers to attack us, it is also getting easier for us to protect ourselves. The problem is that people just don't do it,” he notes, adding that it is also important to ensure that your software and programmes are up-to-date as older computers with outdated software are the most prone to attacks.

Ultimately, he stresses, it boils down to common sense.

“Typically, you won't walk into a dark alley or you won't give a stranger your IC number, so you should not do the same on the Net,” says Tan.

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