How Crypto is Advancing in 2024 and Beyond
If you’ve been thinking about getting involved in crypto in 2024, it’s important to know what you’re getting into. You’ve probably heard cryptocurrency enthusiasts talking about how it’s the future of money. And there are definitely some benefits to using it – it can make some transactions faster and cheaper, for example. But there are also some drawbacks and risks you should know before you jump in.
See Advances in Crypto with Bam Azizi for a complete transcript of the Easy Prey podcast episode.
Bam Azizi is a tech entrepreneur with a PhD in computer science. In his first company, NoPassword, he and his team built over 2,000 integrations to provide frictionless, passwordless authentication. That company was acquired by LogMeIn, the parent company behind the password manager LastPass. After that, he co-founded Mesh, which provides financial technology (fintech) companies with a seamless and secure one-click system for customers to make deposits and get payouts. Even though he comes from a security background, everything he’s ended up doing has been related to identity and security.
Why Identity and Security
When Bam was studying at university, he had access to a lab with a lot of instruments. But to use the instruments, you couldn’t connect your own laptop. You had to log into the ones that were already connected. If someone sent you an email and you needed it for that instrument, you had to log into your email on that shared computer. He started wondering why there couldn’t be a device like a USB thumb drive that could give him access and that he could remove when he was done. He didn’t end up pursuing that idea. But as a person who loves security and never trusts systems to keep him secure, he didn’t like logging onto a random computer.
Bam’s first company started as a hardware company. They made a ring with motion sensors that could detect hand gestures, and you could control a drone, robot, or computer with gestures. It was very cool, but nobody was willing to pay for it. So they started pitching it to companies. The companies said that they would buy it if Bam could make it identify employees and give them access to specific rooms or specific devices, almost like an instant RFID badge.
The team started building a security use case around that. But the hardware was expensive to manufacture. Around that time, the iPhone started coming out with touch ID. Bam realized that all the motion sensors in their ring already existed on smartphones – plus phones had GPS for geofencing and biometric touch ID. They were just reinventing the hardware, and that was both difficult and expensive. Instead, they could do the same thing with software on phones. That’s where NoPassword was born.
Everybody Falls for Scams
Bam and his family members have had cybersecurity incidents and fallen for scams many times. There’s no shame in it. The industry believes that users are the weak link, but you can’t educate everyone about everything. The system should be built to avoid these problems. A good system should be designed so that even if users want to make a mistake, there’s a mechanism to avoid it.
You cannot educate every single user on the planet. People are making mistakes all the time, and there is no shame to it.Bam Azizi
In the early days of Mesh, someone impersonated Bam in an attempt to scam an employee. You’ve probably had a similar experience at some point – it looks very legit. The scammer sent the employee a text message. They’d somehow hacked the device and made it look like the text was coming from Bam. The message said that Bam was in a meeting but needed the employee to do him a favor – “Bam” wanted to send someone a gift, so the employee should either go get a gift card and send him the number or send some cryptocurrency to a particular wallet address.
Bam found out about this because the employee the scammer messaged was also in a meeting and texted that he couldn’t do it. From the employee’s perspective, it looked like the message was coming from Bam. There is nothing Bam can do to stop this kind of scam expect for warning employees that it could happen. Scams happen to everyone, and we shouldn’t be ashamed of it.
How Mesh Got Involved in the Crypto Industry
When Mesh started, it sold its product directly to customers. It was an app that could connect all your brokerage apps, like Robinhood for stocks and Coinbase for cryptocurrency, and manage them all in one place. But then they started building integrations – if you had your Coinbase account connected to Mesh, for example, they wanted you to be able to not just view your assets, but also trade different tokens.
When the crypto craze died down in 2022, people were less interested in doing things on brokerage apps. But Mesh already had a bunch of integrations, and they thought there were a lot of different uses for them outside investments. They ended up back in the identity space, building authentication to make sure customers could connected in a secure, compliant way. And they pivoted from selling their product directly to customers to selling it to businesses – brokerage apps, crypto exchanges, crypto wallets, and other fintech companies. Now in 2024, they are most focused on crypto. They’re not a crypto company in the sense that they’re not issuing a token or selling on an exchange. But they’re in the industry by selling what’s basically an infrastructure to other crypto companies.
From a security and compliance perspective, there’s lots of room for improvement in crypto. Security and compliance act as guardrails. In security, you can often provide your own guardrail. But with compliance, the guardrails come from regulators and agencies that set the frameworks. This makes Mesh’s solutions more appealing to risk-averse companies like banks. Because of their background in security, they’re helping the crypto industry move forward in 2024 and beyond.
There Aren’t a Lot of Guidelines in Crypto
Crypto is an open ecosystem by default. It was build that way from the beginning. That has benefits, but also pitfalls and disadvantages. It’s important to build mechanisms to help consumers avoid being hacked or scammed and protect crypto users.
With internet data, we have categories of how data is stored and best practices for securing it at each step. For security “at rest,” there are best practices for storing data, making sure it’s encrypted, limiting who has access, and managing that access. For security “in transit,” where the data is moving from one place to another, there are best practices for ensuring end-to-end encryption and making sure the channels it goes through are secure.
Crypto is no different than other types of data. The only difference is it’s going to be stored … in an open forum.Bam Azizi
The primary difference between crypto and any other type of data is the blockchain. The blockchain is basically an open forum that everyone can see, but no one can change. When it moves from one place to another or a transaction happens, we still need best practices to keep that data safe. The crypto industry has done a great job building wallets that are secure. But when it comes to transit, very little has been done.
Data Risks in Transit
Transferring crypto in 2024 is no different from when crypto was first invented. If you want to transfer an asset from one wallet to another, you get the wallet address, paste it in the right spot, and hit send. Once you hit send, it’s sent. And because it’s on the unchangeable blockchain, it’s irreversible.
There are two problems with this system. One is that wallet addresses are random strings of letters and numbers. You might copy the wrong thing or paste it in the wrong place. It might be a scam, or you might accidentally send money to the wrong person. Because the wallet addresses are random, it’s really hard to tell.
The second problem is that you can’t reverse it. If you accidentally send an ACH payment or wire transfer incorrectly, there’s a certain period of time where you can call your bank and they will cancel it. But with crypto, once it’s sent, it’s gone. We need to build some governance around security and compliance to add some consumer protection and make sure people aren’t receiving money from bad actors. We can potentially solve some of these problems if the whole industry moves towards a more compliant, secure way to transfer assets.
The US Drug Enforcement Administration (DEA) has even had trouble with this. They seized some illegal assets and wanted to transfer them so they could cash them out. But hackers got involved. They created a wallet address that had the same beginning and ending digits as the wallet address where the DEA wanted to send the money. The DEA sent it to the wrong place. The hackers took it and weren’t able to get it back. If it happened to the DEA, a big government agency, it can happen to anyone.
Crypto and Identity
One of the big challenges with crypto in 2024 and moving into the future is identity. We don’t necessarily know where we’re sending the money or who’s on the other side. But the same thing that we did on the internet, we can also do for crypto. In the early days of the internet, there weren’t Domain Name Services. You had to type in an IP address. But humans want to know who we’re sending email to and what website we’re visiting. Domain Name Services let us put names to IPs. We should do the same thing for crypto. Instead of sending to or receiving from a random address, we should be able to send to or receive from our spouse, our friend, or someone else we know.
What we have done for internet, we can do that for crypto, too.Bam Azizi
Another thing we can do to put more safety guardrails around crypto in 2024 and in the future is building a governance layer to prevent transactions before they happen. All exchanges have a pool of assets that are just sitting there that they can’t touch. They came from an illegal account or a sanctioned country, so the assets were seized, but they can’t reverse the transaction. By the nature of the blockchain, you find out where a transfer comes from when it hits the new account, which is too late. We need a mechanism to verify transactions before they happen.
The core problem that you’re tackling is not blockchain, it’s not crypto, it’s not this industry, it’s identity.Bam Azizi
The core problem here isn’t the blockchain, the crypto industry, or crypto itself. It’s identity and the challenges that causes in security. Mesh has solved these problems for many different use cases. Crypto isn’t an exception.
People Who Don’t Want Identity in Crypto
Crypto came into being with three promises. First, decentralization – there would be no central authority that could prevent things. Second, anonymity – on the blockchain, no one would have to know who you are. Third, cost and speed – it would be much cheaper and faster than traditional financial institutions.
The only one of these promises the industry needs to compromise, and for good reason, is identity. It’s going to be healthier to implement protocols like Know Your Customer (KYC) and anti-money laundering technology without compromising users’ privacy. There are steps you can take to verify the identity of people on the blockchain.
In the end, crypto can’t have it both ways. If they want an industry only used by crypto pros and bad actors doing illegal activities, they can have it. But they shouldn’t expect everyday people to adopt it. Many crypto leaders want to see mass adoption. But if they want that, they’ll have to make some compromises on security and identity.
You can’t have it both ways. If you want to have an industry that is going to be used only by crypto pros and bad actors … you shouldn’t expect that to be adopted by everyday people.Bam Azizi
It should also be more user-friendly. People are taking advantage of it not being user-friendly by setting up fake apps and convincing people to “invest” to steal their money. It’s a bit of a chicken and an egg problem. You can’t blame the users for not doing more research, but you also can’t blame the industry.
Solving the Identity Problem for Crypto
The way Bam sees these problems resolved is crypto being adopted by banks people already use and trust. If crypto wants mass adoption, it will have to compromise and become more appealing for risk-averse companies like big banks. In the end, it benefits users. They get everything they want in a simple, safe, secure way.
Most people using crypto in 2024 aren’t running a drug empire or anything. The biggest benefit of crypto, in fact, is international transfers. A wire transfer from the US to the Philippines through a bank would be expensive and could take a week or more. Doing it with crypto is faster, better, and cheaper – that same transfer with crypto would happen in milliseconds. It’s going to be the modern version of wire transfers.
Stablecoins will help with this transition. A stablecoin has its value pegged to another currency, so its value is stable. A combination of stablecoins and another layer on top of crypto’s foundations may make it seamless. If you’re trying to make that transfer from the US to the Philippines, on your end you transferred money. In the background, your dollars were converted to a stablecoin asset, which was instantly sent to the other party on the blockchain. The other party can then withdraw it whatever currency they want.
The same could happen for businesses – the system could cash out crypto payments and they get a deposit just like if the customer had paid with a credit card. It would also result in lower fees. Credit cards charge businesses a small processing fee, and some merchants raise the price for people using cards to pay. If the cost to do business went from a 2% or 3% credit card fee to a crypto fee of almost nothing, businesses would benefit.
The FTX Collapse and the Future of Crypto
Last year, the big news in crypto was the collapse of FTX and the issues with Binance. From Bam’s experience, it’s the same thing that happened with the mortgage industry. Before 2008, everyone qualified for a loan. Then it collapsed, and now it’s harder to get a mortgage so we don’t make the same mistake.
The same thing happened with FTX. Now we know that a company can’t just claim a token is valuable – they need proof of funds and audits by third parties to prove a token is healthy. The crypto industry has gone through many seasons of bad news and rough times, and each time we learn from them. Hopefully after this, we’ll avoid big collapses in the future.
That said, there’s no guarantee that everything will be safe. You should always do your research and make sure you’re working with trustworthy people and companies. The biggest pitfall for the average person is new tokens. When Dogecoin came out, for instance, everyone was rushing into it. Coinbase and other legitimate exchanges wouldn’t offer it until it was more mature, so many people sent money to less regulated countries for other people to buy it. As a result, people lost a lot of money.
[Crypto] is a tool. It could be used for bad reasons, it could be used for good reasons. I think there are a lot of benefits to it.Bam Azizi
Every time something bad happens, people learn from it. Crypto is no exception. There are a lot of benefits in crypto, in 2024 and in the future. But there are also some pitfalls. It’s important to do things to avoid those pitfalls.
Advice for Those Who Want to Get Into Crypto in 2024
If you want to get into crypto in 2024, a lot of good advice is the same as for any financial move. Be cautious, do your research, and look for warning signs like outrageous returns. Beyond that, it depends on your risk appetite. If you’re looking at it as an investment, don’t expose yourself more than your risk appetite.
We’re also going to see a lot of innovative technology on the market in the next few years. Watch for companies you’ve heard of before and know are trustworthy. You can trust Coinbase, for example. We may also see other companies getting into the crypto space. Companies that sell products might offer that if you pay in crypto, you can get a token that may or may not be valuable. If, for example, Nike does, Nike is a brand you know and trust – that’s probably safe. On the other hand, if someone’s selling a picture of a monkey and asking for a million dollars, that’s probably not a good investment.
In 2024 and 2025, we’re going to see more everyday people using crypto and blockchain technology to save money and time. Be curious and educate yourself about the different use cases. You don’t have to buy Bitcoin and wait ten years to make money. There are going to be cases where paying with crypto can save money and time.
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