NFTs, The Blockchain, And The Future Of Fraud – Fin Tech

NFTs, cryptocurrency, the blockchain, and more are
disrupting the industry and causing a shift in the market,
prompting players to evaluate what the landscape may look like
moving forward. This led us to ask: how will innovations in
technology affect the industry? And how will these innovations
affect other markets?

DeFi. BaaS. Neobanks. BNPL. Even though these terms sound
fictional at first glance, they are the future of finance and
digital technology as we know it. And as we learned from WIT
affiliate expert and noted technology analyst Scott Steinberg, NFTs, cryptocurrency, the
blockchain, and more are financial technologies that are disrupting
the industry and causing a shift in the market, prompting players
to evaluate what the landscape may look like moving forward. This
led us to ask: how will innovations in technology affect the
industry? And how will these innovations affect other markets?

The Evolution of NFTs

NFTs, or non-fungible tokens, have dominated headlines over the
past couple of years, becoming a popular topic of discussion among
artists, celebrities, and- you guessed it- fintech companies. The
technology, as described by Business Insider, is “a unique digital
asset that represents ownership of real-world items like art, video
clips, music, and more. NFTs use the same blockchain
technology that powers cryptocurrencies, but they’re
not a currency.” So, while NFTs aren’t financial products,
they work off the same platforms. And that underlying technology
offers opportunities for innovation across industries, especially
finance.

At their peak, everyone wanted to get their hands on (or make
their own) NFTs. But as of late, Steinberg feels that this
technology is being met with increased amounts of scrutiny, and for
good reason. Over the past several months, we have seen how easy it
is to swipe these digital assets and realize how much their value
is based on the supply and demand of the piece rather than actual
monetary worth. But going forward, Steinberg forecasts a shift.

He explained that right now, NFTs are in their early stages of
development; everybody’s trying to figure out how to utilize
them appropriately. Companies are asking “How can we monetize
this in a way that is acceptable to consumers, and what is this
technology going to fundamentally add to the online
experience?” Currently, Steinberg is seeing an increase in
companies trying to play in the space even though it’s not
always been received well. But overall, he feels that NFTs will be
a part of finance going forward, whether it’s going to be a
major one or not. And as we have seen so far, the space is likely
to be rife with litigation over infringement, false advertising,
and more.

But what about the blockchain technology these tokens are built
upon?

Blockchain to Break Barriers

To evaluate the future of blockchain technology, we must first
answer the question: “What is a blockchain?” According to
Investopedia, a blockchain is “a distributed database or
ledger that is shared among the nodes of a computer network.”
A blockchain offers a secure platform for data storage and as we
mentioned above, it plays a significant role in supporting NFT and
cryptocurrency systems. But Steinberg sees this technology as
playing a larger role in finance’s future.

To start, he sees blockchain solutions, smart contracts, and the
like as offering a digital system of ledgering where you can track
the movement of almost any assets around the world, allowing for
the seamless shifting of money or ownership rights to be faster and
more affordable. But even though this solution is thought to be
protected, Steinberg feels that companies aren’t focused on the
real-use cases of this technology and how it could create future
security risks.

Steinberg reported: “Many providers are currently
concentrated on peer-to-peer payments solutions and quickly moving
money online through apps or cryptocurrencies. But, I would think
that maybe they haven’t focused so much on issues that pertain
to new devices that will be able to store and exchange this
information.” For example, your credit card is becoming
increasingly smarter and capable of storing information; your whole
digital life will live on these devices going forward, which
introduces possibilities for fraud, ID theft, or interoperability
challenges, especially as biometric technology use rises.

Biometric Data Blunders

While fraud in finance may be fraught on the blockchain,
Steinberg also feels that many companies in the fintech space
haven’t given enough thought to the rise of biometric
technology and how this system of digital identification could
impact the industry. Your digital ID travels where you travel, even
into the metaverse and virtual worlds, and the fraud that could
occur goes beyond a simple stolen password. Steinberg laments,
“It’s one thing if somebody steals my password- what
happens if they replicate my retina scans or my fingerprints when
that’s how I’m getting into my fintech payments and
accessing my bank account? And what happens when we enter a world
of deep fakes where somebody can scan your digital image, create a
twin, and then present themselves to the world as you in a very
realistic manner that looks like we would be talking to one another
today?”

The issues raised in this space for fintech will only expand as
companies race towards a digital and online future where many
different devices and touchpoints will use peer-to-peer, online,
and crypto-based payments. Steinberg feels that again, this is an
instance where the use cases and challenges haven’t been fully
thought through. And when it comes to litigation, conflicts over
this shift will, by Steinberg’s definition, keep attorneys in
business for many, many years. But for now, what is being done in
the industry to prepare for this type of fraud?

Preventing Biometric Fraud

When asked about biometric fraud security measures, Steinberg
said there are next to none currently implemented. He hasn’t
seen security measures that are designed to defend against fraud,
opening the door to hackers that could use consumers’ biometric
data to, say, break into an ATM and steal funds. Today, rather,
we’re seeing a lot of preparation around how these technologies
and their proponents will be utilized. We have been increasingly
integrating them at airports, factories, offices, and manufacturing
centers all around the globe, offloading more and more information
to technology.

But as Steinberg said, more and more governments are going to be
switching to these digital forms of ID, and that is going to
present tremendous challenges going forward. The caveat is this: if
it’s high tech or if it’s online, it can be stolen, it can
be broken, and it can be replicated.

If you missed additional insights from our conversation with WIT affiliate expert
Scott Steinberg, check out his expert opinion on the wireless industry, virtual reality, and the rise of artificial intelligence. Mr. Steinberg is
hailed as one of the world’s most celebrated futurists and
strategic innovation consultants. He has been featured in hundreds
of media outlets from CNN to TIME to The Wall St. Journal,
with the Fortune 500 calling him a “defining figure in
business and technology” and “top trendsetter to
follow.”

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