The “metaverse” coined by American science fiction writer Neil Stephenson more than 30 years ago is now the most important buzzword in 2022. This shift towards an “online world” has attracted the attention of tech companies such as Meta, Epic Games, Microsoft and Apple, where people will use “digital identities” to work, shop and interact socially. More notably, Facebook Inc. has changed its name to Meta Inc. and invested $10 billion in developing metaverse technology.
While the metaverse has strong appeal, it will also have major implications for cybersecurity and fraud. As people inevitably turn to the metaverse over the next five years or so, businesses will have to continue to focus on security and regulatory concerns to ensure end users are protected and security practices are kept up to date.
So, what are the key questions in this uncharted territory? Here are some predictions for the field of cybersecurity issues related to the metaverse.
Fraud Risks : Identity theft
With every major digital advancement, cyber threat actors take advantage of it, and consumers and businesses will need to turn to flexible digital fraud prevention to keep pace. Identity theft is expected to lead to a staggering $721.3 billion in losses in 2021, according to Aite Group forecasts.
As the metaverse is built, threat actors will test unique ways to benefit from any vulnerabilities in their frameworks. Cyber-attacks ranging from standard account takeover and phishing attacks to more sophisticated cyber-attacks such as hosting fake services to hijacking digital data are already taking place in the non-fungible token (NFT) market.
Since digital identities are easier to create than physical cards, security teams will need to consider using these digital footprints to identify fraud accurately and in real time. At the same time, consumers must be vigilant about protecting personal information and digital identities, although this trend has yet to emerge.
Fraud Risk: The Possible Costs
It makes sense to use digital currency in a digital world. But with payment systems like cryptocurrencies, there is a significant risk of fraud. Users may suffer loss of authority to operate (ATO), multi-account fraud, branch fraud, refunds, etc. during the payment process.
From 2020 to 2021, cryptocurrency thefts increased by 516%, with losses reaching $3.2 billion. Goldman Sachs predicts that blockchain will be critical to developing the metaverse. Unfortunately, even in a blockchain-based environment, money laundering and countless scams exist, making experts and analysts wary of this digital world.
Consumers may face confusion as cryptocurrency projects gain acceptance. From October 2020 to March 2021, Americans lost $80 million in cryptocurrency scams, an increase of up to 1,000%. With identity fully digitized, the challenge for businesses will be to create frictionless but effective identity checks for cryptocurrency transactions.
How intelligent are smart devices?
Experts predict that the metaverse will function with the help of smart devices and augmented reality. These technologies will combine virtual avatars, virtual reality headsets and wearable NFTs.
While these devices may be beneficial, these wearables will collect data in the user’s real and online lives. With the amount of data collected, threat actors will be more interested in breaking in and causing a data breach of these identity passports.
So there are concerns about where the data will go and how it will be regulated. Some consumers are also concerned about digital theft and how their reputation will be affected if their identity is stolen in a metaverse environment.
Because of these concerns, data and privacy regulations will be at the center of global discussions for some time.
How can business leaders prepare?
The best way to prevent fraud in the metaverse is to stay one step ahead with multiple layers of defense. Business leaders need to be aware of changing regulations and new attacks to ensure adequate protection.
Using innovative technologies such as machine learning and artificial intelligence, businesses have vast amounts of data that can help identify and stop threat actors through device fingerprinting, two-factor authentication, and rapid and seamless analysis of users’ digital footprints.
The metaverse is very popular these days, will be heavily funded, and offers businesses the opportunity to change the way they operate. However, business leaders need to continue their efforts to focus on risk management and maintain the public’s interest, patience and attention. A seamless transition to the new online world is only possible with better risk prevention.