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A pile of credit cards and coins to ilustrate payment security.
Payments security week

How payments have changed

Coins were the first recognisable payments technology and appeared around 600 BCE. Before this, commodities (grain, cattle, beer, bread) were used as payment, for instance, the set wage for a labourer working on the pyramids (2500 BCE) was 10 loaves of bread and a measure of beer.

Security vs usability

Security is the protection of payment as a fair exchange, against thieves, traitors or other parties. That is, security is about avoiding that money is stolen, credit card information is used illegitimately or that financial transactions are diverted.

From coins to Bitcoins there has been an ongoing security vs usability dilemma; the features that make a particular payment technology convenient and easy to use are also the features that create security risks.

One advantage of coins is that they were more portable than bread, beer and sacks of grain. However, this portability also created a security problem in that coins could be more easily stolen and carried away. Coins were also anonymous, so whereas a cow or a goat could have been marked (branded) as belonging to a certain farmer, with a coin it was much harder to prove that it was stolen.

Payment systems therefore become a trade-off between making the system secure and making the system usable. Last week we focussed on the trade-off between usability and privacy: this week we move on to discuss the security vs usability trade-off, and explore the impact this has on our everyday lives.

Innovation and new opportunities

We are currently experiencing a time of unprecedented innovation in payments. In the past 20 years we have seen the introduction of new forms of electronic payment (internet payments, online banking, Bitcoin, PayPal, contactless payment, mobile payment, micro payments and Chip & PIN). Prior to that, it took 1800 years from the introduction of coins to the introduction of paper money (promissory notes), a further 400 years to introduce bank notes and another 300 years to introduce credit cards.

This rapid innovation, as we mentioned, has made our lives much more convenient, however, it has also created many new opportunities for criminals. Electronic payment crimes, which did not exist 20 years ago, are now overtaking cash and credit card based crimes. Most of us are aware of some examples of electronic payment crime: online payment fraud; phishing for your bank account details; customer payment details stolen in bulk from company databases such as the TalkTalk data breach.

The anonymity provided by a combination of the dark web and cryptocurrencies, such as Bitcoin, has created new opportunities for money laundering, buying drugs, illegal weapons and illegal media content such as Silk Road using Bitcoin.

Interestingly from a payment security point of view, there have been a number of recorded cases where criminals using the dark web (Silk Road being one example) have been blackmailed when their anonymity was breached, using Bitcoin to attempt to shield the identity of the blackmailer.

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Cyber Security: Safety at Home, Online, in Life

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