JPMorgan's Bitcoin Jitters, Goldman Sachs' Crypto Bet, Uber Cofounder's Blue-Sky Ambition
While Friday’s nor’easter soaked the coast in all manner of precipitation, I pondered two other storms a-brewing in the business world: a correction in the cybersecurity market and the undeniable, insuppressible arrival of cryptocurrency.
First, cybersecurity concerns have raised tremendous sums of venture capital in recent years—and now we’re beginning to see a shakeout. Private market money ain’t as free-flowing as it once was. Companies like Ping Identity, McAfee, Barracuda Networks, and now PhishMe (since renamed “Cofense”) have sold wholly or in part to private equity buyers. As funding and prospects for exits thin, expect more companies to have a harder time justifying inflated valuations.
Meanwhile, the cryptosquall bears down in full force—and if you listen close, you can hear the joints of the financial establishment creaking. Following the lead of Bank of America, J.P. Morgan Chase warned investors for the first time in its annual report that cryptocurrency could pose a risk to its business. (For more on that, see this newsletter’s “access granted” section below.) In the same week, Circle, a Goldman Sachs-backed financial tech startup, shocked the public by buying a cryptocurrency exchange, news first reported by yours truly. And Garrett Camp, cofounder and chairman of Uber, unveiled a proposal for a brand new cryptocurrency, called Eco, that he hopes to transform into a global payment system.
Once the winds die down, we’ll see whose structures are left standing.
Have a great weekend.
Robert Hackett
robert.hackett@fortune.com
Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my about.me), PGP encrypted email (see public key on my Keybase.io), Wickr, Signal, or however you (securely) prefer. Feedback welcome.
THREATS
Riders of the storm. Github survived the biggest ever recorded distributed denial of service (DDoS) attack on Wednesday. Hackers pummeled the code-sharing site’s servers with 1.35 terabytes per second of bogus Internet traffic—15% stronger than the next biggest DDoS attack, which targeted Dyn, an Internet infrastructure company (now owned by Oracle), in late 2016. The perpetrators took advantage of a new attack technique: using so-called memcached servers, machines designed to speed website performance, to amplify their offensive. An interesting side note: DDoSers have taken to stuffing their attack traffic with ransom demands for Monero, a privacy-oriented cryptocurrency.
Don’t you (forget about me). Equifax said Thursday it plans to notify an additional 2.4 million U.S. consumers that their personal information was compromised in last year’s headline-grabbing hack. The consumers are part of the big three credit bureau’s estimate of 145.5 million people affected by the breach, a figure it marked up from an original September estimate of 143 million. The total cost of the breach, including lawsuit settlements, could wind up being well over $600 million, Reuters reported, which would make it the most costly in corporate history.
Take on me. Data-cruncher Splunk plunked down $350 million to buy Phantom Cyber, a startup that helps automate the work of security analysts. The deal signals growing enthusiasm for the burgeoning market of “security orchestration, automation and response” tools—a cybersecurity segment that promises to ease the load on network defenders. About half of Splunk’s data analytics software sales derive from its security business, which has seen a growth spurt in recent years.
Livin’ on a prayer. The Securities and Exchange Commission has been blasting cryptocurrency projects that have held “initial coin offerings,” or ICOs, with subpoenas. The agency may be gearing up for a major crackdown on the industry, insiders suspect. Earlier this week Fortune had the scoop on Circle, a Goldman Sachs-backed fintech startup, buying the cryptocurrency exchange Poloniex, where many of these projects’ digital tokens trade.
Before those aluminum tariffs go into effect, you better stock up on tin foil hats.
Share today’s Data Sheet with a friend:
http://fortune.com/newsletter/datasheet/
Looking for previous Data Sheets? Click here.
Advertisement
ACCESS GRANTED
“Both financial institutions and their non-banking competitors face the risk that payment processing and other services could be disrupted by technologies, such as cryptocurrencies, that require no intermediation.”
—J.P. Morgan Chase listed cryptocurrency among its “risk factors” in its latest annual report on Tuesday. The statement reminds me of my favorite quote from my recent feature on Circle, which just acquired the cryptocurrency exchange Poloniex. As CEO Jeremy Allaire told me: “I don’t know who the CEO of Sears was back in the mid-’90s, but I bet that CEO was making remarks about Internet shopping that were pretty dismissive. Maybe in 20 years no one will know who Jamie Dimon is.”
FORTUNE RECON
Why Is Health Care Cybersecurity So Bad? Blame the Insiders, by Sy Mukherjee
Bill Gates Says Cryptocurrencies Have Caused Deaths, by Lucinda Shen
People Have Asked Google to Remove 2.4 Million Links About Them. Here’s What They Want to Forget, by David Meyer
Exclusive: Uber Creator Invents New Cryptocurrency—And He Wants Your Help Making It Reality, by Robert Hackett
The War Against Bad Bots Is Coming. Are We Prepared?, by Rami Essaid
Someone Stole 7 Bitcoins from Apple Cofounder Steve Wozniak, by Hallie Detrick
Bug Bounty Startup Bugcrowd Raises $26 Million, by Robert Hackett
Are You a Coinbase User? Your Data Could Be on Its Way to the IRS, by Casey Quackenbush
How Criminals Can Mine Cryptocurrency With Your Poorly Secured Smart Devices, by David Meyer
Rapper 50 Cent Says He Actually Isn’t a Bitcoin Millionaire, by Aric Jenkins
Nearly Half of 2017’s Cryptocurrency ‘ICO’ Projects Have Already Died, by David Z. Morris
ONE MORE THING
Stop looking at your phone. Is easier said than done. The big tech companies have us on the hook. There’s a “growing sense,” Wired’s Robbie Gonzalez writes, “that technology companies hold too much sway over attention, well-being, and our very democracy.” The Facegoogs of the world hold us captive, exploiting our human foibles to draw us into their digital nets. We need better design—deliberate nudges, cues and tools—to keep us from falling for their trap.
Speaking of which, Fortune’s Brainstorm Design conference kicks off in Singapore next week; expect this topic to be on the agenda.