As everything digital becomes an increasingly important part of our lives, it’s only natural that security practices grow in relevance too. After all, cyberattacks and data breaches increased 15.1% between 2020 and 2021, and serious innovation is needed. Sure, we could give a list of the top cyber companies to invest in that are combating current problems — but which firms are also staying on top of tomorrow’s issues? Let’s take a look at some of the biggest challenges the metaverse poses, and the companies on the cutting-edge of solving them.
Cybersecurity issues in the metaverse
Some of the issues below may sound familiar, while others could be fresh onto your radar. However, they all have potentially huge implications.
Over the past few years, we’ve seen how easily fake news and images can spread around the web. Remember when people believed dolphins started appearing in the canals of Venice after the first Covid lockdown, or when images from video games were shared online and claimed to be real footage of the Ukraine war?
Deepfaking (the creation of fake images or videos using AI algorithms) could take fake news to a whole new level. The technology is often used to show a real person doing something fake, such as a “Joe Biden speech” declaring war on China (this has already happened with a doctored Nancy Pelosi speech, for example). Imagine having a conversation with your manager about a new product line, only to find out later that you were actually having a conversation with a deepfaked avatar that just took sensitive information.
Currently, deepfaking is a long way from being able to recreate realistic videos of people, never mind having a real-time conversation. But considering that conversations in the metaverse take place with avatars rather than videos, it may be easier to fake.
The prospect of deepfaking might sound futuristic, but it’s not just brand-new problems we’re going to face in the metaverse, but also the same old issues in a new form.
We’ve seen how search engines and social media sites have been accused of selling data from its users without being transparent. But if you thought it was bad for Facebook to sell information about your political opinions, imagine Meta extracting information from your VR headset about how you twiddle your thumbs when you’re nervous or how your heart rate changes when you interact with certain people.
This becomes even worse when combined with other innovations, like machine learning, that could be used to find patterns and link what it learns to your psychology or even health conditions — then selling relevant products to you through adverts.
Crypto and NFT scams
When we talk of the metaverse, we tend to assume that the dominant currency of the environment will be some form of cryptocurrency. And virtual coins are no stranger to accusations of scams. By design, most cryptocurrency protocols value decentralization and security. This means that when money is stolen from someone’s cryptocurrency wallet, it can be very difficult (or impossible) to trace what happened to the money or who took it.
If NFTs are used to sell digital items within the metaverse, this could also lead to plenty of opportunities for people to sell fraudulent NFTs and then pocket the money. There have already been many people selling NFTs of other peoples’ art, or duplicates.
What it means for you
Many investors are leaping into the metaverse by pouring their money into stocks that will seem to benefit from the trend. Meta and Roblox are popular choices. But how many are paying attention to the challenges outlined above? For instance, metaverse golden child Roblox recently had employee data released online and has suffered other breaches in the past. It’s important to consider this when picking which investments make wise choices.
And while cybersecurity firms seem like obvious choices for combating the issue, not all of them are equally committed to keeping up with the metaverse. Security firm Check Point Software Technologies (CHKP) is one company that has researched some of these problems and started to look for solutions. It is particularly concerned about NFT marketplaces like Opensea and Rarible and how users can protect themselves from crypto scams.
On the side of businesses themselves, Microsoft (MSFT) has been making a lot of moves behind the scenes to invest in standout companies in the metaverse space — and that includes security. The firm plans to acquire ReFirm Labs, an open-source security analysis tool. This is focused on Internet of Things (IoT) and how to protect interconnected devices, which will play a key role in the metaverse.
Cybersecurity might sound like a problem for a company’s IT team rather than its investors — but few things are worse for growth than a massive data breach that harms a company’s reputation. Before you invest in the hottest new metaverse stock, make sure you check that it’s staying ahead of the curve when it comes to security, and look out for cybersecurity firms keeping up with the latest trends too.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.