“Be careful with me, I’m fragile. I’m easily broken.” So go the lyrics to “Trip My Wire”, but those words could just as easily describe the frail legacy technology infrastructure that underpins so many commercial processes from home and auto titling to financial trading systems, digital health records, government databases, customer databases and so on. December’s SolarWinds cyberbreach and this week’s Microsoft breach are just the tip of the iceberg.
Yes, we need sophisticated cybersecurity services to help mitigate the risk of nefarious actors whether they be the private, independent sort or increasingly government-sponsored. However, this approach is insufficient. While loading-up on cybersecurity services mitigates the risk associated with legacy technology systems, it does nothing to resolve the root cause – legacy technology systems.
The bad guys have an edge in Cyberwarfare as all they require is one weakness to exploit whereas the good guys need to bat a thousand. Perfection is difficult regardless of the circumstances. It is especially difficult when you consider that legacy technology systems are riddled with weaknesses that may be exploited. Weaknesses include the legacy technology itself as well as weak security protocols and cavalier user behavior. Investment in modern technology infrastructure is required (as we wrote about last week) to replace legacy systems. Otherwise, massive cyberbreaches such as Equifax (tkr: EFX), SolarWinds (tkr: SWI) and Microsoft (tkr: MSFT) will grow in frequency and size.
When the Federal Reserve ultimately releases its digital currency (within several years in our view), that action could serve as the catalyst to roll out various Distributed Ledger-based/Blockchain-based systems to facilitate digital dollar-based transactions. These technologies are fundamentally more secure than today’s legacy technology workflows and processes. It is logical to then expect a cascading effect where a variety of legacy systems would be replaced. It would make sense to prioritize part of this upgrade process at the national level as certain of these systems are a matter of national security.