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WSJ Highlights the Danger of AI Attacks

Today, the WSJ published an article titled “AI is Helping Scammers Outsmart You – and Your Bank” highlighting the new sophisticated techniques being used by people committing fraud. If we remember back to the early days of internet-enabled fraud, the scammers liked to use the Nigerian Prince approach where you’d get an email claiming you could help royalty access their money and claim a portion of the treasure for yourself. The catch was you had to send a small payment in advance to pay for taxes or some other fees. Of course, there was no Prince, no prize, no lottery, and the money only went in one direction. The scammers intentionally sent poorly-worded emails with spelling and grammatical errors. The idea was that the scam was so obvious that they needed someone who couldn’t or wouldn’t think clearly to fall for the scheme. The mistakes helped weed out any critical thinkers and ensured they only dealt with people who were struggling to understand what was happening.

The new breed of scammers are more sophisticated and have much better tools. Using AI, they can impersonate the voice of your boss or someone you know at your bank. Using the same tools, they can impersonate your voice at a bank. Better printers and digital image manipulation make creating fake identification easier and because opening a bank account no longer requires a trip to the bank, fake ID and a faked voice can be enough to impersonate you.

Some of the scammers are offering jobs to unemployed people and spoofing the email addresses of legitimate businesses. Then, they ask potential victims to purchase equipment they’ll need for the new job with the promise of future reimbursement that isn’t coming.

AI, deepfakes, voice pattern copying, spoofed email addresses and phone numbers are all tricking more sophisticated people out of their money or identity. This is no longer a problem just for elderly people who don’t understand how the internet works. One solution highlighted in the article is behavioral analysis. We all have patterns in how we type, hold our phones, and other regular behavioral indicators. Based on my research, this method of detecting fraud is effective. The problem is it’s more likely to flag suspicious activity after it starts. That makes behavioral analysis an excellent secondary security protocol to shut down or challenge activity that is likely to be fraudulent.

A better first-line approach is biometric security like the kind offered by authID ($AUID). A passive selfie (quick facial identification) is the best option right now to provide both security and low-friction ease-of-use, and authID does this faster than anyone else at a very high rate of accuracy. Their technology is also skilled at detecting insertion attacks. That’s just a fancy way of saying that even with better AI deepfakes, $AUID recognizes the source of the authentication data as incorrect, and rejects the login attempt. Security has been a cat and mouse game for hundreds of years, but right now, improved AI doesn’t beat authID’s security measures.

With fraudsters gaining access to better more sophisticated tools, the importance of better enterprise-level security is increasing. A year ago, companies that were hacked tended to get a pass from too much customer anger because everyone understands that there’s no perfect security. I believe that in the next year or two, companies that are hacked which haven’t put in place next-level security are going to face consequences from both regulators and customers. Credit to the WSJ for highlighting this crucial issue and to authID for having a solution.

 

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2 thoughts on “WSJ Highlights the Danger of AI Attacks”

  1. Sorry if I should ask questions using the “contact us” link (which seems reserved for inquiries from prospect subscribers).

    I am wondering whether you can comment on SRUUF. According to Cameco’s website, it seems, year-to-June, Uranium spot price is trending lower and is converging to the steady rising long-term price. What factors are driving that trend and what implications those factors might have on SRUUF share price in short and longer terms?What are future catalysts that might significantly affect SRUUF share price either positively or negatively?

    Also, could you comment on the recent weakness in LVS share price? Is it solely because the weaker-than-anticipated China economic recovery, or is it due to something else?

    Really appreciate your time!

    Reply
    • Hi Ben,

      Thanks for the great questions. You’re welcome to post them here, or to IR@DeepKnowledgeInvesting.com. Good either way.

      As you noted, uranium has had a huge run and a less-inspiring performance year-to-date. I believe the reason for the recent weakness is concern about a global recession. While it’s true that energy use dips in a recession, the temporary loss of power requirements tends to be small. Long term, most of the world’s population is very interested in living a better material life, and that always means more energy usage. China and India alone have almost 3B of the 8B people on the planet, and they want to use more energy. Here in the US, if we want lots of reliable data centers and AI, that’s going to mean a huge increase in reliable power. (Those AI-enabled $NVDA GPUs have massive power requirements.) Those centers can’t be run on wind or solar. If there is a continued shift to EVs, that’s also going to mean a massive increase in baseload generation capacity.

      So, the entire world is heading towards higher long-term energy usage. Environmentalists are going to fight more use of carbon-based energy like oil, natural gas, and coal. Windmills and solar farms can supplement the grid, but aren’t useful as baseload generation. As of now, the only option that satisfies everyone’s political and environmental needs is nuclear. What we’re seeing is existing nuclear plants in the US and Europe having their useful permitted lives extended. Countries like China have plans for huge increases in their number of nuclear plants and are in the process of starting construction.

      Reliable statistics on uranium stores are difficult to find, but it’s a good estimate that there was about five years of excess supply available when DKI put on the $SRUUF position a couple of years ago. Now, there’s probably less than three years of excess supply. New demand is coming online faster than new supply so as existing stores decline and new plants get started, there will be more upwards price pressure on uranium. Over time, supply will increase to meet demand, but that’s going to be further in the future. It’s difficult to get permitting for new mines, and even Cameco is under-producing relative to its long-term signed contracts. Rather than produce more uranium, Cameco is currently buying uranium at a loss in the spot market as the current price is above their contracted supply price. That imbalance at this one company will last at least through the end of this year. To emphasize that point, the amount of nuclear fuel required to seed and start a new reactor is about 3x the amount of fuel that plant will consume on an annual operating basis.

      It’s important to point out that uranium fuel is a small percentage of the total operating cost of a nuclear plant, and that nuclear plants are difficult to start and stop. That means that even if the price of uranium rises more, existing plants won’t cut back because it’s more profitable for them to continue to produce energy than to reduce plant capacity. Also, much of the new demand is price insensitive. In DKI’s recent webinar with Enrique Abeyta on $TLNE, he talked about Amazon contracting for power at a premium price from a Talen nuclear plant to supply a data center. Other tech companies are intentionally locating data centers close to nuclear plants due to the reliability of that source of power.

      So, I think there’s going to be a multi-year imbalance in supply and demand in the uranium market, but with some volatile pricing along the way. My approach to that is to own $SRUUF with a long-term time-horizon. To the extent that you’re interested and able, there is probably an opportunity to trade uranium to take advantage of that volatility. I hope that answers your question, but please feel free to post any follow-ups.

      Great question as well on $LVS. I intend to have a blog post up about that in the next day.

      Reply

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