John McAfee: Mixing smartphones and Bitcoin will leave cryptocurrency in 'absolute chaos'

Without warning, a man approaches John McAfee, technology pioneer and founder of the anti-virus product that still bears his name, and announces: "You're a legend, you're hilarious." McAfee smiles, shakes his hand, and quickly replies: "I'm glad somebody gets my humour."

Welcome to McAfee's world. In this land of selfies and handshakes, his reputation in cybersecurity – and vast experience – clearly precedes him. From hotels to airports to taxis in remote parts of the world, this is normal. At technology conferences, he receives the reception of a rock star.

Yet in the midst of all this background noise, McAfee has a serious message to spread. In an exclusive interview with IBTimes UK at London's Blockchain: Money event, he claimed that without a major shakeup in cryptocurrency security, the world of virtual money could crumble.

"Security is the biggest problem," he warned. "The hacking world hasn't quite figured it out, but they will." McAfee said that if changes are not made, it will be "absolute chaos" and added: "Not because we don't understand it or we cant understand the math [but] because there is no security whatsoever."

Much of this, he explained, is because there are dangers in how people interact with their online money – namely via smartphone. While he said he had no problem with these "spying devices" collecting some data he said using them to interact with Bitcoin is asking for trouble.

"Some people have hundreds of thousands of dollars on their smartphone wallet. And I tell them – if you give me your phone number, in five minutes I will transfer all of your Bitcoins into my account," he said. And I can prove it, its trivial."

"Wake the f**k up"

McAfee takes the iPhone sitting in front of him and looks at it. "Good god, this device was not designed to secure you and give you privacy," he said. "This device was designed to do the opposite – to open up where you are, who you are with, who your contacts are – this is a spying device.

"Its got a microphone and a camera that can watch you – and why? Because Google, Apple, the great manufacturers realise something – we can sell these phones for $600 and [they] know where the money is, it's information."

"It's designed to collect that – and that's all cool with me – because if a marketeer tries to sell me something I can decide not to buy it. I can say, no, f**k off, I don't want to buy it. But those same facilities that marketeers and sales people use are accessible to any hacker who chooses to use those same facilities. It is designed as the ultimate spy device, and hacking device."

In this scenario, McAfee explained how malware, usually a keylogger, can be used to circumvent strong encryption with ease. "We are all missing the trivial," he said. "The answer is, number one, to wake the f**k up and, number two, if you want security you are never going to get it on this."

The promise of Blockchain

Yet the allure of cryptocurrency – and McAfee doesn't have a preference what type – is too strong to ignore. His company, MGT Capital Investments Inc., is plunging head first into the development of a new US-based mining facility that he claims will be expanding rapidly in 2017.

"The blockchain itself is being applied to everything from voting systems to authenticating of the identity of an individual," he told IBTimes UK. "Here's the irony of this – a system that is built to give pure anonymity also being used to absolutely identify. So – that's the beauty of mathematics, it can be applied to almost anything.

"We are currently into mining. We have 400 S9s in our facility in Washington state," he said. On the question of sustainability – McAfee said the location was chosen because it "only needs air conditioning about two months out of the year" and it is "right next door to a hydro electric power plant."

He added: "We have very cheap electricity and cold weather which [is important] because the two major factors in bitcoin mining are electricity and cooling. We we currently have about 400 machines which is about 5 PetaHash and we will be expanding that rapidly to about 2000 machines by the first of next year."

McAfee said the mining process is "a bit of a study in transaction processing" but maintained the facility and its operations are fully functioning – with proprietary gear already working to solve the integration problems between hardware and software.

He said: "The mining itself is the most insecure process on the planet – you are using open-source code. If you give me open source code I promise you I will find a hacker or someone that I know closely that can say – right here – you can get in at this point. And you're in.

"We have security facilities on our network that no other miner has. We have our own proprietary box called Sentinel which sits on the network and monitors all network traffic – it's looking for anomalies. We have tested it over and over and over."

Yet, perhaps unsurprisingly for a man with such an experienced background in cyber and cryptography, all roads lead back to security. As McAfee puts it: "That's my business." He returns to the inevitability of the technology and how its algorithms will change how finance operates.

"It's here and its here to stay and it will not go away, no matter how much governments hate it and want to regulate it – how can you regulate something which is a mathematical form?" he said.

"I don't know if it will be Bitcoin or multiples [of different currencies] but there will be a cryptocurrency standard for the world whether governments like it or not. And the fact is, it will be difficult to find out where money is flowing from and to, therefore making it difficult to collect taxes- they will have to get used to it.

"There will have to be some other mode of collecting taxes, whether its a tariff on the use of national parks or the use of the roads – I don't have a clue – that's the government's problem and not mine. But it's coming and it will change the culture of this world."