Friday, October 23, 2009

Online Gambling

Introduction to How Online Gambling Works

The first online gambling Web site opened 10 years ago, paving the way for the hundreds that exist now on the Internet. A review by the Australian government in 2001 estimated the number of online gamblers worldwide at just fewer than five million, with more than $11 billion spent in online casinos.

But does online gambling differ from casino gambling, and what's the appeal of playing at home by yourself instead of in a casino? In this article, we'll see what it's like to gamble online, find out how you pay to play, and discuss the legality of gambling via the Internet.

Online Casinos

Online gambling differs from in-person casino gambling in a few obvious ways. There is little to no interaction between the players and the dealer. In fact, there is no dealer -- all the games are operated by computer programs. People who have experienced both kinds of gaming say online games like poker or blackjack usually go faster than their real-life counterparts because there's no conversation between players to slow things down.

Online casinos can offer dozens of different games. One site has slot machine games based on licensed comic book characters, while others have computerized versions of more traditional casino games. Most games are dressed up with fancy graphics and sound effects, much like real slot machines. Players can check the rules of each game and view a chart that shows payouts with the click of a button.

A brief survey of one top casino site shows more than 60 games, including blackjack, baccarat, craps, various versions of roulette, at least two dozen slot games, keno, and several video poker games. The specific rules of the games reflect their real-life counterparts. In video poker or blackjack, players make decisions about the cards that can affect the outcome of the game.

There are also sites that offer online sports betting, which is another form of gambling. These sites allow users to place bets on athletic competitions of every kind, as well as other events like political races or the outcomes of reality TV shows. The sites offer their own odds, which in some cases are better than the odds offered by the traditional Las Vegas bookmakers (due, in part, to the lower overhead required to run an online betting site). Many online casinos offer "instant play" versions of their games, which usually run within a Web browser using Java. Players can also download the casino's software and play the games in a separate application. Some sites only offer a download-to-play option. Players can try out the games for free using a play account filled with a few thousand dollars. Of course, these games don't pay out any real money.

There is a difference in the odds between the "play for fun" version and the real money versions of online games. Although it can't be confirmed, trying out the "play for fun" versions at several online casinos often results in hefty imaginary bank accounts. If the real money games also paid off that big, the casinos would quickly go bankrupt. Success in the "play for fun" games doesn't equal sucess when real money is on the line.

The Legality of Online Gambling

Gambling online falls into a legal grey area. While it is technically illegal in most of the United States, the prosecution and conviction of individual players is very difficult because they're gambling from home. It is also illegal for a gambling Web site to operate within the United States, which is why the offices and servers of most online casinos are located in other countries. There are about 70 countries that allow online gambling sites to set up shop, including Australia, New Zealand, South Korea, Denmark, Finland, France, Germany, and some provinces of Canada.

When you register for an online casino, you are required to agree to the site's terms and conditions. Finding out whether or not gambling is legal where you live is your responsibility. You must also abide by any age limits set on gambling in your locality. If online gambling is illegal in your area, and authorities discover that you've won money, your winnings could be forfeit.

Issues of jurisdiction and sovereignty make gambling laws even murkier. The U.S. Wire Wager Act makes it illegal to use an electronic wire method (which courts generally agree includes the Internet) to transmit bets to places where gambling is not allowed. So a casino set up in the Netherlands is breaking U.S. law if a player in the U.S. plays their games. However, the U.S. doesn't really have the legal authority to prosecute someone in another country. Since players are almost never prosecuted either, we're left with an illegal act that generally goes unpunished. Of course, if an off-shore casino decides to cheat a player out of winnings, and online gambling is illegal in that player's locality, the player will have a difficult time suing the casino.

This brings us to the topic of regulation. Some of the countries that allow online casinos to operate have strict guidelines and regulations that make sure the casinos operate legitimately. They make sure the casino pays out when players win, and they ensure that published odds match the actual odds programmed into each game. Australian and Finnish online casinos are known for adhering to national standards. Some countries are not so strict about regulation and may be more interested in taxing the casinos than making sure that they play fair. There are many online casinos to choose from, and it pays to do some research into the regulations they must follow when you select one.

Paying to Play

The questionable legality of online gambling makes things tricky for players in the United States and other locations that don't allow gambling. You can use a credit card to fill your account at an online casino, but most American credit card companies will not allow the transaction if they recognize that it is intended for a gambling site. This leaves players with a few options.

It is possible to open a bank account at an off-shore bank, which can then be supplied with funds for the gambling site. But this is not a quick process, and the banks will often take a percentage of the amount deposited in return for their services.

Some Internet transaction services can be used to transfer funds into an online casino account. These services act like Paypal, but unlike Paypal, they can be used for gambling transactions. The easiest method is to send an international money order to the casino site, but this is a slow process and not all online casinos offer this option.

Not all of these off-shore banks and fund transfer services are safe to use. How can you tell the difference? Research the bank or service to find out how long the company has been around -- the more established, the better. It's a good sign if you can speak to a real person when you call the company's customer service line. You can also search the Internet for complaints about scams or poor service. Once you've chosen a service, start off with a small transaction to see if everything goes smoothly. When you're confident that they are legitimate, then you can move on to larger transactions. Regardless of the service, it's still a good idea to move the funds to your home accounts as soon as possible.

Second Life Working

Introduction to How Second Life Works

Few online social networking sites get as much attention as Second Life (SL), the three-dimensional virtual world where users, called residents, can preten­d to be whomever -- or whatever -- they want to be. Although it's an online environment, its influence reaches into the real world -- including a virtual economy that's dependent upon actual money. In reality, or perhaps virtual reality, Second Life is a complex environment filled with potential risks and rewards.

At its most basic level, Second Life is an online environment created by Linden Lab, a company based in San Francisco. Second Life is an online world in which residents create virtual representations of themselves, called avatars, and interact with other avatars, places or objects. Second Life isn't just a fancy chat room -- residents can do much more than communicate with one another. For one thing, they can contribute to the world around them, creating buildings, objects or even animations. Resident additions to the virtual world are called user-generated content, and this content is one of the factors that makes Second Life such a unique online environment. User-generated content also explains why Second Life is for adults only -- Linden Lab places few restrictions on residents, meaning that you can see some pretty raunchy creations while you're exploring the environment.


Membership Has Its Privileges

If you just want to explore Second Life, you can do it for free. A basic membership costs nothing and allows you to create an avatar and look around the world. If you want to buy land, you'll need to upgrade to a premium membership, which costs $9.95 a month. Concierge members are those who spend more than $125 a month on land-use fees. These users have access to an extensive support network.

In Second Life, residents can go to social gatherings, live concerts, press conferences and even college classes. They can do a lot of things you can do in real life -- buy land, shop for clothes and gadgets or just visit with friends. They can also do things that are impossible in the real world -- avatars can fly or teleport to almost any location. Some residents design short programs, called scripts, which give avatars or objects new abilities, including special animations or the ability to generate copies of other objects.

In many ways, Second Life is similar to Massively Multiplayer Online Role Playing Games (MMORPGs). Like an MMORPG, users represent themselves with a customizable, three-dimensional figure that acts like a computer-generated puppet. Users navigate through an online world, encountering strange landscapes and new people. Unlike MMORPGs, residents in Second Life aren't in a game, though there are games inside Second Life's virtual environment. They inhabit a virtual world free of pre-determined goals or tasks, just like the real world.

The Geography of Second Life

Second Life geography spans two worlds -- the real world and the virtual world. In the real world, Second Life exists on a collection of server host machines, called sims. These computers store all the information found within the virtual world. Each sim runs between 2 to 16 server processes, which simulate regions in Second Life. Every region is 256 m2 in the virtual world. Linden Lab calls the collection of networked sims the grid.

When a new resident logs on to Second Life, his or her avatar appears at "Orientation Island." Here, the resident participates in a tutorial, learning how to navigate through Second Life, communicate with other residents and how to use menus and commands. The resident also learns about the places he or she may venture. All regions have a rating of either PG or mature. Regions with the PG rating should be free of objectionable material, including violent or sexually explicit content. In mature areas, rules are less strict -- avatars might wear revealing clothing or nothing at all, and residents have few behavioral restrictions.

Regions also have safe and unsafe ratings. A safe rating means you can wander around without fear of attack from other avatars or objects (unless you encounter griefers, residents who harass other users). An unsafe region allows residents to simulate combat, either with other users or with objects programmed to attack avatars. Unsafe regions let residents create their own version of an MMORPG, or simply satisfy the visceral thrill of getting into a fight.

Other geographic spaces in Second Life include the mainland, estates, islands and parcels. Linden Lab owns and oversees the mainland, a continent inside Second Life. An estate is a privately owned collection of regions with a unifying theme and code of conduct determined by the estate's owner -- there are estates in Second Life that simulate towns in the old West or medieval Europe. Islands are pretty much what they sound like: Small, independent land masses, usually under the control of a private owner or company. Parcels are very small units of land measuring 4 m2.

Premium membership residents can buy or rent land from Linden Lab or other residents. Land gives residents a place to build and store their virtual possessions, but it's not a necessity -- many residents wander through Second Life without ever owning land. If the resident buys land on the mainland, he or she answers directly to Linden Lab. If the resident rents land on another resident's estate, he or she will have to comply with that resident's rules and conditions. In turn, the estate owner has to pay Linden Lab for the land he or she owns.

Land owners can set their property as public access or private invitation only. They can also designate their land as a PG or mature area. If they own land on the mainland, they can create whatever decorations, landscaping or buildings they like. Because of this, neighborhoods on Second Life's mainland tend to be a hodgepodge of clashing styles. Estate owners can be more restrictive, requiring residents to comply with their aesthetics.

Second Life Avatars

New Second Life users select their avatars from generic male and female templates (residents and their avatars don't necessarily share the same gender). Although a resident could use an unmodified template, everyone else would know that he or she was a newb -- a new user who doesn't know how things work. Most residents customize their avatars a little before leaving Orientation Island.

One important factor in avatar customization is the inventory. The inventory holds hair, skin, objects, animations and body parts and has an infinite capacity. A user can open his or her inventory and choose to put on or remove items, like clothing or hairstyles. Residents can add to an avatar's inventory at any time, creating a practically limitless number of avatar customization options.
They can change their avatars' appearance as often as they like. Nothing in Second Life is permanent -- if a user decides his or her avatar should evolve from a hulking brute to
an emaciated goth kid, he or she can make the changes at any time.

A resident can also right click his or her mouse on the avatar, which pulls up a pie-shaped menu. One of the menu choices is appearance, which allows a user to adjust the way his or her avatar looks. For example, if the user wants to modify the avatar's hairstyle, he or she might use the tool's slide bars to make the hairstyle longer or shorter. Even with this level of control, the user can only adjust what is already there. If he or she wanted a completely new hairstyle, the user would have to either design it or buy it from another resident.

Some residents create special skin textures for avatars ranging from realistic skin and hair to fantasy-inspired scales or feathers. Users can find dozens of residents who sell and trade clothing, skin and even body parts in Second Life. Savvy residents can customize their avatars by creating their own clothes and skins in a graphics program and importing the file into Second Life.

Avatar customization is just one way residents can tweak their Second Life experiences. Users can also build objects within Second Life using simple in-world tools and menus. By creating and linking together basic prim structures, users can create more complex objects. They can also use the Linden Scripting Language, a programming language similar to Java, to give objects specific properties. For example, a skilled user could create a puppy dog that follows him or her everywhere. Residents make objects for different reasons -- some do it to bolster the theme of a particular area or avatar design, others build objects just for fun.

Residents can even build houses and other buildings. Some use programs like AutoCAD to design their structures before importing them into Second Life. Others purchase building designs from other residents. Buildings can be extremely realistic or defy real-world physics.

Second Life's capacity for customization is extensive. The world inside Second Life doesn't just foster user-generated content, it depends upon it. By encouraging user innovation and participation, Second Life has created a loyal community of enthusiastic residents.

Walking and Talking in Second Life

Second Life's controls can be a little intimidating for new users. Its interface includes several menus, buttons and keyboard shortcuts. Many users find the learning curve too steep and quickly give up -- only about 10 percent of all users who make accounts ever bother to return after their first visit.

Avatars can get around Second Life by walking, flying or teleporting to their destination. Residents make their avatars walk around by using the arrow keys. Pushing the up arrow key makes the avatar walk forward, for example. Moving the mouse changes the position of the avatar's head, making it look around.

At the bottom of the resident's screen are several buttons, including the fly button. Clicking on this button will launch the resident's avatar into the air, allowing him or her to fly around like Superman. Flying lets avatars navigate over water or avoid other obstacles they might encounter on the ground.

Teleporting is the fastest method of travel in Second Life. Residents can teleport their avatars by opening up the map function. A window appears with the Map of Second Life, and the resident simply double-clicks on a destination to teleport there. Some locations may have restrictions, such as an island reserved for private use by another resident. In these cases, the avatar teleports as close to the location as possible without violating access restrictions. Without permission, the avatar can't enter restricted areas -- the resident would have to ask the area's owner for an invitation.

Residents can also choose a few different ways to communicate with other users. They can opt to use the Voice feature, which allows residents with microphones to talk to one another live. Residents can also use a chat box, which opens a window in which users can type messages. Chat box conversations are broadcast to everyone in the immediate area, so for more private conversations, residents can instant message another user.

Pie-shaped menus include options that allow residents to interact with other users or objects. Right clicking on objects pulls up the menu, displaying a list of things the resident can do. Another way you can interact is to use gestures. Gestures are animations that can convey a mood or simulate an action. Second Life includes a tool that lets you design your own gestures, or you can get them by buying them or trading with another resident.

Second Life's Tech Specs

As of October 2007, Second Life uses the Havok 1 physics engine. This software simulates real physics within a virtual environment. The physics engine determines how avatars and objects behave within the virtual world, including collision detection (the engine tells the software when two items are touching and how each should react), vehicle dynamics and what animations look like.

The more sophisticated the physics engine, the more realistic simulations using it will be. Linden Lab announced that it is upgrading Second Life to the Havok 4 physics engine. Games that use the Havok 4 engine include Halo 2 and Halo 3, BioShock, Medal of Honor Heroes and Full Spectrum Warrior. As of October 2007, the Havok 4 Second Life engine was still in the beta testing stage.

Textures
­­Residents can apply textures to the surface of objects. A texture is just an image file designed to give a surface a particular look. Examples of textures include wood grain, brick patterns and metallic finishes. Many residents create textures in graphics programs like Photoshop or Paint Pro and then import the files into Second Life.

Residents can hear and view streaming audio and video inside Second Life. Second Life supports audio in MPEG and Ogg Vorbis formats. Streaming video requires the user to install Quicktime. Residents can choose to display video on specific surfaces in the land they own. To do this, they designate the surface's texture as a media surface. If any other surface within that resident's land has the same texture, it will also display the streaming video. Since this can cause confusion, residents should make sure the surface they choose has a unique texture within their land.

A Virtual Hollywood
Second Life is becoming a popular engine for machinima projects. Machinima films are movies that use a pre-existing computer environments and engines. Filmmakers can create avatars in Second Life and use them like digital puppets to create stories, then upload the films to Web pages like machinima.com. Some traditional shows have featured action in Second Life as well, including an episode of "The Office" and a plotline in "CSI: New York."

Second Life requires a fairly hefty setup on the user's end. It's compatible both with PCs and Mac computers. Technical requirements for the PC include:

* A Cable or DSL connection
* Windows 2000, XP or Vista operating system (Linden Lab recommends XP or Vista)
* An 800 MHz Pentium III processor or better (at least 1.5 GHz recommended)
* 512 MB of computer memory (1 GB recommended)
* An nVidia GeForce 2, ATI Radeon 8500 or Intel 945GM graphics card or better

The Mac requirements include the cable or DSL connection, the same amount of computer memory and graphics card requirements as the PC, and:

* Mac OS X 10.3.9 or better
* 1 GHz G4 or better processor

Creating Things in Second Life

Absolutely every object, building and flying car you see in Second Life was created by a Resident. The basics of object creation are easy, but it takes a lot of practice and some serious scripting capabilities to make the really impressive stuff. Fortunately, there's a designated place in Second Life for you to practice these skills: the sandbox. The sandbox is a public space where residents practice building different objects.

You can open the object creation tool three ways:

* Click the "build" button at the bottom of the screen
* Right-click on the ground or any empty space and choose "create" from the options wheel
* Press cmd-4 (ctrl-4 on Mac)

When you open the object creation tool, the default window is "create," indicated by a magic wand symbol. At the top of the window is a list of the 15 prims -- basic shapes like cubes, cones and tubes -- available to Second Life users. A seasoned builder knows how to stretch, cut, link and multiply these prims to create everything from a hotel to a Ferrari.

Here are some of the basic building options:

* Create an object by choosing a prim shape and clicking on the ground or any open space.
* In the "edit" window, you can move, rotate, stretch or change the texture of the object. (The default texture is wood.)
* Use the "object" tab in the edit window to enter precise measurements, rotation angles and more advanced features like tapering and twisting.
* In the "texture" tab, you can choose from existing textures in your Inventory and edit their color and shading.
* You can link objects together by selecting multiple shapes and pressing ctrl-L.
* Copy objects by simply selecting an object, holding down the Shift key and dragging the object.
* Check the "use grid" box in the edit menu to see helpful on-screen rulers as you stretch, move and rotate your objects.

With just these simple tools and key controls, you can make almost any stationary object in Second Life. But if you want to bring your creations to life -- give them movement and interactivity -- you'll have to learn the Linden Scripting Language (LSL). LSL is most similar to the C programming language. There are many Web sites and online tutorials for learning basic and advanced LSL scripts. You can even find a few at the Second Life forums.

To attach a script to a Second Life object, click on the "scripts" tab in the edit menu and click "new script." Within the script editor is a pull-down menu with dozens of common scripting commands. Although, without a basic understanding of LSL, you can't just piece together a working script with those commands.

One of the cool things about Second Life is that you retain intellectual property rights for every object you create in-world. With those rights, you can choose to allow other people to edit your objects or not. You can also assign a price tag to an object and sell it on the Second Life marketplace.

Second Life Population and Rules

Linden Lab listed the population of Second Life at more than 10,500,000 residents as of October 2007. That figure sounds impressive, but it's important to keep a couple of mitigating factors in mind. First, Linden Lab allows users to create more than one account, so some of the 10,500,000 residents are duplicates. Second, the virtual world has a high churn rate, meaning most visitors only log on once and then abandon the program. Some observers mark the churn rate as high as 90 percent, meaning only 10 percent of all the people who visit Second Life will come back after the first visit.

Second Life publishes Economy stats, which include the number of residents who have logged in to the program over the past week, two weeks, month and two months. In October 2007, just fewer than 1,000,000 residents logged in.

According to Second Life's Web page, 60 percent of residents are men. User age ranges from 18 to 85. Residents who use Second Life come from all different backgrounds, from corporate executives to college students.

One unifying trait all residents share is that by creating an account in Second Life they agree to obey Linden Lab's terms of service (TOS). Linden Lab designed the TOS to help protect itself and honest residents from malicious users. Users should read the TOS carefully, particularly if they want to participate in Second Life's economy. The TOS makes it clear that Linden Lab has the right to wipe out a user's inventory, including any in-game currency he or she might have. The company also makes it clear that users can't hold Linden Lab responsible for incidents that delete user information.

Along with the Terms of Service, Linden Lab requires all users to follow the Community Standards. Community Standards lists six kinds of behavior, called the Big Six, which could result in a users' suspension or banishment from Second Life if he or she violates them. They are:

1. Intolerance: Using derogatory language or images relating to a resident's gender, race, ethnicity, religion or sexual orientation
2. Harassment: Stalking another avatar, participating in cyberbullying, using intimidating words or actions or presenting unwelcome sexual advances toward another avatar
3. Assault: Committing an act of violence against another avatar in a Safe area
4. Disclosure: Revealing personal information about another resident
5. Indecency: Inappropriate behavior in PG-rated areas, including running around nude or shouting obscenities
6. Disturbing the Peace: Engaging in behavior that is meant to disrupt other residents' experiences in the virtual world. This can include making repetitive, distracting noises or filling a space with so many objects that the area suffers lag as a result.

Linden Lab has employees in Second Life who can respond to situations, but the company mainly relies on users to report misbehaving residents. For most first offenders, Linden Lab will issue a warning. However, for repeat offenders, Linden Lab may suspend or revoke the user's membership. Offenders could lose all their items and money in the game, and as the Terms of Service make clear, Linden Lab would not have to refund their money.

Not for the Kids
Linden Lab designed Second Life to be an adults-only online community -- all residents must be 18 or older, though there is a separate virtual world called Teen Second Life for users between the ages of 13 and 17. Traditionally, residents could create accounts in Second Life without submitting to an age verification process. In May 2007, Linden Lab announced that SL would soon roll out an age verification system to ensure that all residents meet the minimum age requirement.


Teen Second Life

Because Second Life places age restrictions on its residents, teenagers can't participate in the virtual world. It's not that Second Life is exclusive -- it's that Linden Lab wants to protect teens from the sometimes bawdy content that residents stumble across. But there's a separate virtual world altogether for users between the ages of 13 and 17: Teen Second Life.

Teen Second Life shares nearly all of the same features as regular Second Life. A basic account is free, but a premium account allows you to buy land. Teens can customize their avatars, build an endless variety of objects, and buy and sell in Linden dollars. They can also chat and send in-world instant messages, just like the older residents.

Safety is obviously a big priority whenever a teen community is concerned. Linden Lab staffs the teen world with liaisons who are there to help teens find their way around and to keep an eye out for potential problems. Here are some of Linden Lab's safety tips for Teen Second Life:

* Never reveal real-world personal information to anyone
* Never agree to meet someone in the real world
* Keep passwords a secret
* Log off immediately if you feel uncomfortable or harassed at any time
* Report any strange or inappropriate behavior by going to the "help" menu and clicking "report abuse"
* Share your Second Life experience with your parents

The virtual world of Teen Second Life is tiny compared to regular Second Life. According to Linden Lab statistics, Teen grid avatars make up less than one percent of active Second Life users. Teen Second Life receives heavy competition from similar teen virtual worlds like Virtual MTV and Habbo. But no matter the returning rates of these young residents, they at least have a virtual world outlet provided by the Teen Second Life community.

Second Life Economy

Premium Service

When residents upgrade to premium memberships, they receive a lump sum of Linden Dollars and a weekly stipend. In the fall of 2007, the lump sum was $1,000 Linden, while the stipend was $300 Linden per week. Residents can spend money on land, clothing, textures, accessories, objects or even scripts for objects.

­Second Life's economy is based off a unit of currency called the Linden Dollar. Linden Dollars are virtual money, but that doesn't mean they're worthless. Residents can go to a currency exchange service to convert U.S. dollars into Linden currency, and vice versa. The official exchange service is called LindeX. The exchange rate fluctuates, just like real currencies. In October 2007, the exchange rate was about 267 Linden Dollars for every U.S. dollar. Most transactions within the game world use Linden Dollars.

Second Life's economic model is one of the main reasons Second Life gets a lot of attention. Some people find it strange that someone would spend real money for a virtual house or shirt. It's even more difficult to believe that some people are making a living off of buying and selling items in Second Life. Some are concerned that the U.S. government will explore ways to tax in-game transactions.

Resident Ailin Graef not only makes a living off of Second Life but also became the first person to become a real millionaire through transactions in Second Life. Graef made her fortune by dealing in real estate, becoming what some residents call a land baron. She bought land in Second Life from Linden Lab, developed it using creative and stylish themes, then rented or sold the land back to other residents.

ot all purchases use Linden Dollars -- land sales and auctions usually require real cash. If you want to buy your own island in Second Life, for example, you'll need to throw down $1,675. This will buy a 65,356 m2 island (an entire region). For this fee, you get to choose the island's terrain and location.

Own enough land and you'll have to pay Linden Lab a monthly fee to use it. Your land use fee pays for renting space on a server. The monthly premium membership fee entitles a resident to 512 m2 of land at no additional charge. As a user purchases more land, the land use fee increases.

As of October 2007, the land use fee ranged from $5 per month for ownership of up to 512 m2 of additional land to $195 per month for up to 65,356 m2 of land. Second Life calls residents who spend at least $125 per month on land use fees -- meaning they own at least 32,768 m2 -- concierge members. Linden Lab bases the land use fee off the maximum amount of land a resident owns during each 30-day billing cycle. Concierge members have access to a special team of Linden Lab customer relations employees who help resolve issues.

Second Life and the Real World

Some people believe that the future of the Internet is in three-dimensional virtual worlds like Second Life, where users will navigate through creative landscapes in search of information and entertainment. As a result, some organizations have jumped into Second Life with hopes that they can get in on the ground floor before the community's popularity explodes. More than 100 companies and organizations have an online presence in Second Life. Many own islands and host events like press conferences or concerts. Others use Second Life to promote charitable organizations or political philosophies. Some companies create a space in Second Life with no clear strategy on what to do with it, which usually backfires -- no one wants to go to a location that's just a big advertisement.

Other companies try to avoid that mistake. Coca-Cola, for example, held a competition in which residents submitted designs for a virtual vending machine. The winner of the competition will star in a video about designing a Second Life object. By creating interactive content, Coke avoided the pitfall of jumping into Second Life without contributing to the world's content.

Other companies use similar strategies. Reebok let users design shoes for their avatars, then order a custom-made copy of the shoes for themselves to wear in real life [source: New York Times]. Starwood Hotels used Second Life to test building and room designs, taking suggestions from residents and incorporating them into real building plans [source: Business Week]. Some companies have even used Second Life as a recruitment tool, seeking out residents who are particularly adept at creating user-generated content.

While companies continue to experiment with an online presence in Second Life, a few Internet security experts caution that the virtual world isn't the safest environment in which to conduct business. They point out that griefers can find ways to listen in on confidential conversations or sabotage a company's Second Life location. Most companies only use Second Life as a marketing tool rather than for remote meetings. Some companies are creating virtual environments of their own in order to avoid the security dangers in Second Life.

Some colleges even have a presence in Second Life, holding classes and studying human psychology and sociology in the virtual world. In 2006, Harvard University held a class called CyberOne: Law in the Court of Public Opinion. It was open to the general public of Second Life, where residents could view lectures and participate in discussions [source: Harvard]. Other colleges have experimented with holding classes in the virtual world with varying degrees of success.

Second Life might seem strange and foreign to those of us who are only used to the real world but to residents, it's an important community that's just as valid as any physical environment. Still, whether Second Life marks the future of the Internet or just a passing fad remains to be seen.

Saturday, October 3, 2009

Could a single hacker crash a country's network?

You know you're living in the new millennium when one of the Obama administration's newest positions is nicknamed the "cyberczar." In May 2009, President Obama formally announced his plans to appoint a national cybersecurity adviser, charged with protecting computer networks in the United States -- which Obama referred to as "strategic national assets" -- from hacking and spying.



Cybersecurity isn't a new topic making the rounds in Washington. In 2007, the Commission on Cybersecurity for the 44th President, within the Center for Strategic and International Studies, was tasked with examining public policy and issues surrounding cybersecurity and developing recommendations for its improvement. According to the commission's executive summary, the vulnerability of computer networks has become a national security problem.

Computer hacking has evolved from a casual tech sport into a full-blown nefarious industry. With vast amounts of personal information floating around on the Internet, people are constantly at risk for identity theft and the ripple effect of stolen money. For instance, in 2008, the FBI reported $264.6 million lost due to Internet fraud [source: Internet Crime Complaint Center]. The federal government has even more at stake than bank account numbers and birth dates, though. In addition to the appointment of the cyberczar, the Department of Defense plans to establish a U.S. Cyber Command Center to combat the tide of online threats against its networks and classified government data.

The recent series of cyber-attacks on July 4, 2009, highlighted why we need online safeguards. That weekend, government and public Web sites in the United States and South Korea were assaulted with denial-of-service attacks (DoS), which are essentially virus programs that flood sites with traffic and temporarily disable them. North Korea, which isn't even known for having high-tech hacking capabilities, was suspected as the perpetrator [source: Olsen]. While the North Korea allegation hasn't been confirmed, the hackers targeted at least nine U.S. sites, including the White House, Treasury Department and National Security Agency (which is, incidentally, where the future U.S. Cyber Command Center is slated to be stationed). In South Korea, the DoS attacks clogged more than 20 sites.


Estonia's Hack Attack

Cyber-Armageddon has yet to commence, but hackers are waging small skirmishes -- like what took place on July 4, 2009, against the United States and South Korea -- and their skills only continue to mature. Some of the most talented hackers these days live in Russia and former Soviet states [source: Poulsen]. That criminal tech tidbit is interesting, given the political situation surrounding the virtual collapse of Estonia's nationwide network in 2007.

In March 2009, a 22-year-old Russian named Konstantin Goloskokov admitted to rallying a group of pro-Kremlin friends to launch a series of cyber-attacks against Estonian Web sites two years prior. Rioting broke out in Estonia in the spring of 2007 after government workers relocated a commemorative World War II statue of a Soviet soldier. Russian loyalists took offense to the statue incident, which they perceived as a direct snub to the former Soviet Union's contributions to the war [source: Lowe]. As the fighting in streets calmed, a second wave of aggression cropped up in cyberspace. According to Goloskokov, he and a group of friends directed enormous streams of data to Estonian government, bank and media Web sites, effectively crippling the nation's Internet access off and on from April 26 to May 18, 2007.

The Estonian virtual invasion consisted of distributed denial-of-service attacks (DDoS). With DDoS attacks, hackers use other people's computers, sometimes halfway across the globe, to wreak virtual havoc. To launch DDoS attacks, hackers first access other people's computers through zombie applications, malicious software that overrides security measures or creates an entry point. Once hackers gain control over so-called zombie computers, they can network them together to form cyber-armies, or botnets. The Estonian attack relied on vast botnets to send the coordinated crash-inducing data to the Web servers.

Just how much damage did that small group of hackers carry out? According to a New York Times article reporting on the events, the hackers rained down a data load equivalent to downloading the entire Windows XP operating system every six seconds for 10 hours [source: Landler and Markoff]. Hannabank, Estonia's largest bank and one of the prime targets of the attack, lost around $1 million over the course of the attacks, and Parliament members couldn't access e-mail for four days .

Goloskokov, the cyber-attack mastermind, claimed the siege was a form of civil disobedience, rather than criminal behavior. Whatever the intent, the incident demonstrated the tremendous power that a remote group of hackers can wield. Especially considering that Estonia is one of the most wired nations on the globe, the implications for what could happen to larger and arguably less sophisticated networks in, say, the United States seem rather grave. In 2000, the Estonian government adopted Internet access as a basic human right. But as hackers hone their skills, the Baltic nation may have to fight to defend it.

Is cyberwar coming?

Listen up, soldier! Not every battle takes place over rugged terrain, on the open sea or even in the air. These days, you'll find some of the fiercest fighting going on between computer networks. Rather than using bullets and bombs, the warriors in these confrontations use bits and bytes. But don't think that digital weaponry doesn't result in real world consequences. Nothing could be further from the truth.

Consider all the different systems in the United States connected to the Internet:

* Emergency services
* Financial markets and bank systems
* Power grids
* Water and fuel pipelines
* Weapons systems
* Communication networks



That's just the beginning. Think about all the services and systems that we depend upon to keep society running smoothly. Most of them run on computer networks. Even if the network administrators segregate their computers from the rest of the Internet, they could be vulnerable to a cyber attack.

Cyber warfare is a serious concern. Unlike traditional warfare, which requires massive amounts of resources such as personnel, weapons and equipment, cyber warfare only needs someone with the right knowledge and computer equipment to wreak havoc. The enemy could be anywhere -- even within the victim nation's own borders. A powerful attack might only require half a dozen hackers using standard laptop computers.

Another frightening aspect of cyber warfare is that a cyber attack can come as part of a coordinated assault on a nation or it could just be a malicious hacker's idea of a joke. By the time a target figures out the nature of the attack, it may be too late. No matter what the motive, cyber attacks can cause billions of dollars in damages. And many nations are woefully unprepared to deal with cyber attacks. With that in mind, the question isn't will there be a cyberwar -- the question is when will there be one?

Some people might argue that the cyberwar is already here. In fact, based on attacks perpetrated daily against the United States and other nations, the first real cyberwar began back in the late 1990s.

Cyberwars Around the World

Although the Internet has been around for a few decades, it's still a relatively young technology. It's also an extremely useful technology. Governments, corporations and ordinary citizens adopted Internet technology very quickly. Before long, entire industries and government services became dependent upon the Internet to function. The problem is that on the whole, the Internet and the systems connected to it aren't very secure. There are many ways to exploit vulnerabilities and infiltrate systems. Internet security hasn't been able to keep up with adoption and use.

Wargames
The Eligible Receiver experiment employed what is known in the security industry as a red team attack. Red teams are groups of people who are on your side, but behave as if they were a true opponent in order to test your defenses. They can employ all of the strategies a real adversary might use in an attack.

Some people recognized the inherently dangerous nature of the Internet fairly early on. In 1997, the Department of Defense commissioned an experiment codenamed Eligible Receiver. While most of the details regarding Eligible Receiver remain classified, the main purpose of the exercise was to see if a group of hackers using readily-available computers and software could infiltrate the Pentagon's computer systems. The results were sobering -- according to John Hamre, the deputy secretary of defense at the time, it took three days before anyone at the Pentagon became aware that the computer systems were under attack.

The team of hackers gained control of Pentagon and national military command systems. A real attack could have caused the computer systems to shut down. Even more discomforting was the thought that the attackers could access and steal information.


In fact, it seems that a real adversary managed to do just that only a year later. In an attack that the U.S. government called Moonlight Maze, someone managed to penetrate multiple computer systems at the Pentagon, NASA and other facilities and access classified information. U.S. officials discovered the probing attacks by accident in 2000 after going unnoticed for two years. The pilfered data included strategic maps, troop assignments and positions and other sensitive info. Government agents were able to trace the attacks back to Russia, but it's impossible to say if that was their true origin.

The United States isn't always on the defense in cyber warfare. The U.S. has used cyber warfare strategies against Iraq and Afghanistan. During the Kosovo war, the U.S. used computer-based attacks to compromise the Serbian air defense systems. The attacks distorted the images the systems generated, giving Serbian forces incorrect information during the air campaign. Security agents are also working to infiltrate terrorist cells and monitor them remotely.

Recently, cyber warfare played a role in the conflict between Russia and Georgia. Hackers attacked Georgian Web servers with a series of distributed denial of service attacks (DDoS). Essentially, a DDoS involves sending millions of pulses called pings to a Web server. The server becomes overwhelmed trying to respond to the pings and eventually slows or even crashes. The identity of the attackers is still unknown -- it could have been anyone from Russian agents to mafia hackers to someone who wasn't even involved with the conflict.

The list doesn't stop there. Some suspect that North Korea has used cyber attacks on South Korea. There are rumors that China uses cyber attacks against Taiwan. The terrorist organization Al Qaeda has even declared a cyber jihad on the U.S. In many cases, proving one nation is actively using cyber attacks on another is impossible.

What does a cyberwar look like? In the next section, we'll take a closer look at some of the strategies cyber warriors use.

Cyberwar Battle Strategies

While there are many different cyberwar scenarios we could look into, in general you can break down the strategies into two major categories. Let's take a look at each one in detail.



SCADA Systems
Water and fuel systems often use system controls and data acquisition (SCADA) control systems. That's because SCADA systems can automate many tasks by taking cyber commands and converting them into real world actions like opening a valve in a fuel line or shutting off a power grid. But most SCADA systems run on the same software -- mainly Microsoft products -- that happen to have well-known vulnerabilities.

The first major strategy is the Pearl Harbor attack, named after the surprise attack on the naval base at Pearl Harbor, Hawaii, in 1941. This kind of attack involves a massive cyber assault on major computer systems. Hackers would first infiltrate these systems and then sabotage them. They might shut down part or all of a nation's power grid or attack water and fuel lines.

Another approach is to use computer viruses to do the dirty work. Viruses like Code Red, Slammer and Nimda spread rapidly across the Internet. Code Red directed infected computers to attack the White House Web site. These viruses caused billions of dollars worth of damage as companies and governments had to repair computer systems affected by the viruses. Viruses offer hackers a low-risk/high-reward attack because it can be difficult to track down the programmers who unleash them.

Pearl Harbor attacks can be frightening all on their own, but some security experts worry that enemies could coordinate a cyber attack with a physical assault. Imagine your city's power supply winking out in an instant, and within moments you hear the sound of explosions going off in the distance. Such an attack could not only cause a lot of damage, it would be a powerful psychological tactic. Some experts worry that terrorist organizations like Al Qaeda are working on plans that follow this strategy.

­The other method of attack is much more subtle but just as dangerous. Instead of committing a massive cyber assault, the enemy would infiltrate computer systems and just watch and wait. This strategy involves spying and r­econnaissance. The key is to avoid detection and gather as much information as possible. The enemy could use that information to target weak points in the victim nation's infrastructure.

A hacker who has managed to infiltrate a system can also sabotage that system in a more gradual way that avoids detection. By tweaking lines of code in subtle ways, the hacker can make systems less accurate and less reliable over months or even years. This long-term strategy might eventually lead to the system becoming completely unreliable or unresponsive. This method takes longer to implement than a Pearl Harbor attack but it's also more difficult to detect and prevent or repair.

A hidden hacker could even insert computer viruses into an infiltrated system. Not all viruses attack instantaneously. Some hackers build in triggers that they can activate with a manual command. Others use time-activated triggers that will release a virus on a certain date.

Cyberwar Defenses


­Because cyber warfare is so different from traditional warfare, you can't rely on the same rules you'd use in a physical conflict. With the right techniques, a hacker can make an attack practically untraceable. It's not hard for a skilled hacker to create an entire army of zombie computers -- machines infected with a program that allows the hacker to control the computer remotely. A person owning one of these infected computers might not be aware of the intrusion at all. If a computer system comes under attack from an army of zombie computers, it might not be possible to find the hacker ultimately responsible.

Part of preparing for a cyber attack is to educate citizens around the world. The importance of computer security can't be overstated. A combination of the right antivirus software and a careful approach to Internet activities can help prevent hackers from gathering the resources they need to mount an offense in the first place.

Security experts like Richard Clark, former cyber security advisor to the United States, say that part of the responsibility falls on software companies. He has said that software companies often rush products to market without putting them through a rigorous quality control phase. In particular, he criticized Microsoft for its practices. Since then, Microsoft claims it spends more time and resources making sure its products have strong security features .



Why release products that aren't secure? The issue isn't as clear-cut as we might like. There's an economic tradeoff when companies take more time to look into security issues before releasing a product. The longer the production cycle, the more money the company has to spend. That puts software companies in a difficult position. Should they increase the price of their products, which can hurt the consumer? Should they keep the price the same and absorb the added development costs, which hurts their investors? Should they cut costs elsewhere by lowering salaries, which hurts their workforce? The reality is that an increased focus on security will result in an impact on the bottom line of the business. If companies feel the risk of a security breach is low, it's possible that they'll ignore the possibility entirely.

Another thing to consider is that private companies own most of the Internet's infrastructure. Unless the government implements regulations, it's up to these private companies to ensure the safety of their networks. Even experts like Richard Clark have said that regulation is not the right decision -- he argues that it inhibits innovation and lowers the bar for security across all industries.

Most industries and governments employ security experts who monitor their respective computer systems constantly. They are responsible for detecting probes and intrusions and reacting to them. Security experts like John Arquilla, an associate professor at the Naval Postgraduate School, and John Hamre, CEO and president of the Center for Strategic and International Studies, have said that a Pearl Harbor attack would probably not cause widespread destruction, in part because we've learned to detect and respond to attacks quickly [source: Frontline]. While an attack might still be successful, they say that the recovery period would be relatively short. Governments and companies should still try to seal any security holes they might have, but it's not likely that a massive attack could cripple major systems for a significant period of time. Other experts are less certain -- they caution that a well-organized assault could take us by surprise and hit enough systems to cause widespread economic damage.

While it might not be obvious to us in our every day life, there's no doubt that cyber warfare is going on right now between nations and factions around the world. So is cyberwar coming? It may already be underway.