When you’re faced with a task, you often wish you had the help of a friend. As they say, two heads are better than one, and collaboration can be the key to solving a problem or overcoming a challenge. With computer networks, we can say two nodes are better than one. These unique environments consist of at least two interconnected nodes that share and exchange data and resources, for which they use specific rules called “communications protocols.” Every node has its position within the network and a name and address to identify it.
The possibilities of computer networks are difficult to grasp. They make transferring files and communicating with others on the same network a breeze. The networks also boost storage capacity and provide you with more leeway to meet your goals.
One node can be powerful, but a computer network with several nodes can be like a super-computer capable of completing challenging tasks in record times.
In this introduction to computer networks, we’ll discuss the different types in detail. We’ll also tackle their applications and components and talk more about network topologies, protocols, and security.
Components of a Computer Network
Let’s start with computer network basics. A computer network is comprised of components that it can’t function without. These components can be divided into hardware and software. The easiest way to remember the difference between the two is to know that software is something “invisible,” i.e., stored inside a device. Hardware components are physical objects we can touch.
Hardware Components
- Network interface cards (NICs) – This is the magic part that connects a computer to a network or another computer. There are wired and wireless NICs. Wired NICs are inside the motherboard and connect to cables to transfer data, while wireless NICs have an antenna that connects to a network.
- Switches – A switch is a type of mediator. It’s the component that connects several devices to a network. This is what you’ll use to send a direct message to a specific device instead of the entire network.
- Routers – This is the device that uses an internet connection to connect to a local area network (LAN). It’s like a traffic officer who controls and directs data packets to networks.
- Hubs – This handy component divides a network connection into multiple computers. This is the distribution center that receives information requests from a computer and places the information to the entire network.
- Cables and connectors – Different types of cables and connectors are required to keep the network operating.
Software Components
- Network operating system (NOS) – A NOS is usually installed on the server. It creates an adequate environment for sharing and transmitting files, applications, and databases between computers.
- Network protocols – Computers interpret network protocols as guidelines for data communication.
- Network services – They serve as bridges that connect users to the apps or data on a specific network.
Types of Computer Networks
Local Area Network (LAN)
This is a small, limited-capacity network you’ll typically see in small companies, schools, labs, or homes. LANs can also be used as test networks for troubleshooting or modeling.
The main advantage of a local area network is convenience. Besides being easy to set up, a LAN is affordable and offers decent speed. The obvious drawback is its limited size.
Wide Area Network (WAN)
In many aspects, a WAN is similar to a LAN. The crucial difference is the size. As its name indicates, a WAN can cover a large space and can “accept” more users. If you have a large company and want to connect your in-office and remote employees, data centers, and suppliers, you need a WAN.
These networks cover huge areas and stretch across the globe. We can say that the internet is a type of a WAN, which gives you a good idea of how much space it covers.
The bigger size comes at a cost. Wide area networks are more complex to set up and manage and cost more money to operate.
Metropolitan Area Network (MAN)
A metropolitan area network is just like a local area network but on a much bigger scale. This network covers entire cities. A MAN is the golden middle; it’s bigger than a LAN but smaller than a WAN. Cable TV networks are the perfect representatives of metropolitan area networks.
A MAN has a decent size and good security and provides the perfect foundation for a larger network. It’s efficient, cost-effective, and relatively easy to work with.
As far as the drawbacks go, you should know that setting up the network can be complex and require the help of professional technicians. Plus, a MAN can suffer from slower speed, especially during peak hours.
Personal Area Network (PAN)
If you want to connect your technology devices and know nobody else will be using your network, a PAN is the way to go. This network is smaller than a LAN and can interconnect devices in your proximity (the average range is about 33 feet).
A PAN is simple to install and use and doesn’t have components that can take up extra space. Plus, the network is convenient, as you can move it around without losing connection. Some drawbacks are the limited range and slower data transfer.
These days, you encounter PANs on a daily basis: smartphones, gaming consoles, wireless keyboards, and TV remotes are well-known examples.
Network Topologies
Network topologies represent ways in which elements of a computer network are arranged and related to each other. Here are the five basic types:
- Bus topology – In this case, all network devices and computers connect to only one cable.
- Star topology – Here, all eyes are on the hub, as that is where all devices “meet.” In this topology, you don’t have a direct connection between the devices; the hub acts as a mediator.
- Ring topology – Device connections create a ring; the last device is connected to the first, thus forming a circle.
- Mesh topology – In this topology, all devices belonging to a network are interconnected, making data sharing a breeze.
- Hybrid topology – As you can assume, this is a mix of two or more topologies.
Network Protocols
Network protocols determine how a device connected to a network communicates and exchanges information. There are the five most common types:
- Transmission Control Protocol/Internet Protocol (TCP/IP) – A communication protocol that interconnects devices to a network and lets them send/receive data.
- Hypertext Transfer Protocol (HTTP) – This application layer protocol transfers hypertext and lets users communicate data across the World Wide Web (www).
- File Transfer Protocol (FTP) – It’s used for transferring files (documents, multimedia, texts, programs, etc.)
- Simple Mail Transfer Protocol (SMTP) – It transmits electronic mails (e-mails).
- Domain Name System (DNS) – It converts domain names to IP addresses through which computers and devices are identified on a network.
Network Security
Computer networks are often used to transfer and share sensitive data. Without adequate network security, this data could end up in the wrong hands, not to mention that numerous threats could jeopardize the network’s health.
Here are the types of threats you should be on the lookout for:
- Viruses and malware – These can make your network “sick.” When they penetrate a system, viruses and malware replicate themselves, eliminating the “good” code.
- Unauthorized access – These are guests who want to come into your house, but you don’t want to let them in.
- Denial of service attacks – These dangerous attacks have only one goal: making the network inaccessible to the users (you). If you’re running a business, these attacks will also prevent your customers from accessing the website, which can harm your company’s reputation and revenue.
What can you do to keep your network safe? These are the best security measures:
- Firewalls – A firewall acts as your network’s surveillance system. It uses specific security rules as guidelines for monitoring the traffic and spotting untrusted networks.
- Intrusion detection systems – These systems also monitor your network and report suspicious activity to the administrator or collect the information centrally.
- Encryption – This is the process of converting regular text to ciphertext. Such text is virtually unusable to everyone except authorized personnel who have the key to access the original data.
- Virtual private networks (VPNs) – These networks are like magical portals that guarantee safe and private connections thanks to encrypted tunnels. They mask your IP address, meaning nobody can tell your real location.
- Regular updates and patches – These add top-notch security features to your network and remove outdated features at the same time. By not updating your network, you make it more vulnerable to threats.
Reap the Benefits of Computer Networks
Whether you need a network for a few personal devices or want to connect with hundreds of employees and suppliers, computer networks have many uses and benefits. They take data sharing, efficiency, and accessibility to a new level.
If you want your computer network to function flawlessly, you need to take good care of it, no matter its size. This means staying in the loop about the latest industry trends. We can expect to see more AI in computer networking, as it will only make them even more beneficial.
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From the same author
Read the articleThe world is rapidly changing. New technologies such as artificial intelligence (AI) are transforming our lives and work, redefining the definition of “essential office skills.”
So what essential skills do today’s workers need to thrive in a business world undergoing a major digital transformation? It’s a question that Alan Lerner, director at Toptal and lecturer at the Open Institute of Technology (OPIT), addressed in his recent online masterclass.
In a broad overview of the new office landscape, Lerner shares the essential skills leaders need to manage – including artificial intelligence – to keep abreast of trends.
Here are eight essential capabilities business leaders in the AI era need, according to Lerner, which he also detailed in OPIT’s recent Master’s in Digital Business and Innovation webinar.
An Adapting Professional Environment
Lerner started his discussion by quoting naturalist Charles Darwin.
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
The quote serves to highlight the level of change that we are currently seeing in the professional world, said Lerner.
According to the World Economic Forum’s The Future of Jobs Report 2025, over the next five years 22% of the labor market will be affected by structural change – including job creation and destruction – and much of that change will be enabled by new technologies such as AI and robotics. They expect the displacement of 92 million existing jobs and the creation of 170 million new jobs by 2030.
While there will be significant growth in frontline jobs – such as delivery drivers, construction workers, and care workers – the fastest-growing jobs will be tech-related roles, including big data specialists, FinTech engineers, and AI and machine learning specialists, while the greatest decline will be in clerical and secretarial roles. The report also predicts that most workers can anticipate that 39% of their existing skill set will be transformed or outdated in five years.
Lerner also highlighted key findings in the Accenture Life Trends 2025 Report, which explores behaviors and attitudes related to business, technology, and social shifts. The report noted five key trends:
- Cost of Hesitation – People are becoming more wary of the information they receive online.
- The Parent Trap – Parents and governments are increasingly concerned with helping the younger generation shape a safe relationship with digital technology.
- Impatience Economy – People are looking for quick solutions over traditional methods to achieve their health and financial goals.
- The Dignity of Work – Employees desire to feel inspired, to be entrusted with agency, and to achieve a work-life balance.
- Social Rewilding – People seek to disconnect and focus on satisfying activities and meaningful interactions.
These are consumer and employee demands representing opportunities for change in the modern business landscape.
Key Capabilities for the AI Era
Businesses are using a variety of strategies to adapt, though not always strategically. According to McClean & Company’s HR Trends Report 2025, 42% of respondents said they are currently implementing AI solutions, but only 7% have a documented AI implementation strategy.
This approach reflects the newness of the technology, with many still unsure of the best way to leverage AI, but also feeling the pressure to adopt and adapt, experiment, and fail forward.
So, what skills do leaders need to lead in an environment with both transformation and uncertainty? Lerner highlighted eight essential capabilities, independent of technology.
Capability 1: Manage Complexity
Leaders need to be able to solve problems and make decisions under fast-changing conditions. This requires:
- Being able to look at and understand organizations as complex social-technical systems
- Keeping a continuous eye on change and adopting an “outside-in” vision of their organization
- Moving fast and fixing things faster
- Embracing digital literacy and technological capabilities
Capability 2: Leverage Networks
Leaders need to develop networks systematically to achieve organizational goals because it is no longer possible to work within silos. Leaders should:
- Use networks to gain insights into complex problems
- Create networks to enhance influence
- Treat networks as mutually rewarding relationships
- Develop a robust profile that can be adapted for different networks
Capability 3: Think and Act “Global”
Leaders should benchmark using global best practices but adapt them to local challenges and the needs of their organization. This requires:
- Identifying what great companies are achieving and seeking data to understand underlying patterns
- Developing perspectives to craft global strategies that incorporate regional and local tactics
- Learning how to navigate culturally complex and nuanced business solutions
Capability 4: Inspire Engagement
Leaders must foster a culture that creates meaningful connections between employees and organizational values. This means:
- Understanding individual values and needs
- Shaping projects and assignments to meet different values and needs
- Fostering an inclusive work environment with plenty of psychological safety
- Developing meaningful conversations and both providing and receiving feedback
- Sharing advice and asking for help when needed
Capability 5: Communicate Strategically
Leaders should develop crisp, clear messaging adaptable to various audiences and focus on active listening. Achieving this involves:
- Creating their communication style and finding their unique voice
- Developing storytelling skills
- Utilizing a data-centric and fact-based approach to communication
- Continual practice and asking for feedback
Capability 6: Foster Innovation
Leaders should collaborate with experts to build a reliable innovation process and a creative environment where new ideas thrive. Essential steps include:
- Developing or enhancing structures that best support innovation
- Documenting and refreshing innovation systems, processes, and practices
- Encouraging people to discover new ways of working
- Aiming to think outside the box and develop a growth mindset
- Trying to be as “tech-savvy” as possible
Capability 7: Cultivate Learning Agility
Leaders should always seek out and learn new things and not be afraid to ask questions. This involves:
- Adopting a lifelong learning mindset
- Seeking opportunities to discover new approaches and skills
- Enhancing problem-solving skills
- Reviewing both successful and unsuccessful case studies
Capability 8: Develop Personal Adaptability
Leaders should be focused on being effective when facing uncertainty and adapting to change with vigor. Therefore, leaders should:
- Be flexible about their approach to facing challenging situations
- Build resilience by effectively managing stress, time, and energy
- Recognize when past approaches do not work in current situations
- Learn from and capitalize on mistakes
Curiosity and Adaptability
With the eight key capabilities in mind, Lerner suggests that curiosity and adaptability are the key skills that everyone needs to thrive in the current environment.
He also advocates for lifelong learning and teaches several key courses at OPIT which can lead to a Bachelor’s Degree in Digital Business.
Read the articleMany people treat cyber threats and digital fraud as a new phenomenon that only appeared with the development of the internet. But fraud – intentional deceit to manipulate a victim – has always existed; it is just the tools that have changed.
In a recent online course for the Open Institute of Technology (OPIT), AI & Cybersecurity Strategist Tom Vazdar, chair of OPIT’s Master’s Degree in Enterprise Cybersecurity, demonstrated the striking parallels between some of the famous fraud cases of the 18th century and modern cyber fraud.
Why does the history of fraud matter?
Primarily because the psychology and fraud tactics have remained consistent over the centuries. While cybersecurity is a tool that can combat modern digital fraud threats, no defense strategy will be successful without addressing the underlying psychology and tactics.
These historical fraud cases Vazdar addresses offer valuable lessons for current and future cybersecurity approaches.
The South Sea Bubble (1720)
The South Sea Bubble was one of the first stock market crashes in history. While it may not have had the same far-reaching consequences as the Black Thursday crash of 1929 or the 2008 crash, it shows how fraud can lead to stock market bubbles and advantages for insider traders.
The South Sea Company was a British company that emerged to monopolize trade with the Spanish colonies in South America. The company promised investors significant returns but provided no evidence of its activities. This saw the stock prices grow from £100 to £1,000 in a matter of months, then crash when the company’s weakness was revealed.
Many people lost a significant amount of money, including Sir Isaac Newton, prompting the statement, “I can calculate the movement of the stars, but not the madness of men.“
Investors often have no way to verify a company’s claim, making stock markets a fertile ground for manipulation and fraud since their inception. When one party has more information than another, it creates the opportunity for fraud. This can be seen today in Ponzi schemes, tech stock bubbles driven by manipulative media coverage, and initial cryptocurrency offerings.
The Diamond Necklace Affair (1784-1785)
The Diamond Necklace Affair is an infamous incident of fraud linked to the French Revolution. An early example of identity theft, it also demonstrates that the harm caused by such a crime can go far beyond financial.
A French aristocrat named Jeanne de la Mont convinced Cardinal Louis-René-Édouard, Prince de Rohan into thinking that he was buying a valuable diamond necklace on behalf of Queen Marie Antoinette. De la Mont forged letters from the queen and even had someone impersonate her for a meeting, all while convincing the cardinal of the need for secrecy. The cardinal overlooked several questionable issues because he believed he would gain political benefit from the transaction.
When the scheme finally exposed, it damaged Marie Antoinette’s reputation, despite her lack of involvement in the deception. The story reinforced the public perception of her as a frivolous aristocrat living off the labor of the people. This contributed to the overall resentment of the aristocracy that erupted in the French Revolution and likely played a role in Marie Antoinette’s death. Had she not been seen as frivolous, she might have been allowed to live after her husband’s death.
Today, impersonation scams work in similar ways. For example, a fraudster might forge communication from a CEO to convince employees to release funds or take some other action. The risk of this is only increasing with improved technology such as deepfakes.
Spanish Prisoner Scam (Late 1700s)
The Spanish Prisoner Scam will probably sound very familiar to anyone who received a “Nigerian prince” email in the early 2000s.
Victims received letters from a “wealthy Spanish prisoner” who needed their help to access his fortune. If they sent money to facilitate his escape and travel, he would reward them with greater riches when he regained his fortune. This was only one of many similar scams in the 1700s, often involving follow-up requests for additional payments before the scammer disappeared.
While the “Nigerian prince” scam received enough publicity that it became almost unbelievable that people could fall for it, if done well, these can be psychologically sophisticated scams. The stories play on people’s emotions, get them invested in the person, and enamor them with the idea of being someone helpful and important. A compelling narrative can diminish someone’s critical thinking and cause them to ignore red flags.
Today, these scams are more likely to take the form of inheritance fraud or a lottery scam, where, again, a person has to pay an advance fee to unlock a much bigger reward, playing on the common desire for easy money.
Evolution of Fraud
These examples make it clear that fraud is nothing new and that effective tactics have thrived over the centuries. Technology simply opens up new opportunities for fraud.
While 18th-century scammers had to rely on face-to-face contact and fraudulent letters, in the 19th century they could leverage the telegraph for “urgent” communication and newspaper ads to reach broader audiences. In the 20th century, there were telephones and television ads. Today, there are email, social media, and deepfakes, with new technologies emerging daily.
Rather than quack doctors offering miracle cures, we see online health scams selling diet pills and antiaging products. Rather than impersonating real people, we see fake social media accounts and catfishing. Fraudulent sites convince people to enter their bank details rather than asking them to send money. The anonymity of the digital world protects perpetrators.
But despite the technology changing, the underlying psychology that makes scams successful remains the same:
- Greed and the desire for easy money
- Fear of missing out and the belief that a response is urgent
- Social pressure to “keep up with the Joneses” and the “Bandwagon Effect”
- Trust in authority without verification
Therefore, the best protection against scams remains the same: critical thinking and skepticism, not technology.
Responding to Fraud
In conclusion, Vazdar shared a series of steps that people should take to protect themselves against fraud:
- Think before you click.
- Beware of secrecy and urgency.
- Verify identities.
- If it seems too good to be true, be skeptical.
- Use available security tools.
Those security tools have changed over time and will continue to change, but the underlying steps for identifying and preventing fraud remain the same.
For more insights from Vazdar and other experts in the field, consider enrolling in highly specialized and comprehensive programs like OPIT’s Enterprise Security Master’s program.
-
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Related posts
The world is rapidly changing. New technologies such as artificial intelligence (AI) are transforming our lives and work, redefining the definition of “essential office skills.”
So what essential skills do today’s workers need to thrive in a business world undergoing a major digital transformation? It’s a question that Alan Lerner, director at Toptal and lecturer at the Open Institute of Technology (OPIT), addressed in his recent online masterclass.
In a broad overview of the new office landscape, Lerner shares the essential skills leaders need to manage – including artificial intelligence – to keep abreast of trends.
Here are eight essential capabilities business leaders in the AI era need, according to Lerner, which he also detailed in OPIT’s recent Master’s in Digital Business and Innovation webinar.
An Adapting Professional Environment
Lerner started his discussion by quoting naturalist Charles Darwin.
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
The quote serves to highlight the level of change that we are currently seeing in the professional world, said Lerner.
According to the World Economic Forum’s The Future of Jobs Report 2025, over the next five years 22% of the labor market will be affected by structural change – including job creation and destruction – and much of that change will be enabled by new technologies such as AI and robotics. They expect the displacement of 92 million existing jobs and the creation of 170 million new jobs by 2030.
While there will be significant growth in frontline jobs – such as delivery drivers, construction workers, and care workers – the fastest-growing jobs will be tech-related roles, including big data specialists, FinTech engineers, and AI and machine learning specialists, while the greatest decline will be in clerical and secretarial roles. The report also predicts that most workers can anticipate that 39% of their existing skill set will be transformed or outdated in five years.
Lerner also highlighted key findings in the Accenture Life Trends 2025 Report, which explores behaviors and attitudes related to business, technology, and social shifts. The report noted five key trends:
- Cost of Hesitation – People are becoming more wary of the information they receive online.
- The Parent Trap – Parents and governments are increasingly concerned with helping the younger generation shape a safe relationship with digital technology.
- Impatience Economy – People are looking for quick solutions over traditional methods to achieve their health and financial goals.
- The Dignity of Work – Employees desire to feel inspired, to be entrusted with agency, and to achieve a work-life balance.
- Social Rewilding – People seek to disconnect and focus on satisfying activities and meaningful interactions.
These are consumer and employee demands representing opportunities for change in the modern business landscape.
Key Capabilities for the AI Era
Businesses are using a variety of strategies to adapt, though not always strategically. According to McClean & Company’s HR Trends Report 2025, 42% of respondents said they are currently implementing AI solutions, but only 7% have a documented AI implementation strategy.
This approach reflects the newness of the technology, with many still unsure of the best way to leverage AI, but also feeling the pressure to adopt and adapt, experiment, and fail forward.
So, what skills do leaders need to lead in an environment with both transformation and uncertainty? Lerner highlighted eight essential capabilities, independent of technology.
Capability 1: Manage Complexity
Leaders need to be able to solve problems and make decisions under fast-changing conditions. This requires:
- Being able to look at and understand organizations as complex social-technical systems
- Keeping a continuous eye on change and adopting an “outside-in” vision of their organization
- Moving fast and fixing things faster
- Embracing digital literacy and technological capabilities
Capability 2: Leverage Networks
Leaders need to develop networks systematically to achieve organizational goals because it is no longer possible to work within silos. Leaders should:
- Use networks to gain insights into complex problems
- Create networks to enhance influence
- Treat networks as mutually rewarding relationships
- Develop a robust profile that can be adapted for different networks
Capability 3: Think and Act “Global”
Leaders should benchmark using global best practices but adapt them to local challenges and the needs of their organization. This requires:
- Identifying what great companies are achieving and seeking data to understand underlying patterns
- Developing perspectives to craft global strategies that incorporate regional and local tactics
- Learning how to navigate culturally complex and nuanced business solutions
Capability 4: Inspire Engagement
Leaders must foster a culture that creates meaningful connections between employees and organizational values. This means:
- Understanding individual values and needs
- Shaping projects and assignments to meet different values and needs
- Fostering an inclusive work environment with plenty of psychological safety
- Developing meaningful conversations and both providing and receiving feedback
- Sharing advice and asking for help when needed
Capability 5: Communicate Strategically
Leaders should develop crisp, clear messaging adaptable to various audiences and focus on active listening. Achieving this involves:
- Creating their communication style and finding their unique voice
- Developing storytelling skills
- Utilizing a data-centric and fact-based approach to communication
- Continual practice and asking for feedback
Capability 6: Foster Innovation
Leaders should collaborate with experts to build a reliable innovation process and a creative environment where new ideas thrive. Essential steps include:
- Developing or enhancing structures that best support innovation
- Documenting and refreshing innovation systems, processes, and practices
- Encouraging people to discover new ways of working
- Aiming to think outside the box and develop a growth mindset
- Trying to be as “tech-savvy” as possible
Capability 7: Cultivate Learning Agility
Leaders should always seek out and learn new things and not be afraid to ask questions. This involves:
- Adopting a lifelong learning mindset
- Seeking opportunities to discover new approaches and skills
- Enhancing problem-solving skills
- Reviewing both successful and unsuccessful case studies
Capability 8: Develop Personal Adaptability
Leaders should be focused on being effective when facing uncertainty and adapting to change with vigor. Therefore, leaders should:
- Be flexible about their approach to facing challenging situations
- Build resilience by effectively managing stress, time, and energy
- Recognize when past approaches do not work in current situations
- Learn from and capitalize on mistakes
Curiosity and Adaptability
With the eight key capabilities in mind, Lerner suggests that curiosity and adaptability are the key skills that everyone needs to thrive in the current environment.
He also advocates for lifelong learning and teaches several key courses at OPIT which can lead to a Bachelor’s Degree in Digital Business.
Many people treat cyber threats and digital fraud as a new phenomenon that only appeared with the development of the internet. But fraud – intentional deceit to manipulate a victim – has always existed; it is just the tools that have changed.
In a recent online course for the Open Institute of Technology (OPIT), AI & Cybersecurity Strategist Tom Vazdar, chair of OPIT’s Master’s Degree in Enterprise Cybersecurity, demonstrated the striking parallels between some of the famous fraud cases of the 18th century and modern cyber fraud.
Why does the history of fraud matter?
Primarily because the psychology and fraud tactics have remained consistent over the centuries. While cybersecurity is a tool that can combat modern digital fraud threats, no defense strategy will be successful without addressing the underlying psychology and tactics.
These historical fraud cases Vazdar addresses offer valuable lessons for current and future cybersecurity approaches.
The South Sea Bubble (1720)
The South Sea Bubble was one of the first stock market crashes in history. While it may not have had the same far-reaching consequences as the Black Thursday crash of 1929 or the 2008 crash, it shows how fraud can lead to stock market bubbles and advantages for insider traders.
The South Sea Company was a British company that emerged to monopolize trade with the Spanish colonies in South America. The company promised investors significant returns but provided no evidence of its activities. This saw the stock prices grow from £100 to £1,000 in a matter of months, then crash when the company’s weakness was revealed.
Many people lost a significant amount of money, including Sir Isaac Newton, prompting the statement, “I can calculate the movement of the stars, but not the madness of men.“
Investors often have no way to verify a company’s claim, making stock markets a fertile ground for manipulation and fraud since their inception. When one party has more information than another, it creates the opportunity for fraud. This can be seen today in Ponzi schemes, tech stock bubbles driven by manipulative media coverage, and initial cryptocurrency offerings.
The Diamond Necklace Affair (1784-1785)
The Diamond Necklace Affair is an infamous incident of fraud linked to the French Revolution. An early example of identity theft, it also demonstrates that the harm caused by such a crime can go far beyond financial.
A French aristocrat named Jeanne de la Mont convinced Cardinal Louis-René-Édouard, Prince de Rohan into thinking that he was buying a valuable diamond necklace on behalf of Queen Marie Antoinette. De la Mont forged letters from the queen and even had someone impersonate her for a meeting, all while convincing the cardinal of the need for secrecy. The cardinal overlooked several questionable issues because he believed he would gain political benefit from the transaction.
When the scheme finally exposed, it damaged Marie Antoinette’s reputation, despite her lack of involvement in the deception. The story reinforced the public perception of her as a frivolous aristocrat living off the labor of the people. This contributed to the overall resentment of the aristocracy that erupted in the French Revolution and likely played a role in Marie Antoinette’s death. Had she not been seen as frivolous, she might have been allowed to live after her husband’s death.
Today, impersonation scams work in similar ways. For example, a fraudster might forge communication from a CEO to convince employees to release funds or take some other action. The risk of this is only increasing with improved technology such as deepfakes.
Spanish Prisoner Scam (Late 1700s)
The Spanish Prisoner Scam will probably sound very familiar to anyone who received a “Nigerian prince” email in the early 2000s.
Victims received letters from a “wealthy Spanish prisoner” who needed their help to access his fortune. If they sent money to facilitate his escape and travel, he would reward them with greater riches when he regained his fortune. This was only one of many similar scams in the 1700s, often involving follow-up requests for additional payments before the scammer disappeared.
While the “Nigerian prince” scam received enough publicity that it became almost unbelievable that people could fall for it, if done well, these can be psychologically sophisticated scams. The stories play on people’s emotions, get them invested in the person, and enamor them with the idea of being someone helpful and important. A compelling narrative can diminish someone’s critical thinking and cause them to ignore red flags.
Today, these scams are more likely to take the form of inheritance fraud or a lottery scam, where, again, a person has to pay an advance fee to unlock a much bigger reward, playing on the common desire for easy money.
Evolution of Fraud
These examples make it clear that fraud is nothing new and that effective tactics have thrived over the centuries. Technology simply opens up new opportunities for fraud.
While 18th-century scammers had to rely on face-to-face contact and fraudulent letters, in the 19th century they could leverage the telegraph for “urgent” communication and newspaper ads to reach broader audiences. In the 20th century, there were telephones and television ads. Today, there are email, social media, and deepfakes, with new technologies emerging daily.
Rather than quack doctors offering miracle cures, we see online health scams selling diet pills and antiaging products. Rather than impersonating real people, we see fake social media accounts and catfishing. Fraudulent sites convince people to enter their bank details rather than asking them to send money. The anonymity of the digital world protects perpetrators.
But despite the technology changing, the underlying psychology that makes scams successful remains the same:
- Greed and the desire for easy money
- Fear of missing out and the belief that a response is urgent
- Social pressure to “keep up with the Joneses” and the “Bandwagon Effect”
- Trust in authority without verification
Therefore, the best protection against scams remains the same: critical thinking and skepticism, not technology.
Responding to Fraud
In conclusion, Vazdar shared a series of steps that people should take to protect themselves against fraud:
- Think before you click.
- Beware of secrecy and urgency.
- Verify identities.
- If it seems too good to be true, be skeptical.
- Use available security tools.
Those security tools have changed over time and will continue to change, but the underlying steps for identifying and preventing fraud remain the same.
For more insights from Vazdar and other experts in the field, consider enrolling in highly specialized and comprehensive programs like OPIT’s Enterprise Security Master’s program.
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