Crypto as the Root of Evil: Part I
The Rapid Rise of Bots & Scammers
It’s no big secret that fraud is a downside in cryptocurrency.
We can’t seem to scroll past our social media feed without being spammed with scammy links and uninvited bots commenting on our innocent posts. Does it appear to have become more prevalent as time has gone on?
As cryptocurrency becomes mainstream, it appears not only investors have noticed. So have actors in bad faith who have seized the opportunity.
But is this enough to signal the end of cryptocurrency? Should it be banned or, in more common parlance, ‘be cancelled’?
I had to find out, and the results were surprising.
“Give me your Bitcoin.”
Studies by the United States Federal Trade Commission (FTC) revealed over 7000 people reported a whopping $80 million loss since October 2020. And that’s just for those that made a complaint.
Compared to the previous year, that’s over a dozen more reports.
As with ants perching on sugar on a hot sunny day (or any other day, really), scammers have swarmed the crypto space.
While crypto scams still aren’t anywhere as near rampant as with fiat currency, does the very premise of blockchain technology make it more prone to actors in bad faith?
The nascence of the space, the potential for significant gain and the lack of in-depth understanding by a sizeable number of users all make the perfect recipe for a scam pie.
And so, one of its most significant selling points can quickly become its pitfall: the lack of a middleman or centralised entity to flag suspicious-looking activity.
Bots are also a controversial aspect of crypto because while they’re helpful in the fast-paced space of trading, scammers can also utilise them to spread phishing links on social media.
Which begs the question…
How exactly is crypto hacked?
Scams aren’t novel.
They’ve been around probably as long as human beings have. And since most people are into crypto for the money, not just the technology, scams have become more prominent.
But how is this even possible with a technology rooted in steep security?
Cryptography—the security on which crypto lies—is still one of the most secure technologies. The way it’s set up, it’s almost impossible to get through the back door. This leaves room for one option:
The front door.
This is significant because it shows that there’s proactiveness on the consumer end. The downside, of course, is victim blaming, which is never helpful.
See, the primary way to get into one’s wallet is through their private (“front”) key.
Most often, this is what is usually targeted by fishy links. The idea is not to break down your door but to quietly open it and maybe even grab a bottle of Coke in your fridge as the apartment is ransacked.
So how exactly is this done?
FTC breaks it down into 3 main methods:
1. Investment scams: Because of the open nature of crypto offers, anyone can get into it. These scams are sometimes up-front, with the promise of an incredulous profit margin offering “little to no risk” in a short time, often with a sense of urgency.
2. Romance scams: Think Tinder Swindler meets crypto. These involve one party, usually met via a dating site/app, pressuring the other into getting into “a new crypto wave”. It might sound bizarre, but I guess love is a drug.
3. Impersonation: This could be in the form of government or business agencies demanding payment in crypto to offset a supposed and unknown debt or fake social media accounts of established crypto platforms sending phishing links. These can be very convincing.
This list isn’t exhaustive.
The way forward.
The fact remains that cryptocurrency (alongside the blockchain in its entirety) is a compelling piece of technology that’s still in its days of infancy. But these developments aren’t exactly encouraging to both the newbies and OGs in the space.
What about the claims on money laundering and crypto funding crime or wars?
Can anything be done about this?