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Education is the Best Defense Against Cryptocurrency Scams

Scammers are smart people who do bad things. We live in an age where we have to protect ourselves against threats that have never existed before. Threats like cybercrime, identity theft, and ransomware. These are relatively new phenomena themselves, so it’s not common knowledge how to protect yourself against scammers that employ these schemes. The younger generations are faring far better than the older generation when it comes to becoming a victim of these scams. This is likely due to the fact that more and more people are growing up having always known the internet. Digital concepts, ideas, and ultimately best practices are second nature to the youth of today. There has been a massive rise in ransomware in recent years, and cryptocurrency certainly is not blameless.

reflection of computer screen with ransomware in sunglasses of girl

YEKATERINBURG, RUSSIA - JUNE 28, 2017: A reflection of a computer hacked by a virus known as Petya. The Petya ransomware cyber attack hit computers of Russian and Ukrainian companies on June 27, 2017. Donat Sorokin/TASS (Photo by Donat SorokinTASS via Getty Images)

Cryptocurrency Enables Cybercrime

One massively unfortunate fact of cryptocurrency is it enables cyber criminals to get away with their schemes easier. Cyber criminals take advantage of the naivety of everyday individuals’ knowledge of technology. They exploit the fact that they don’t know any better. Usually they get people to take actions that transfer ownership of important information or money. Cryptocurrency does two things to help cyber criminals.

  1. Concoct a wider variety of scams
  2. Get away with cyber crimes more easily

There is a slight caveat to the second point that I will address in a later section of this article. The first point however, is true though and though. Cyber criminals are smart people. They are very clever with their methods and schemes. I do not have confidence that the general public, and law enforcement are keeping up in any meaningful way with the pace at which cyber criminals are innovating on their schemes. Ransomware for example has become so much more dangerous and sophisticated with the integration of cryptocurrency.

What is Ransomware?

Ransomware is a type of virus or malware that holds your data hostage. Many people keep important information and files unprotected on their computers. Anything from family photos, to tax information. Criminals don’t really care about your family camping trip photos, but they know you do. So they encrypt your harddrive, making your pictures unreadable. At the same time, a program is installed onto your computer that demands you send an amount of cryptocurrency to an address. Once that amount has been received, your computer will be unencrypted. In order to get your family photos back, you need to pay the hackers. This is one reason why keeping a backup of your computer is a great idea. You can ignore the hacker, and restore your computer with its files if you follow the best practice of daily or weekly backups.

Ransomware is a type of malware that has steadily been increasing in prevalence since the inception of bitcoin in 2008. In 2017, a computer security firm named Carbon Black reported a 2500 % increase in ransomware attacks. Best case scenario, the attackers ask for bitcoin. Worse case scenario, they ask for some sort of privacy coin like zCash or Monero. If you do end up paying the hackers, bitcoin is much more easy to obtain, and use. There is even the chance that you law enforcement can recover your funds as bitcoin is extremely easy to trace.

The Traceability of Bitcoin

A good number of newcomers to the world of cryptocurrency often make the comment that bitcoin is used by criminals and terrorists. While this is true, what they don’t realize is that when this does happen, blockchain forensic tools can be used to thwart the criminal activity. Due to the nature of bitcoin, all transactions are transparent and traceable. Unless the criminals are supplementing the digital activity with other tools to hide their identity, law enforcement can learn the identity of criminals using bitcoin. This is a good thing overall for bitcoin, as it only further supplements bitcoin as a great currency to be accepted and adopted. Should criminals use it to conduct crime, they can be stopped using the same medium that they are using for payments.

The Untraceability of Privacy Coins

When it comes to privacy oriented coins such as zCash or Monero, catching criminals is not as simple. Unlike bitcoin, transactions on these networks are not traceable, or transparent. It is either difficult, or downright impossible to tell who is sending what amount of money to whom. This technology is really what criminals should be using to conduct their crime, as law enforcement is way behind in being able to easily learn the identity of criminals using these networks.

This is no reason for these networks to be taken down though. They are just as robust and difficult to shut down as other cryptocurrency networks. Instead, it means that creative innovation needs to take place in order to learn the identity of those who would misuse this technology. For example, someone may obtain Monero on an exchange and use it to facilitate crime. It is possible that the exchange may be able to expose the identity of the user. This is one avenue to holding those who would misuse cryptocurrency accountable for their actions.

A Little Education Goes A Long Way

Most of the time, a little education can prevent catastrophic events from occurring. Here are a couple of one-off tips for safeguarding your identity online. 

  1. Don’t use the same password for everything
  2. Make sure your password contain a mixture of letters, numbers, and symbols
  3. Be familiar with how to identify phone call scams
  4. Regularly backup your phone and/or computer

Most cyber crimes can be prevented, or ignored if you have taken one or more of the above actions. 

It Will Get Worse Before It Gets Better

Most of the time, humans need a large, life changing event to take place before we change our behaviours. Even then, changing the way we do things is not our first thought. With ransomware on the rise, and cryptocurrencies on pace for mass adoption, cybercrime is not going away. With knowledge of this fact, you would think that more resources would go into educating the public on digital safety and security. So what sort of catastrophe would we need to have occur to educate the masses? The WannaCry ransomware attacks in 2017 infected more than 200000 computers across 150 countries. It caused billions of dollars worth of damages. Nonetheless, digital education doesn’t seem to be any more relevant than it was 3 years ago. So to answer the question, “What sort of hack needs to take place before we change?”. A bigger one than WannaCry.

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About the Author

Keegan Francis

Keegan Francis is a cryptocurrency knowledge expert and consultant. He recognized the opportunity in cryptocurrency early in his career and has been invested in it since 2014. His passion led him to start the Go Full Crypto, a project that documents his journey of totally opting out of traditional financial services. Keegan has been living entirely off of cryptocurrencies since 2019.

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