Bitcoin and other cryptocurrencies often get used in scams, such as Ponzi schemes, phishing attacks, and fake ICOs. Crypto’s lack of regulation has led to several high-profile hacks, such as the Mt. Gox hack in 2014, resulting in the loss of over 650,000 bitcoins — a $460 million disaster.
Unfortunately, these scams often look like legitimate investments, making them challenging to spot. Given the unique cybersecurity risks associated with cryptocurrency, Kenny Natiss says that companies should make sure they have a comprehensive cybersecurity plan in place.
Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and control the creation of new units. Since they are decentralized, neither the government nor financial institutions can manage them.
Bitcoin, the most well-known cryptocurrency, was created in 2009 in response to the global financial crisis. As of October 2022, there are over 19 million bitcoins in circulation, with a total market cap of around $368 billion.
In addition to being used to make purchases of goods and services, cryptocurrencies get exchanged frequently on decentralized exchanges. There are now thousands of different cryptocurrencies, including Ethereum, Litecoin, and Monero, with new ones made regularly, often referred to as altcoins or alternative coins.
The decentralized nature of cryptocurrency and its anonymity has made it a popular choice for investors, consumers, and, sadly, criminals.
The most sophisticated type of fraud is the ransomware attack. Hackers encrypt a victim’s files and demand payment in cryptocurrency for the decryption key. The Colonial Pipeline attack was an example of this type of scam.
Here are some of the most common cryptocurrency scams to be aware of:
This scam promises investors high returns for little to no risk. The people behind the scheme are simply using new investor money to pay off old investors. Eventually, the project will collapse, and many people will lose their money.
This scam involves creating a fake Initial Coin Offering (ICO) to raise funds from unsuspecting investors. The people behind the ICO often create a website and whitepaper that looks legitimate, but the project is nothing more than a fraud.
In this scam, hackers attempting to steal login credentials or personal information send emails or other messages that seem to be from a reliable source. Be careful when clicking on unknown links within communication channels, as it could unwittingly give hackers access to individual accounts.
This scam involves installing malicious software on a computer that can steal personal information or login credentials. Be very careful when downloading files from the internet, as it could inadvertently install malware on an unsecured system.
This type of scam involves artificially inflating the price of a particular cryptocurrency through false and misleading statements. Once the price gets artificially inflated, the people behind the scheme sell their coins for a profit, leaving investors with worthless coins.
Cryptocurrency brings unique considerations to cybersecurity because no central authority can be held responsible for safeguarding assets. Instead, it is up to individual users to take measures to protect their investments.
By taking cybersecurity measures to protect assets and being aware of the risks, individuals and businesses can help safeguard their investments and personal information.