Most Common Cryptocurrency Scamming Techniques
Presently, there has been a constant breakthrough of news about organizations and individuals alike being scammed or robbed of their digital currency holdings. Digital Currency in general is a nascent and scam intensive area. People are still trying to find their way across all the complexity. Thus, in the light of these events, we consider it our duty to help our readers in figuring out their Crypto Adventure.
What is Scamming?
Scamming is the elaborate process of taking advantage of uninformed individuals or organization, and using their ignorance to get away with their money. Scamming has always been prevalent anywhere money or wealth is involved.
Since scams are everywhere, the area of cryptocurrency and blockchain is no different. The new found complexity and unfamiliarity of the sector is a ripe area for all types of scrupulous activities. As one considers knowing about and investing in different projects in the cryptocurrency ecosystem, it is essential to be aware of the possibilities of losing one’s cryptocurrency investments.
Let us look at several ways by which a lot of initial investors have been scammed of their hard-earned wealth.
Known Cryptocurrency Scamming Techniques
Cryptocurrency scamming techniques vary in their degree and complexity. A new and enthusiastic investor is easily dejected by the overwhelming amount of information they need to consume just to stay ahead in the space. So, to ease the strain, here’s a list of the most prevalent scams in the space and how to easily identify them and safe guard your funds.
Cryptojacking is the unauthorized use of someone else’s computer to mine cryptocurrency. Hackers do this by either getting the victim to click on a malicious link, usually in an email or web-based ad, and load cryptomining code on the computer. This code then auto-executes and runs in the background, unbeknown to the user.
In a sense, cryptojacking is a way for cybercriminals to make free money with minimal effort. Cybercriminals can simply hijack someone else’s machine with just a few lines of code. This leaves the victim bearing the cost of the computations and electricity that are necessary to mine cryptocurrency. The criminals get away with the tokens.
According to the stats provided by the technology Blog CSOnline.com, in 2017 and 2018 alone hackers gained control of over 200,000 phones, laptops and other computable machines and used them to mine cryptocurrency. Historically, Monero has been the most favored cryptocurrency to cryptojack because of its openness to smaller computable machines and higher privacy.
One of the more common techniques among cryptocurrency scammers is the dusting attack. Dusting attack takes advantage of the transparent nature of the blockchain to follow and identify their victims. It is more of a wait and watch mechanism.
As the name says, Dusting attack is done by mass sending, or ‘dusting’, small amounts of cryptocurrency to hundreds or thousands of wallets. Scammers realized that cryptocurrency users do not pay much attention to these tiny amounts showing up in their wallets, and since then started using this to their advantage. Using the tiny amount, hackers take note of the wallet ID they send it to. After dusting multiple addresses, the next step of a dusting attack involves a combined analysis of those various addresses in an attempt to identify which ones belong to the same wallet.
Dusting attacks were initially performed with Bitcoin, but since then other cryptocurrencies are also used as Bitcoin’s fee is too high to mass dust. Since dusting attacks rely on a combined analysis of multiple addresses, if a dust fund is not moved, attackers are not able to make the connections they need to “de-anonymize” the wallets.
Dusting takes advantage of the importance of privacy the users assign on their cryptocurrency holding. After successfully tracing the owner of the funds by looking at the history and future of the transaction flow, the hackers blackmail the owner to pay them a ransom in exchange for keeping their anonymity safe.
Ransomware is a type of malware (malicious software) that may present in a few different ways, affecting individual systems as well as networks of businesses, hospitals, airports, and government agencies. The popularity of ransomware has grown significantly in the last decade and as a financially motivated cyber-attack, it is currently the most prominent malware threat in the world.
Cryptocurrency Ransomeware has been quite the hacking norm. Ever since the release of the WannaCry ransomware in 2017, that took hold of Windows devices and demanded bitcoin in exchange, several iterations of ransomware have been used to attack hundreds of thousands of computers worldwide. Usually, hackers prey on individuals and organizations that have a weak security infrastructure and hold a lot of sensitive information, crucial for daily activities.
Phishing and Spoofing Scams
Phishing is the process of replicating an original platform, to trick its users into thinking it is the actual thing. Phishing attacks online have been prevalent right from its initial days.
Phishing attacks are also being used within the cryptocurrency ecosystem, where malicious actors try to steal Bitcoin or other digital currencies from the users. Using psychological manipulation, the scammers trick people into revealing their username, password, billing information wallets IDs and so on.
For instance, this may be done by an attacker spoofing a real website and changing the wallet address to his own, giving users the impression that they are paying for a legitimate service when, in reality, their money is being stolen. Sometimes, users are provided with fake wallet IDs that ask for funds in exchange for a product or service. These are funds then are nowhere to be found. Other times, hackers release fake wallets that lure in users trying to store funds. Those funds then get stolen from the users.
Best Ways to Avoid being Scammed
Virtual currency fraud is a pervasive problem. However, the entire crypto domain isn’t a scam. As the number of scams increase, the adoption rate of the sector goes down. Following are some of the ways by which we can make sure that doesn’t happen.
Use 2 or more Factor Authentication
2FA or 2 factor authentication is the process of externally depending on several devices or platforms to confirm a request. 2FA has been generally used by people trying to log in to sensitive websites, trying to withdraw large funds and so on. All users are encouraged to use some form of 2FA mechanism such as password + OTP protection, password + email identification, etc. Remember that the greater the barriers to entry, the safer the information stored.
Use a VPN
Using a VPN while browsing through sensitive information is highly beneficial. When you use a VPN, all your traffic becomes encrypted. Neither the ISP or nearby coffee shop neighbor can get a single clue about your online activities. A VPN also contributes to your security. As your traffic is encrypted, wifi hackers can’t hijack your session cookies or steal your plain-text passwords. Although a VPN is not the complete security solution for your coins, it is an extremely important component of the protection. Installing a trustworthy antivirus is also recommended.
Consult Various Sources
When you come across a lucrative investment, website, application or anything else, it is considered a good practice to consult various sources, both online and offline. By consulting several platforms and individuals, one can gain confidence about the validity of the product or service being looked at. Most hackers take advantage by misusing the trust of users who come onto fancy looking sites and plant malicious code or application in devices without the knowledge of the user.
Call for Regulation
One of the more important and long-term solutions to this problem is the call for Regulation Worldwide. Since the cryptocurrency sector in most countries is still considered a grey area, most hackers take remorse in that fact. With no regulation, hackers think they can use that to take advantage of non-protected users. They stay safe as there is no one to catch them even if a complaint is made. There are no laws that deal with such scrupulous practices in countries where there is no sufficient regulation.
Thus, we urge all our users to lead the stride in the adoption and regulation of cryptocurrency and blockchain, as it is the best case for all of us to stay safe and protected. Don’t forget to check out our guide on how to avoid getting scammed from cryptocurrency projects.