In the wake of the recent Bitcoin ATM scam, I was asked what I know about cryptocurrency. I know just enough to be dangerous. What concerns me the most is how easily and how often it is used in fraud. Here is what I found out for you.
What is a Crypto-wallet?
It’s a digital tool to store, send, and receive cryptocurrencies like Bitcoin, Ethereum, Tether, etc. As of March 2024, there were about 8,985 active cryptocurrencies you could store in a crypto-wallet. It consists of a pair of cryptographic keys: a public key (your wallet address) and a private key (your password). There are different types of wallets. For example, hardware wallets are physical devices that store your private keys offline. Software wallets are apps or programs installed on your computer or mobile device. Online wallets are hosted by cryptocurrency exchanges or other online platforms. Not all cryptocurrency wallets are equal in terms of security, so do your due diligence. Choose a wallet based on criteria like security features, reputation, and ease of use. Read reviews from legitimate sources. Keep your private keys secure and do not share them with anyone.
What is a Cypto-exchange?
It’s an online platform where users buy, sell, and trade cryptocurrencies for other digital assets or traditional currencies like dollars. Exchanges vary in terms of security, fees, available cryptocurrencies, and regulatory compliance. Research and choose reputable exchanges that have strong security measures like multi-factor authentication (MFA). If you have a large amount of cryptocurrency consider storing it in a hardware wallet instead of keeping it on the exchange.
What’s AI Got to Do with It?
Scalable Scams: Artificial Intelligence (AI)-powered tools automate scam campaigns so criminals can attack a lot of potential victims simultaneously. For example, AI algorithms analyze large, publicly available datasets, like from your social media platforms. If you have significant cryptocurrency holdings or actively participate in cryptocurrency communities, scammers can precisely identify you and tailor their outreach to your preferences.
Social Engineering: AI can generate phishing emails, text messages, and websites that mimic legitimate cryptocurrency platforms or services and look extremely authentic. Do not give your Personally Identifiable Information (PII) to anyone or any app during a transaction you did not originate.
Deepfakes: AI-driven deepfake technology produces realistic videos and audio recordings of prominent figures in the cryptocurrency industry. Criminals use this content to deceive potential investors. For example, spreading false information or endorsing fraudulent projects.
Safety First
Your money in a bank has FDIC protection. Your money in a cryptocurrency account has no protection. Cryptocurrency’s inherent anonymity not only makes it attractive to criminals it also makes it easy for them to threaten you into doing something you cannot undo. How can you protect yourself in the cryptocurrency space?
- Verify the legitimacy of the institution you send cryptocurrency to before sending it.
- Ask questions. For example, if multi-factor authentication is not offered, ask for it.
- Remain calm and reject any pressure to make snap decisions. Refuse to give out your PII (e.g., social security number, bank account number, etc.) just because they demand it.
- Do not send cryptocurrency to anyone you have not met in person or to anyone (even a friend or relative) who texts or emails you with an urgent need for money. Either call that person using the phone number from your contact list or go see them in person.
What do you think we should know about cryptocurrency? Please share your experience in the comments.