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Most Common Cryptocurrency Scamming Techniques
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There has been a constant breakthrough in the news about organizations and individuals being scammed or robbed of their digital currency holdings. Digital Currency, in general, is a developing and scam-intensive area. People are still trying to find their way across all the complexity. Thus, in light of these events, we consider it our duty to help our readers figure out their Crypto Adventure.
What is Scamming?
Scamming is the elaborate process of taking advantage of uninformed individuals or organizations 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 newfound complexity and unfamiliarity of the sector is a ripe area for all types of ethical activities. As one considers knowing about and investing in other projects in the cryptocurrency ecosystem, it is essential to be aware of the possibility of losing one’s cryptocurrency investments.
Let us look at several ways many initial investors have been scammed of their hard-earned wealth.
Known Cryptocurrency Scamming Techniques
Cryptocurrency scamming techniques vary in degree and complexity. The new and enthusiastic investor is easily discouraged by the overwhelming amount of information they need to consume 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 quickly identify them and safeguard your funds.
Cryptojacking
Cryptojacking is the unauthorized use of someone else’s computer to mine cryptocurrency. Hackers get the victim to click on a malicious link, usually in an email or web-based ad and load the crypto mining 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 hijack someone else’s machine with just a few lines of code. This leaves the victim bearing the cost of the computations and electricity 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, 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 devices and higher privacy.
Dusting Attack
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 watches mechanism.
As the name says, a Dusting attack is made 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 in their wallets and, since then, have used this to their advantage. Using the small 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 to identify which ones belong to the same wallet.
Dusting attacks were initially performed with Bitcoin, but other cryptocurrencies are also used as Bitcoin’s fee is too high to mass dust. Additionally, since dusting attacks rely on a combined analysis of multiple addresses, if a dust fund is not moved, attackers cannot make the connections they need to “de-anonymize” the wallets.
Dusting takes advantage of the importance of privacy the users assign to their cryptocurrency holdings. After successfully tracing the owner of the funds by looking at the transaction flow’s history and future, the hackers blackmail the owner into paying them a ransom to keep their anonymity safe.
Ransomeware
Ransomware is malware (malicious software) that may present several ways, affecting individual systems and 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 ransomware has been quite the hacking norm. Since the WannaCry ransomware release in 2017, which took hold of Windows devices and demanded bitcoin in exchange, several ransomware iterations have been used to attack hundreds of thousands of computers worldwide. Usually, hackers prey on individuals and organizations with weak security infrastructure and hold much sensitive information crucial for daily activities.
Phishing and Spoofing Scams
Phishing is replicating an original platform to trick users into thinking it is the actual thing. Phishing attacks online have been prevalent right from their initial days.
Phishing attacks are also being used within the cryptocurrency ecosystem, where malicious actors try to steal Bitcoin or other digital currencies from users. Using psychological manipulation, scammers trick people into revealing their usernames, password, billing information, wallet IDs, etc.
For instance, this may be done by an attacker spoofing an actual 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 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 increases, the adoption rate of the sector goes down. The following are some of the ways by which we can make sure that doesn’t happen.
Use two or more Factors 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 significant funds, and so on. All users are encouraged to use 2FA mechanisms 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. As a result, neither the ISP nor nearby coffee shop neighbors 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 a critical protection component. 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 good practice to consult various online and offline sources. By consulting several platforms and individuals, one can gain confidence about the validity of the product or service being looked at. Unfortunately, most hackers take advantage of misusing the trust of users who come onto fancy-looking sites and plant malicious code or applications in devices without the user’s knowledge.
Call for Regulation
A more critical and long-term solution to this problem is the call for Regulation Worldwide. Since most countries’ cryptocurrency sector is still considered a grey area, most hackers take remorse. With no regulation, hackers think they can use that to exploit non-protected users. They stay safe as no one can catch them, even if a complaint is made. There are no laws that deal with such ethical practices in countries where there is no sufficient regulation.
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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. Also, don’t forget to check out our guide on how to avoid getting scammed by cryptocurrency projects.
Written by
Sudarshan M
@Sum
186 posts
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