We study behavioural economics and psychology – and recently published a book about the rising problem of fraud, scams, and financial abuse. There are reasons why cryptocurrency scams are so prevalent. And there are steps you can take to reduce your chances of becoming a victim.
Scams are not a recent phenomenon, with stories about them dating back to biblical times. What has fundamentally changed is the ease by which scammers can reach millions, if not billions, of individuals with a press of a button. The internet and other technologies have simply changed the rules of the game, with cryptocurrencies coming to epitomise the leading edge of these new cybercrime opportunities.
Cryptocurrencies – which are decentralised, digital currencies that use cryptography to create anonymous transactions – were originally driven by “cypherpunks,” individuals concerned with privacy. But they have expanded to capture the minds and pockets of everyday people and criminals alike, especially during the COVID-19 pandemic, when the price of various cryptocurrencies shot up and cryptocurrencies became more mainstream. Scammers capitalised on their popularity. The pandemic also caused disruption to mainstream business, leading to greater reliance on alternatives such as cryptocurrencies.
A January 2022 report by Chainanalysis, a blockchain data platform, suggests that in 2021, close to US$ 14 billion was scammed from investors using cryptocurrencies
For example, in 2021, two brothers…
