When one of our students told us they were going to drop out of college in August 2021, it wasn’t the first time we’d heard of someone ending their studies prematurely. But the reason was new: The student had become a victim of a cryptocurrency scam and lost all their money — including a bank loan — leaving them not just broke, but in debt. The experience was financially and psychologically traumatic, to say the least.
This student, unfortunately, is not alone. Currently, there roughly one billion cryptocurrency owners, with an estimated 25 million bitcoin owners by the end of 2022, representing a 16.7 percent growth since 2021. As the number of crypto owners increases, so has the number of scam victims.
We study behavioral 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.
Crypto takes off
Scams are not a recent phenomenon, since stories about them date 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, and cryptocurrencies have come to epitomize the leading edge of these new cybercrime opportunities.
