The Dark Side of Cryptocurrency | Office of Information Security (2024)

FAQs

What is the dark truth about cryptocurrency? ›

Cryptocurrency scams manifest in various guises, each presenting a unique set of challenges to the unsuspecting investor. One prevalent form is the Ponzi scheme, cleverly dressed in crypto attire. It lures victims by promising outlandishly high returns on investments.

1. What are the common security risks associated with cryptocurrency? Common security risks include hacking and phishing attacks, smart contract vulnerabilities, social engineering scams, insider threats, and rug pulls.

The lack of key policies related to transactions serves as a major drawback of cryptocurrencies. The no refund or cancellation policy can be considered the default stance for transactions wrongly made across crypto wallets and each crypto stock exchange or app has its own rules.

One of the most notorious uses of cryptocurrency in cybercrime is ransomware. Ransomware attacks, one of today's most important cyber security problems, especially for organizations, have also increased in parallel with the rise of cryptocurrencies.

Bitcoin's price is primarily affected by its supply, the market's demand, availability, competing cryptocurrencies, and investor sentiment. Bitcoin supply is limited—there is a finite number of bitcoins, and the final coins are projected to be mined in 2140.

The Dark Side of Blockchain Technology: Environmental Concerns and Mitigation Strategies. The contemporary times are characterized by adoption of technology-driven systems in almost every aspect of life thereby reshaping civilisation in terms of work, education, entertainment, economy, and commerce, at a rapid pace.

The Securities and Exchange Commission's primary theory on whether a cryptoasset is a security appears to be based upon whether the blockchain project associated with a cryptoasset is, at any point in time, “sufficiently decentralized.”[2] If so, the cryptoasset is not a security.

If a cryptocurrency is a security, cryptocurrency issuers and exchanges must seek the necessary licenses from their securities regulators. This is usually pretty difficult to do, so the crypto industry spends a huge amount of effort trying to ensure that cryptocurrency sales and developments avoid securities laws.

Which cryptocurrency is most secure? Ethereum is considered to be the most secure cryptocurrency as compared to other digital assets. This is largely because its platform uses the blockchain technology, which is one of the most robust technologies for digital transactions.

There are several risks associated with investing in cryptocurrency: loss of capital, government regulations, fraud and hacks. Loss of capital. Mark Hastings, partner at Quillon Law, warns that investors must tread carefully in crypto's unique financial environment or risk significant losses.

Why is crypto not the future? ›

Volatility and lack of regulation. The rapid rise of cryptocurrencies and DeFi enterprises means that billions of dollars in transactions are now taking place in a relatively unregulated sector, raising concerns about fraud, tax evasion, and cybersecurity, as well as broader financial stability.

Backing a currency is done by the currency's issuer to ensure its value. Bitcoin, gold, and fiat currencies are not backed by any other asset. Bitcoin has value despite no backing because it has properties of sound money.

Cybercriminals have found many ways to use cryptocurrencies for their benefit. One of the most common ways is through ransomware attacks. In a ransomware attack, a cybercriminal will gain access to a victim's computer and encrypt their files, making them inaccessible.

Bitcoin is a digital currency that can be transferred from one person to another without the use of a bank. Because it's unsecured it could easily be lost or stolen and is not insured by any government bodies. You might have heard about bitcoin because of the WannaCry ransomware.

Cryptocurrencies are known for their market volatility so the value of investor's assets go up and down quickly. As more people have invested their money in cryptocurrencies, criminals have capitalised on this as an opportunity to commit fraud.

The official reason given for the move against IPs is, according to the local Premium Times, the “continuous manipulation of the forex market”, and the decision was taken “following reports that currency speculators and money launderers were using [crypto platforms] to execute criminal activities”.

It is theoretically possible. Bitcoin has been around for close to 15 years now, and although it has survived several dramatic crashes before making new highs, its extreme volatile nature puts investors at risk of losing all their money.

As a rule of thumb, investors should avoid meme coins, low-market-cap coins, and any coins not trading on major cryptocurrency exchanges.

Most crypto coins have extreme volatility swings, complicated technicals and very little regulation. So, while there's an opportunity and people have become rich, many still hesitate to invest in the crypto market.