Crypto Recovery Needs A More Aggressive Solution To Fraud

It’s no exaggeration to say that our industry is going through tough times. We are in the midst of a “crypto winter” when the prices of major currencies such as Bitcoin (BTC) and Ether (ETH) plummet. Similarly, monthly non-fungible token (NFT) trading volume has fallen by more than 90% since peaking in the billions of dollars in January this year. Of course, these declines are only exacerbated by a number of black swan events rocking the crypto world, such as the FTX and Three Arrows Capital meltdowns. Taken together, it should come as no surprise that cryptocurrencies are facing a trust deficit.

We need to address the disruptive behavior of reckless CEOs and hold the individuals responsible for these events accountable, but we cannot stop there if our industry is to recover. Enhancing the security of end-users against fraud and hacking threats should be a top priority in dealing with the lack of trust that cryptocurrencies face.

Don’t you think so? In 2021, he had $3.2 billion worth of digital assets stolen, according to research firm Chainalysis. It doesn’t look good for the industry this year. When it comes to fraud, the picture is bleak as reports keep showing an increase in known crypto-scams such as deposit taking and draining wallets. Between July 2021 and August 2022, his unsophisticated NFT scam cost him a staggering $100 million in investment capital. Given that most NFT scams are micro-scams that affect individual users that go unreported, this number may be an underestimate.

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Phishing links trick end users into emptying their wallets. A front-running scheme using videos promising “huge profits” to persuade people to download fake software that gives scammers access to their assets. Also direct attacks that destroy bridges like Ronin and Nomad. Looking around, not only are scams and hacks bringing billions of dollars of digital assets to the crypto industry, but they are undermining confidence in cryptocurrencies in a way that makes more sense than the Black He Swan event in 2022. You can see that

Sure, Sam Bankman Freed and Do Kwon and all the other bad actor CEOs can be avoided and kicked out. However, if we want to convince the public and customers that it is safe to interact with and invest in cryptocurrencies, we need to tackle fraud and hacking issues head-on.

How can we make Web3 safe for everyone? The fundamental principles of cryptocurrency are decentralization, transparency, and immutability. Cryptocurrencies should be for everyone, and as an industry, we need to limit the effort required and the level of risk associated with users getting started with cryptocurrencies, whether buying or trading NFTs or buying or selling Bitcoin. must be lowered. As it stands, cryptography is too complex and difficult for everyday people to understand. Without better tools and anti-fraud software, scams and hacks are easily executed and spread.

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Developing anti-fraud tools is definitely one way the industry can combat fraud and hacking. Continued investment in security layers and systems that indemnify users in the event of losses related to hacking or fraud can help. Strong mainstream adoption will never happen if cryptocurrencies remain higher. This is probably our biggest barrier to rebounding as an industry and onboarding the next 100 million users .

The first step in solving any problem is recognizing it. There is a lack of trust in our industry, and scams and hacks are just as relevant as the FTX or Three Arrows debacles. Cryptocurrencies are often colloquially referred to as “dark forests” and trading parties identified as exploitable are usually exploited (or destroyed). Personally, I don’t want to live in a dark forest, and neither do users. It is our responsibility to create a path that shines. End-user security is no longer just an industry buzzword. It should be a key pillar of our regeneration.

This article is for general information purposes and is not intended, and should not be construed as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author and do not necessarily reflect or represent the views or opinions of Cointelegraph.