PERSPECTIVES FROM THE CAMPUS

One of the strengths of Indiana is that we bring together a variety of perspectives from the plethora of areas that touch the field of cyber, especially through the colleges, universities, and other institutions of higher education throughout our state. Hence the name, “Perspectives from the Campus”, we invite experts – immersed in the pursuit of educating their students – to offer their knowledge for finding solutions in cybersecurity that benefit all Hoosiers.

In the latest installment of this series, David Dungan, who serves as the executive director at the Center for Security Services and Cyber Defense at Anderson University, delves into the world of cryptocurrency. In addition to offering some helpful information about the types of scams cybercriminals are using when it comes to trying to steal someone’s assets, he discusses a few of the steps they’re using to mislead people when it comes to investing (or spending) the money that’s in their digital wallet.  

By David Dungan

It wasn’t that long ago, cryptocurrency seemed to be all the rage; especially when you consider that the value of Bitcoin, in November reached more than $65,000 – before plummeting to $16.189 in less than a year.

Since that time, Bitcoin has regained its value, peaking at $71,631 in early April. But regardless of the peaks and valleys that often comes with almost any type of investment, cryptocurrency fraud has emerged as the “riskiest scam” for consumers, according to a recent report from the Better Business Bureau.

With all of that, it’s understandable to ask questions, such as how secure is cryptocurrency trading, and cryptocurrency?

It’s important to understand, too, what types of scams are out there and what you need to know to protect yourself to avoid being the victim of a cybercrime, in which 80 percent of Americans who were targeted in crypto and investment scams last year lost money. More recently, in February, a 70-year-old woman in California lost $720,000 for what she thought was a legitimate crypto investment.

Some crypto basics to keep in mind:

• Cryptocurrency, also known as digital currency, uses cryptographic functions to store transactions and balances in blockchains, which are shared, fixed records that record and track assets, common for digital payments.
• Cryptographic functions help secure data by encrypting and decrypting data with private and public keys.
• Encryption keeps your data safe by using mathematical models to rearrange the information in a way that only the parties that have the decryption key can rearrange it to access the data. Decryption works by converting an encrypted message to its readable format.
• Cryptocurrency users will use cryptocurrency wallets, or crypto wallets, to store their private encryption keys ,which work like passwords, that proves a user’s ownership of the cryptocurrency. These wallets allow users to exchange their cryptocurrencies.

Some of the more common scams you have seen recently involving cryptocurrency includes:

• Bitcoin Investment Scams -Scammers will pose as seasoned investors and request a fee or access to a victim’s funds.
• Rug Pull Scams - In this type of scam, fraudsters will set up a project and wait for the value of the project to be pumped up before “pulling the rug” and stealing as much of the value as they can.
• Phishing Scams -Phishing involves sending a victim a fake website link that will request personal details, in this case, a crypto wallet and private key.

Fortunately, there are several steps consumers can take to help protect themselves to avoid being a victim of a cryptocurrency scam that include:

• Watching Out for Promises of Huge Returns that claim that they can create huge returns on your crypto investment. Like other investments, crypto is hard to predict and get rich quick schemes are almost always scams.
• Thoroughly Research AI-Generated Investments -Whether you want to invest in a new crypto coin or a non-fungible token (NFT), it is wise to vet all your potential investments. Try to find as much information as possible about the project, or cryptocurrency, you want to invest in. Be sure to ask questions, such as: Who created the project? Are they reputable? Is it open source?
• Always Avoid Clicking on Links from Unknown Senders - To avoid phishing scams, it is important to not click on links if you don’t know the sender. Furthermore, scammers may impersonate people you do know, so double check each email address carefully.

While we certainly cannot predict the cryptocurrency market, we can evaluate the security of cryptocurrency wallets and exchanges as a way to help you protect your identity and keep your investments out of the hands of a cybercriminal!