Cryptocurrency was developed using blockchain technology, something that is difficult to tamper with without leaving a trail. A risky investment to start, there are more ways to lose when investing in crypto than just market decline.
Cryptocurrency has taken off with more people learning about and investing in the technology behind it. Any time new technology is developed, bad actors find a way to exploit it. But hackers aren’t the only bad actors out there, sometimes bad actors are simply thieves looking to scam people out of their hard-earned money. Gizmodo started a monthly series covering the top crypto and NFT scams. Through the first three months of 2022, the scams they covered resulted in over $14 million in lost funds.
Crypto is infested with fraud. NFTs are purchased with crypto. Because both technologies are so new, it can be difficult for investors to know a scam when they see one. There are no federally regulated platforms, although there are platforms which attempt to verify and audit crypto. But with no real rules to follow, even they are subject to human error and mistakes in judgement.
For example, in January 2022, the Blockverse NFT project launched. A “play-to-earn” game based on the Minecraft universe, the project allowed investors to purchase Blockverse characters through OpenSea and a new cryptocurrency called $Diamond, which was launched with the project. It sold out in 8 minutes and then shut down. All Discord, Twitter and web presence was deleted. This prompted the Twitter account @NFTethics to suggest a centralized authority.
The Blockverse NFT project developers made off with $1.2 million in investor money. This had nothing to do with the cryptocurrency market itself or its fluctuations. It wasn’t a hacker who snuck in and stole funds. This was a project that was never intended to come to fruition. Its entire purpose was to get investors to spend money and then pull the rug from under them. And this is just one example of many. You can view the top scams for January, February, and March for more.
With more businesses adopting or investing in crypto and NFT projects, it is incredibly important to do your research. Not just on the various forms of cryptocurrency that are out there, but also the exchange platforms. Decision-makers at any business should know as much as possible before diving into this type of decentralized technology. Know which exchanges have suffered a breach and how it was handled. Know the policies on transactions and how fraud is handled. Know how long they’ve been around. Read reviews and ensure that their overall customer base is happy with their services. Lastly, always bring in an expert to not only ensure you are making the right decisions for your business, but to ensure proper implementation and understanding of what you want to do.
As the world watches artificial intelligence undergo its initial set of regulations from various corners of the world, the cryptocurrency and NFT markets should pay attention. It won’t be long before crypto becomes the next to get the attention of global governments.