Will bitcoin ever storm past its previous high of more than $19,000 per coin and go on to make today’s holders multi-millionaires? Will it collapse, or will it find the stable level that’s needed for it to actually work as a currency?
More worrying, if you invest in cryptocurrency, could you actually lose the lot?
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I’ve recently warned of the massive rise in cryptocurrency ramping, and fraudulent initial coin offerings (ICOs) are seriously on the rise. Are you sure you can distinguish between the honest ones and the scams? Between a legitimate cryptocurrency trader and a crook out to rip you off?
Even if you hold legitimate cryptocurrency, theft is becoming big business. You might think you’re safe using multi-bit, high-security passwords, but most password-based fraud happens though phishing or finding other ways to get access to your password, rather than a full-on cracking attempt.
What can you do?
But perhaps the scariest thing is that if you have your coins stolen, there’s nothing you can really do about it.
Reuters this week told us about a couple whose password was compromised and whose cryptocurrency wallet was emptied of around $14,000 in coins. But what could they do about it? The very nature of cryptocurrency, its decentralisation and anonymity, coupled with there being pretty much no regulation surrounding it, means there’s really no place to even start trying to rectify a theft.
Reporting it to the police is about the limit, but there’s little they can do. Police in London have revealed reports of 200 people being hit over a two-month period earlier this year, with average losses of around £10,000.
Even heavily-regulated conventional finance, like banking and shares, attracts huge amounts of fraudsters. Everyone who uses email will have received phishing attempts trying to get us to log on to fake websites and reveal our passwords. And boiler room share scams hook new victims every day. Although investigations and prosecutions do happen, they’re sadly rare.
Cryptocurrency scams are already becoming quite sophisticated. As well as phishing scams and fake ICO’s, completely fake cryptocurrency exchanges are on the rise, together with fake cryptocurrency wallet apps. The apps pretend to provide security for carrying your cryptocurrency on your phone, but send your details to fraudsters who clean you out.
Some fraudulent trading apps have even made it briefly onto legitimate app stores, and been downloaded thousands of times before being discovered and stopped.
In fact, it scares me how many people just trust anything that’s on their phone, assuming that technology they don’t even faintly understand must surely be safe. Some of the cleverest technology experts out there are the hackers and scammers.
Even classic old scams like Ponzi schemes are being dug up for a new lease of life, promising high returns that somehow seem more plausible in a market that has seen meteoric rises, like bitcoin and its $19,000 peak. It’s far easier to dupe the gullible when they’ve seen others genuinely striking it rich in the same market.
So we have a new kind of investment that few people actually understand, which is attracting hordes of scammers and is, by its nature, unregulated. And even when conducted honestly, it looks like junk to me.
Give me something I understand, like shares in great British businesses… every time.