What is Cryptocurrency and how does it work?

Cryptocurrency fraud and cryptocurrency scams

Unfortunately, cryptocurrency crime is on the rise. Cryptocurrency scams include:

Fake websites: Bogus sites which feature fake testimonials and crypto jargon promising massive, guaranteed returns, provided you keep investing.

Virtual Ponzi schemes: Cryptocurrency criminals promote non-existent opportunities to invest in digital currencies and create the illusion of huge returns by paying off old investors with new investors’ money. One scam operation, Bit Club Network, raised more than $700 million before its perpetrators were indicted in December 2019.

“Celebrity” endorsements: Scammers pose online as billionaires or well-known names who promise to multiply your investment in a virtual currency but instead steal what you send. They may also use messaging apps or chat rooms to start rumors that a famous businessperson is backing a specific cryptocurrency. Once they have encouraged investors to buy and driven up the price, the scammers sell their stake, and the currency reduces in value.

Romance scams: The FBI warns of a trend in online dating scams, where tricksters persuade people, they meet on dating apps or social media to invest or trade in virtual currencies. The FBI’s Internet Crime Complaint Centre fielded more than 1,800 reports of crypto-focused romance scams in the first seven months of 2021, with losses reaching $133 million.

Otherwise, fraudsters may pose as legitimate virtual currency traders or set up bogus exchanges to trick people into giving them money. Another crypto scam involves fraudulent sales pitches for individual retirement accounts in cryptocurrencies. Then there is straightforward cryptocurrency hacking, where criminals break into the digital wallets where people store their virtual currency to steal it.

Is cryptocurrency safe?

Cryptocurrencies are usually built using blockchain technology. Blockchain describes the way transactions are recorded into “blocks” and time stamped. It’s a fairly complex, technical process, but the result is a digital ledger of cryptocurrency transactions that’s hard for hackers to tamper with.

In addition, transactions require a two-factor authentication process. For instance, you might be asked to enter a username and password to start a transaction. Then, you might have to enter an authentication code sent via text to your personal cell phone.

While securities are in place, that does not mean cryptocurrencies are un-hackable. Several high-dollar hacks have cost cryptocurrency start-ups heavily. Hackers hit Coin check to the tune of $534 million and Bit Grail for $195 million, making them two of the biggest cryptocurrency hacks of 2018.

Unlike government-backed money, the value of virtual currencies is driven entirely by supply and demand. This can create wild swings that produce significant gains for investors or big losses. And cryptocurrency investments are subject to far less regulatory protection than traditional financial products like stocks, bonds, and mutual funds.

What is Cryptography?

Is a method for protecting information and communications through codes. The codes

Ensure that only the intended receivers can read and process the messages.

“crypt” means hidden, and graphy means writing

Those that practice it are cryptographers.

Modern cryptography has four main standards:

• Confidentiality: only the intended receiver can understand the information.
• Integrity: no one can change the information while it is
• In storage without the change being detected

Repudiation: the information creator or sender can never deny their intent in the info’s creation and transmission

• Authentication: the sender and receiver can both confirm each other’s identity as well as the origin or destination of the information.

Cryptography techniques are derived from mathematical concepts.

They use algorithms or rule-based calculations to send message in ways that are hard to read.

The algorithms create a cryptographic key they control digital signing and verification in order to protect data privacy, internet browsing, and confidential communications.

These include emails and credit card transactions.

Modern cryptography is most often associated with translating ordinary readable text called plain text into encrypted unreadable text called cipher text, and then back again to deciphered plain text.

There are two types of cryptography:

• Single key encryption algorithms and
• Public key encryption algorithms.

Single key or symmetric encryption algorithms create a fixed length of bits called block cipher

This block cipher has a secret key the creator or sender can use to encrypt the data and the receiver can use to read it.

Public key or asymmetric encryption algorithms use a pair of keys: one is a public key associated with the creator or sender to encrypt messages, and the other is a private key that only the data is originator knows for decrypting information.

A procedure or protocol that meets all the standards is known as a cryptosystem.