Bolting the Stable Door
“Bolting the Stable Door” – a cartoon illustrating how the crypto industry is belatedly putting in place protections to help consumers.
According to a report in 2023 by Security.org, over 30% of consumers that have not owned crypto were put off investing in the industry by the lack of trust, oversight and fear of cyber attacks.
The FTC reported that since the start of 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams.
To tackle this, the industry started with cooperation to report scams, such as the Crypto Safe Alliance, and investment in detection firms such as Cyvers.ai, which uses geometric machine learning to learn typical crypto user behaviors and identify anomalies.
Perhaps one of the most significant solutions was last week’s launch of Snaps by Metamask, which is one of the largest on-ramps into the crypto industry with 30M users.
Wallet users can now add anti-fraud services (e.g. Blockfence, Forta) to their wallet as easy as it is to add a new Chrome extension to a browser.
Chainalysis identified that the largest number of crypto scams are investment related, with the positive news that the number of scams decreased by 46% in 2022.
However, it seems the primary reason is that investment scams follow the price of bitcoin – consumers are more likely to be susceptible to get rich schemes when the asset prices are growing, and the news is filled with stories of crypto investors striking it rich.
To have any hope that the next crypto bull run will occur and attract new consumers, the industry needs to change the narrative and demonstrate that it is on top of fraud and scams.
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