Cryptocurrency has been becoming more and more legitimate in its existence over the years.
It has been one of the most controversial topics in the history of the business world over the past decade, but slowly, cryptocurrencies have gained traction.
With blockchain companies producing a legitimate product and many investors looking to invest in crypto, the legitimacy of cryptos has stopped coming under question.
And as they have been gaining legitimacy, it has been becoming easier and easier for scammers to start using cryptocurrencies as a way to take people for a ride and take whatever money they invest in crypto away from them.
This has been becoming a global problem, with many countries facing issues regarding an increase in the number of crypto-related scams.
What is the cause of this? Why, in the age when finally cryptos are becoming more accepted in the general society, are we seeing an increase in vultures trying to scam people out of their money? Let’s do a quick overview of cryptocurrencies and the state of the world, in order to try and understand what is going on to cause such an increase.
The dual nature of crypto
Cryptocurrencies, Bitcoin specifically, when they first came about were intended not as a tool for speculation, but as a payment system. The inventor, Satoshi Nakamoto, came up with cryptos as an alternative to the modern currencies and payment systems. He wanted to avoid banking fees and slow transaction times across borders.
So he created a system that would retain privacy, be free to use and work just like real cash, except digitally. And the idea took a few years to blow up, but it did eventually. But it did not blow up in the way that Satoshi was hoping for. Instead of becoming a currency, as it was intended to be, cryptocurrencies ended up being a tool for speculation.
People started using cryptos as a way to make hundreds of thousands, millions of US dollars and they did not want to stop. And as a result, today, we have cryptocurrencies being used as both financial assets and as currencies, and the result is both confusing and dangerous.
It is dangerous because people who use it as a currency might end up being victims of people who want to scam them out of their cryptos, in order to then speculate with them.
Those who use cryptos as currency don’t mind the fact that they might be spending money that could be worth more tomorrow than it is today, they simply want to buy a service.
But those who speculate with the money think this to be a waste and some of them end up using the opportunity of people using cryptos as a currency as a way to scam them.
It has been estimated that on the worldwide markets, thousands of people are scammed out of their cryptos every year, losing millions of dollars of funds in cryptos to those who would rather see the currencies used for speculation.
Even if you think that cryptos should be used for speculation, you probably dislike these scammers. Once they have acquired enough cryptos, they usually go on the markets and sell them, which causes the market price of the cryptos to fall from the value it was previously.
This results in some speculators losing money. So, in a way, the scammers are doing damage to the entire industry built around cryptos, not just to those who use the cryptos as currency.
The rise of scammers
The world has seen a sharp rise of scammers over the past few years, as related to crypto casinos. Only in 2018 many countries reported losses amounting to millions of dollars, simply because scammers did a good job of deceiving people into depositing money with them. Let’s take a look at some of these countries.
The UK ended up losing around 197 million pounds to scams in 2018. That is an outrageous amount of money, yes. But what is even more outrageous (and sort of impressive) is the fact that about 82% of all of these investment scams were cryptocurrency related. This means that around 161 million pounds were lost to such scams.
The majority of them acted as investment opportunities, fake ICOs, and other seemingly lucrative financial opportunities, that turned sour rather quick for the wannabe investors. The average victim of such a scam lost around 29 000 pounds.
ACCC reports that Australia lost around 4 million dollars to cryptocurrency scams in 2018. This might not see much in comparison to the UK, but the truth of the matter is that Australians do not report their losses to watchdogs as the Brits do, which lowers the number significantly.
Most of these scams were posing as online casinos operating with cryptocurrencies, which further damaged the reputation of real and innocent online casinos in Australia. The hopes for the future of 2018 are that these problems will not persist in the next year, but if they do, the new regulation is thought of being introduced into the industry, to make sure this never happens again.
Ghana lost around 22 million dollars to cryptocurrency scams in 2018. The country is disproportionately interested in cryptocurrencies, which makes it an easy target for scammers who are willing to utilize the lack of knowledge of the local population about cryptos to take their money.
There are many more countries around the world that have been losing money to cryptocurrency scams in the past few years, and the trend is dangerous. It simply means one thing – the world needs to decide whether cryptos are a currency or a trading asset. It cannot be both, as the danger of money loss is becoming too great.