bitcoin scams have become such a prevalent phenomenon in the cryptocurrency space that they have become a topic of discussion at the annual .
Bridging the Gap between Policy and Cryptography
The 22nd Financial Cryptography and Data Security Conference was held from February 26 to March 2, 2018, in Curaçao.
The convention is an annual event organized by the International Financial Cryptography Association ().
The conference is a forum through which members of the scientific community present and discuss findings related to all aspects of securing digital transactions and cryptographic systems.
Interested parties are required to submit original papers that touch on the technological details as well as real-world deployments.
As the conference aims to bridge the gap between the technology and its real-world applications, papers with a focus on commerce, system security as well as interdisciplinary works are highly welcomed.
“The goal of the conference is to bring security and cryptography researchers and practitioners together with economists, bankers, implementers, and policy-makers,” the conference website .
The bitcoin Ponzi Scheme Ecosystem
While a number of papers were presented at the summit, a report prepared by Marie Vasek and Tyler Moore of the University of New Mexico and the University of Tulsa respectively is probably of most interest to the bitcoin community.
The researchers presented a paper that seeks to delve into the world of bitcoin-related scams. The findings were compiled in a document called ‘.’
Following an in-depth analysis of a large number of submissions on bitcoin-related forums, such as the , the researchers were able to determine a number of different metrics related to bitcoin fraud.
While these findings mostly relate to bitcoin, as it is the leading digital currency, it is possible to extrapolate these findings and bring to light the fraudulent schemes involving alternative cryptocurrencies.
The Scope Of The Study
The duo compiled the data on bitcoin Ponzi schemes through in-depth analysis of BitcoinTalk forum threads. As a side note, the website was created in the same year bitcoin was launched and can be thought as a database of community sentiment since 2008.
It is also a platform that the cryptocurrency community can use as an easily accessible conduit through which they announce research, technological developments, as well as advertise related products and services.
The website is in the top 1,000 websites globally by Alexa, giving an idea of the popularity and active nature of its users.
In the paper, the researchers their decision to focus on the BitcoinTalk forum in the following:
“We chose this as our sole source for this work based both on its popularity in the bitcoin ecosystem and its popularity within the subsection of Ponzi scheme investors within the bitcoin ecosystem.”
Due to the considerable traffic witnessed on the website, it was imperative for the researchers to limit their scope of the study to only those threads that held relevant information. As such, they focused on three specific sub-forums: , , and threads.
Vasek and Moore studied 11,424 threads on these sub-forums and were able to find a large number of Ponzi schemes. 1,780 to be exact.
Using the information contained within the threads relating to Ponzi schemes, the researchers were able to determine a reliable way to determine the lifespan of such a fraudulent apparatus.
“We considered the opening time a scheme was operational to be the first time it was advertised on BitcoinTalk and the closing time to be the last comment time on threads relating to the scheme. The difference between these times is the lifetime of the scam.”
The threads were also composed of three distinct parties: The scammers, the shills, and the victims.
Scammers would be those who would post the Ponzi schemes originally while victims would be those who would comment on the post and were verified to be neither the scammers or shills. The paper described shills as “victims who post only about a single scam and nowhere else on the forum.”
While this may seem like a generalization that is likely to lead to errors in correctly identifying shills, the duo was able to corroborate this definition through manually sifting through the discussions.
“While not all shills only post about one particular scam and not all posters with history on only one scammer thread are shills, we have concluded from manual inspection that this simple approach provides an effective approach to identify many shills without miscategorizing legitimate users.”
The Limitations of the Study
Vasek and Moore specified that their research was not intended to speak for the entirety of the bitcoin-related Ponzi schemes on the Internet. It should also be noted that the findings are limited considering the fact that they analyzed conclusions on only one site.
Moreover, though they were able to identify specific instances of scamming, it is likely they were unable to determine all fraudulent activity on the threads included in the scope of their study.
The researchers admit that “even with the improved coverage relative to previous work, our results are necessarily incomplete. There are inevitably scams which use bitcoin and we do not measure. There are also scammers which create multiple accounts to talk about their scam and we only are able to extricate the obvious cases of this behavior. Despite these limitations, we provide a large-scale analysis of this online Ponzi scheme ecosystem.”
The Findings
Confirming what is widely thought to be true within the crypto community, scammers will create many usernames to spam forums with links or information related to their scam.
“Scams with multiple scammers have multiple threads about the scam originating from different usernames. By randomly inspecting 20 such instances of this, we find that in most cases, both usernames appear to be the same scammer or at least operating the same scam.”
A quarter of the scams identified only lasted for about a day. Half lasted for about a week while the last quarter lasted for longer than seven days. The longest scam was determined to last for three years.
The scams that lasted for less than a day were shut down by moderators as they were obviously fraudulent schemes.
Moreover, they were able to find a correlation to the level of activity on the thread and the lifespan of the scam. The relationship was proportional meaning the higher the activity, the longer the fraud continued to exist, especially when shills did the posts.
“We find that more scammer posting helped enliven the scam – whereas an average scam lasted about a week, the average scam where the scammer posted at least half of the posts lasted about three weeks. Scammers interacting with their victims seem to prop up their scam, at least in the short term.”
Interestingly, the lifetime of the scam is shortened when there is direct interaction between the scammers and the would-be victims. The duo explained that they found “that more daily scammer and victim interaction shortens the life of the scam.”
This is likely because the victims are able to garner more information that alerts them to the fact that they are dealing with a Ponzi scheme.
Lastly, the duo determined that reputation determined how many victims would fall for the scam. Therefore, if a scammer posted a Ponzi scheme on the same day his account was created, the number of victims that would fall for the project would be significantly reduced, and most times would be negligible.
How to Identify a Ponzi bitcoin Schemes
The research conducted by Vasek and Moore highlights the amount of fraudulent bitcoin activity is prevalent in at least one primary online cryptocurrency forum.
Hence, whenever you come across an “investment scheme” or a new “highly profitable” cloud mining platform that is being promoted and talked up on forums such as BitcoinTalk or other social media platforms like Reddit, be wary that many of these proposals are likely to be fraudulent.
Due to the pseudo-anonymous nature of bitcoin and most altcoins, cryptocurrencies have become the new go-to payment method for Ponzi schemes in particular.
Furthermore, thanks to social media, these scams can be propagated all over the world. Point and case being which was exposed to the cryptocurrency community in January 2018.
In reality, cryptocurrency Ponzi schemes are easy to identify and it should not be too difficult for the average user not to fall for them.
They all have the following three characteristics: They offer high-than-usual returns, have well-paying referral programs that encourage users to invite other “investors” into the scheme and provide little to no information about the people behind the operation. If you see these signs, then stay clear.
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Cryptocurrency exchange and wallet service provider Coinbase has bagged an e-money license from the UK’s Financial Conduct Authority (FCA).
The new development was revealed by Zeeshan Feroz, the chief executive of the company’s UK division. Feroz explained in in a on March 14 that the new license only covers the company’s fiat activities and not its cryptocurrency transactions. In other words, the move will impact only the funds coming in and going out of Coinbase’s exchequer, and not what happens in between during the usual dealings in crypto.
For the uninitiated, the e-money license will enable Coinbase to issue e-money and facilitate dedicated payment services in the UK. Additionally, the exchange will clear regulatory checkpoints overseeing activities such as segregation of client funds, which is basically the mechanism by which customer fiat balances are kept separately (read: in different bank accounts) from the company’s own operational funds.
The e-money license is applicable in the UK, as well as 23 other countries within the European Union (EU). This essentially means that Coinbase is now eligible to provide payment services and issue e-money in these regions.
In a conversation with the , Feroz stated that the s decision to grant Coinbase the e-money license is a testimony to the high regard the agency holds for its KYC processes and the overall “approval of the compliance.”
“We are committed to making sure customer funds are always secure, and this update means that our e-money operations have safeguards and operational standards at par with other regulated financial institutions,” he stated in the blog.
Coinbase is optimistic that among numerous other perks, the new license will also play a key role in making cryptocurrencies accessible to many first-time-users. A smaller, lesser known exchange has also recently launched in the UK, known as , focusing on bitcoin, litecoin and vertcoin. The combination of the two bodes well for crypto enthusiasts in Britain.
Support for FPS
In yet another giant leap, Coinbase has officially added support for the Faster Payment Scheme (FPS) for its users in the UK. FPS is replacing SEPA for UK customers, thus paving the way for a new system that offers a more convenient yet familiar payment experience. But above all, it is compatible with all major UK banks.
“UK customers will benefit from faster, safer and seamless bank transfers. We will start with a pilot, giving a small number of institutional users access to Faster Payments. In the coming weeks, we will begin rolling out to all UK customers, making the Coinbase experience increasingly easier,” Feroz added.
Coinbase is currently conducting a pilot to test the waters, and if everything goes as per plan, the exchange will make the new offering available for retail customers en masse.
Brexit Effect
On the flip side, it is not yet clear how the UK’s impending exit from the European Union (EU) will affect the new arrangement.
A spokesperson representing the exchange said that is allowed to trade within EU so long as the controversial doesn’t come into effect. As a worrying factor for the company, Coinbase might have to pull out of the union after Brexit – even if temporarily – unless certain existing rules aren’t modified before the UK breaks away from the union.
It is worth mentioning here that the European crypto sector is among the biggest contributors to Coinbase’s bottom line. In 2017, the crypto market in the region expanded twice as fast as any other market. The UK’s domestic sector, in particular, happens to be the biggest market for the company, which is why Coinbase leaves no stones unturned to strengthen its foothold in the country.
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Nachdem der Ripple-Kurs sich die Woche über seitwärts bewegt hat, ist er am 14. März um 20 % gefallen. In den frühen Morgenstunden konnte Ripple einen Bounce vorweisen. Ob dieser jedoch für eine nachhaltige Kursverbesserung ausreicht, ist fraglich. Zusammenfassung Der Ripple-Kurs ist in dieser Woche gefallen. Der Kurs bewegte sich bis zum 14. März seitwärts…Der Beitrag erschien zuerst auf .
