Commentary

Bitcoin Scams Spread On Social Media

Bitcoin is the future of money, or maybe just a clever hedge against devaluation for rich people, depending on how you much kool-aid you’re drinking.

But one thing’s for sure: it won’t change human nature, and that means as soon as people start talking about money, scammers are bound to show up.

In fact the steady rise in Bitcoin’s price over the last year, from $415.69 in late March 2016 to $972.28 at the time of writing, has fueled an explosion in scams revolving around the blockchain-based “cryptocurrency,” according to a new study by ZeroFox, a social media security and monitoring firm.

In March of this year alone, ZeroFox identified 3,618 Bitcoin scam URLs, which were shared more than 126 million times on social media, including two that were shared over 40 million times each.

While Bitcoin fans tout the cryptocurrency’s blockchain system, including a publicly available log of all transactions, as guarantees of security and transparency, ZeroFox points out that Bitcoin is actually ideal for scamming purposes for several reasons.

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The lack of a central controlling authority, meant to protect the currency from fiat devaluation or regulation, also makes it virtually impossible to police, as does the anonymity of users.

Furthermore, any Bitcoins lost to scammers can’t be recovered because all transactions in the blockchain are irreversible (which is the whole point).

ZeroFox has identified several categories of scam involving Bitcoin. The first simply uses the promise of (fake) Bitcoin wallet downloads to drive users to social media URLs that deliver a malware app to their computers, or to a survey about Bitcoin that does the same.

Another popular scam involves phishing impersonators posing as a Bitcoin database, inviting Bitcoin owners to enter their “key” to see if they’re in the database – in fact enabling the scammers to steal Bitcoins.

In another ruse, scammers pose as a “Bitcoin flipping” business, which offers to quickly double the victim’s Bitcoins through various investment schemes – again with the goal of getting their keys and stealing Bitcoins.

Last but not least, ZeroFox also identified a number of Bitcoin pyramid schemes, on a classic “Ponzi” model, as well as “cloud mining” scams promising new Bitcoins from powerful number-crunching computers.

ZeroFox noted that there are also plenty of legitimate Bitcoin cloud-mining schemes, making this scam particularly hard to detect.

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