To cheat someone out of Bitcoin, all you need is a Bitcoin wallet, an anonymous chat platform, some poor schmuck’s ID-card-holding photos, doctored images of a bank transfer, and an enthusiastic, Bitcoin-selling idiot. I know all this because I recently partook in such a transgression, playing the role of The Idiot.
The Idiot – to whom, if you’ll indulge my hanging on to any shred of self dignity I still have, I shall refer in the third person – ignores all the blaring warning signs. Warning signs such as a “buyer” urgently in need of Bitcoin, not being able to wait a single day and meet face to face, insisting on a bank transfer on a Saturday that will only show up in The Idiot’s account the next day, convincing The Idiot that a bank transfer that doesn’t go through a banker cannot be undone, offering a ridiculously high exchange rate, sending photos of himself holding up an ID card but refusing to send a fresh photo in which he poses as The Idiot asked as proof of identity, agreeing to first transfer the money to The Idiot’s account without any reassurance, sending easily photoshoppable proof of said transfer, etc. Fast forward to a stolen half-Bitcoin and The Idiot decided to not even go to the police, which he sees as quite inept when it comes to innovative crimes.
Cryptocurrencies offer anonymous possession and trade, easy transactions across physical and legal borders, and high volatility with a risk of hacking. If for any reason you lose access to your wallet – a euphemism for both the digital identity of your stash and the app that manages it – no bank or authority can get your money back. If your wallet app has an unintentional security breach, or an intentional backdoor, you will probably never see your Bitcoin again. And let’s not forget Social Engineering of Idiots for Dummies.
States are ambivalent regarding the legality and regulation of cryptocurrency. Crypto may foster a lucrative tech ecosystem, but it diminishes the state’s control of the currency rate, disrupts following money trails of criminal activity, and makes it easier to dodge taxes. It is also dangerous to the financial environment, as its volatility and vulnerability could snowball and hurt citizens, banks, insurance companies, and the stock market.
In this episode of the Lex Cybernetica podcast we look into the challenges, problems and dangers of cryptocurrencies with our guests Dr. Aviv Zohar, who talks about his research of criminal usage of cryptocurrencies; Dr. Hadar Jabotinsky, who talks about regulation of cryptocurrencies; Mr. Boaz Dolev, who talks about how cryptocurrencies are secured; and Lex Cybernetica’s host, Ido Kenan.
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