ACG-CYBER SECURITY BULLETIN NO 147 UNDERSTANDING BITCOIN AND ITS RISK
The following information was obtained from different cyber security sources for notification to all parties concerned pursuant to the mandate of the Philippine National Police Anti-Cybercrime Group (PNP ACG).
The information provided was classified as “Restricted” pursuant to the PNP Regulation 200-012 on Document Security and Impact Rating as high based on PNP Information Communication Technology (ICT) Security Manual s.2010-01 p. 22 and p.129.
Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. People could buy and sell bitcoins by tapping dealers or brokers or going to bitcoin exchanges. It is basically like a moneybag with a lock on it, the code of which is given to the recipient of the bitcoin. It is a form of digital public money that was created by painstaking mathematical computations and monitored by millions of computer users called miners.
Bitcoin allow users to send and receive funds directly to each other without requiring a bank or other payment processing intermediary to facilitate the transaction. It is considered a peer-to-peer system based on blockchain technology which maintains a public ledger of all transfers on the bitcoin network.
Bitcoin scams have been famously criminal and public in nature. With no bank as a middleman in exchange, things become more complicated so hackers and con men have had a heyday.
Bitcoin scam, compared with other ways of stealing money, it usually takes advantage of people’s trust and negligence. Currently, the crypto-currency market is not regulated enough to protect people from scams, that is why it is such a common thing among users of digital currencies. Since many people try to earn money by investing in new projects that are related to crypto-currency, Initial Coin Offering (ICOs) are one of the most popular ways to commit fraud. Besides that some emerging cryptocoins use a financial pyramid system. In addition, to avoid scams, it is better to use a verified exchange or trading platform.
The Internet age brought a lot of viruses, malware and other nastiest into the world. Unfortunately, the value, anonymity and entire digital nature of crypto-currency means scammers can now make money a lot easier with dangerous downloads. As always, you should not click on unknown email attachments or potentially dangerous links.
Investing in crypto-currencies can be very risky. Firstly, to buy and store a crypto-currency is quite technically demanding and it is very easy for things to go wrong. The lack of regulation and central authority means that seeking compensation or making complaints is also very difficult.
Second, the crypto-currency marketplace is a target for fraud, so extra caution is needed. Also, many exchanges have been subject to cyber-attacks during which people who have left their holdings on these exchanges have lost them.
Lastly, the unstable nature of the currencies means that if you’re investing with the hope of making money, it is very easy to lose some or all your original investment.
Hope and optimism keeps the trend of insanity and stupidity alive for long, but once in a blue moon, rationality raises its head and that is when stupidity pays the steepest price.
The public are advised to follow the tips in order to avoid the risk of Bitcoin Scam, to wit:
- Use two-factor authentication every time;
- Always remember, bitcoins do not work like credit card. If you lose money fraudulently, nobody can send a refund;
- Do not keep your savings in a web wallet even though it is convenient;
- Never engage in any financial transaction, bitcoin or otherwise, via direct message on social networks.
For additional information, please refer to the following websites:
- https://www.quora.com/What-is-Bitcoin-Is-it-a-scam; and
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