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Mitigation of risk posed by cryptocurrency scams

The cryptocurrency marketplace has seen rapid growth over the years. Especially in 2021, the prices of cryptocurrencies, mainly bitcoin followed by Ethereum, hit their all-time highest prices. This growth has paved the way for several new opportunities for investors in the business world.

Mitigation of risk posed by cryptocurrency scams.

Alongside new opportunities for investors, a few crypto policies have also given rise to manipulation and several kinds of financial frauds. While the service providers are working towards making crypto a safer platform for investors, the risk remains.

In the cryptocurrency exchanges and wallet providers are trying their best to introduce new and stricter policies to ensure their users' investments' safety. Authorities are also trying to get a set of uniform regulations worldwide for crypto in this regard.

The leading cause of the increasing number of cyber crimes in the crypto market is the absence of intermediary authority, i.e., decentralization. The idea of decentralization was initially introduced to promote the pseudo-anonymous nature of crypto transactions and eliminate the need to trust a middle man or a medium body with your assets, but it has partially backfired.

Crypto transactions were supposed to be kept anonymous, so no authorities would be able to trace crypto transactions. Unfortunately, this has led to several crimes, such as the trade of illegal items. In addition, most transactions are linked to the dark web function using cryptocurrencies, but the most concerning one of these crimes are crimes.

As a result, financial experts are now forced to develop new ways to secure the crypto assets of investors. Otherwise, a constant downfall of the crypto marketplace will be witnessed shortly.

Potential mitigation measures

According to experts, mitigation measures taken to tackle cyber crimes previously won't be of any help while dealing with cyber crimes related to cryptocurrency. This is because crypto is a whole different network that functions on principles of cryptography.

Therefore, new regulations are required to help ensure the safety of crypto assets. A few of them are discussed here:

Appointment of a middleman

Since plenty of scams in the crypto market occur through inauthentic cryptocurrency exchanges, it is crucial to hold each of them accountable for all the information they collect.

Now, this might compromise the central concept of crypto, but we think it's one of the most critical steps that need to be taken. While decentralization can still exist in crypto transactions, it is essential to appoint an intermediary party that keeps a check on transactions.

Insurance for crypto assets can also be made possible as a follow-up step in later stages. Moreover, special arrangements should be made to make crypto wallets a safer storage space.

Multi-factor authentication

Before any service provider starts functioning and collecting data about crypto wallets, authorities should run a multi-factor authentication. The purpose of multi-factor authentication would ultimately be to eliminate all scamming cryptocurrency exchanges and service providers. While also ensuring that the new ones being developed in the market are not scammers. This will promote the security of crypto assets and reduce their risk.

As many new cryptocurrency exchanges are being launched these days, it is difficult for beginner investors to opt for the right one. Multi-factor authentication will also make choosing the perfect service provider an easier task.

For instance, This allows the users to keep track of the current prices of cryptocurrencies and keep up with the trends. Moreover, it provides crypto wallets with additional services like tools allowing users to swap cryptocurrencies automatically with others.

Preventing suspicious transactions

Aside from cyber crimes, crypto is also being used as a platform for the trade of illegal items such as weaponry. But why crypto? Cryptocurrencies are a form of digital money that functions solely online.

All crypto transactions must process a stable internet connection and a device with a service provider. Moreover, crypto transactions are untraceable. Although they are recorded on the blockchain, tracking the parties on both ends is impossible.

One way to prevent suspicious transactions is not allowing crypto users to use made-up names for their crypto accounts. Accurate identification should be required while signing up for a crypto account.

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