More than 300 million people use crypto worldwide and 16% of Americans say they have invested in, traded or used cryptocurrency, according to Pew Research. Meanwhile, cryptocurrency hacks are on the rise, with more than $1 billion stolen so far this year, including recent fraudulent activities identified in South Korea with remittances abusing the so-called “Kimchi Premium” for money laundering activities. The cryptocurrency industry has been called the “Wild West” of finance and many have called for more regulation of these currencies. In fact, the Securities and Exchange Commission (SEC) just announced new crypto regulation initiatives that will boost investor protections and help minimize risk. What is crypto, and why is it vulnerable to large-scale hacks? And, aside from regulation protections, how can we use technology to double down on crypto fraud? We can define cryptocurrency (crypto) as a digital currency composed of an encrypted data string. Crypto is organized by a peer-to-peer network called a blockchain, which is a digital shared ledger. All transactions (“blocks”), including buys, sells, and transfers, are added to the shared ledger — and all parties have access to this single source of truth. Cryptocurrencies (which include Bitcoin, Dogecoin and Ethereum) are decentralized, meaning they are not issued or maintained by banks or governments.
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