Coin Center has published a new backgrounder, “Why are there so many Bitcoin Scams?,” to address the high rate of fraud which has plagued the Bitcoin space in its early years. A history of high profile thefts and scams may unfairly taint an newcomer’s perspective of the technology itself.
Cryptocurrency researcher Ben Doernberg delves into this topic:
Bitcoin’s public narrative is that it represents a dramatic break with the past. Corporate supporters tout digital currency as a disruptive hotbed of innovation, while ideological advocates claim it will usher in a new age of financial freedom. Detractors argue that it is an unprecedented threat to law and order, and will lead to rampant lawlessness and chaos. When it comes to digital currency scams and fraud, however, the real story is best described up with a quote from 2,000 years ago: there is nothing new under the sun.
It is important to acknowledge upfront that the prevalence of fraud in the digital currency community has been remarkably high. This holds true whether you look at the percent of the currency’s monetary base that has been lost or stolen, the percentage of bitcoin transactions that are related to fraudulent activity, or the amount of turmoil these schemes create in digital currency circles. But while Bitcoin users are getting ripped off in large numbers, Bitcoin technology itself offers scammers little to no benefit over cash or PayPal. It is actually the digital currency’s userbase and the ecosystem’s marginalization by mainstream legal and financial institutions that accounts for the prevalence of scams.
To read the full backgrounder, click here.