Since the dawn of human civilization, there have always been those willing to prey on others to get ahead. With the advent of technology, those predators have continued to evolve to keep up with the times and have now set their sights on attacking the Web3 community.
According to the Federal Trade Commission (FTC) from January 2021 to March 2022 nearly 50,000 Americans have reported losses amounting to more than $1 billion caused by crypto-related scams, which is a staggering 60 times higher than in 2020. It’s important to note that these are only the reported losses and the figure is likely to be much higher.
Crypto enthusiasts are also on track for 2022 to be the biggest year for cryptocurrency theft, as the number of assets stolen in Q1 2022 is already comparable to losses inflicted on investors during the entirety of the first half of 2021, which doesn’t include losses incurred within the NFT space.
The Web3 world is plagued with “rug pulls”, ignorant celebrity influencers, and pump and dump schemes, to name just a few, and with an increasing number of victims every day and little to no regulation, it seems as though we’ll continue to hear more of these horror stories as the industry grows. Due to its inherent decentralized nature, there is not much in the way of recourse for investors – there is no centralized authority in place to even flag suspicious transactions let alone stop the fraud from taking place, to begin with.
Recently the Justice Department has filed charges against a former Opensea manager for his involvement in insider trading NFTs, which will hopefully put in place the beginnings of some kind of regulatory practices from which to work in the future. This marked the very first time that the department has ever pursued such an endeavor and shedding more light on these issues, seems like a definite “win” for the community as a whole; however, there is much more than obviously needs to be done.
Considered by some as counterintuitive to the idea behind Web3, many others in the space are calling for some sort of regulation to safeguard against these vicious financial attacks. It shouldn’t be so easy for hackers and scammers or even blockchain “misinformation” to have the power to destroy people’s livelihoods with the click of a mouse.
To maliciously strip these people of their assets in such cold and calculated ways would make any person, even of less than average moral character, want to be sick. The spectrum of damage inflicted is quick-hitting and can be long-lasting – encompassing everything from emotional to financial instability and everything in between.
With all of these negatives, there is still overwhelming support in favor of advancing technology further. Web3 promises to be the next evolution of the internet with a vision for a more open, decentralized, and secure network enabled by advancements in blockchain technology and artificial intelligence. For those who comprehend the rudiments within the space it seems like a “no-brainer”, but to the vast majority of those who aren’t fully aware of the potential future that Web3 could provide for us, these darker sides of the blockchain ecosystem will only keep mass adoption at bay, or the very least, slow much-needed progression.