Cryptocurrency has been a never-ending roller coaster since its introduction more than a decade ago, seeing extreme highs and lows in value to its investors’ surprise, delight and dismay. As of 2022, it has seen more mainstream recognition than ever before, with A-list celebrities endorsing it in Super Bowl commercials and non-fungible tokens (NFTs) selling for hundreds of thousands of dollars.
This mainstream acceptance belies its still-considerable security risks, however. The United Kingdom, for example, saw more than £146 million ($199 million) stolen in cryptocurrency heists in 2021 alone, a 30% jump from 2020. Stopping this fraud will require diligent user authentication and know your customer (KYC) protocols, but many cryptocurrency exchanges have a long way to go on this front. More than half of all exchanges have no sort of KYC system in place, and even those that do often find their security systems sorely lacking.
More seamless and effective authentication methods are necessary to curb fraud and allow cryptocurrency to safely grow in value and popularity. Some exchanges are moving the authentication step to the time of transactions rather than sign-up, while others are deploying new techniques like biometrics. Any action can make a positive difference in a system that has traditionally been opposed to authentication and verification of any type.
In the latest Alternative Payments Tracker®, PYMNTS examines how fraudsters attempt to scam cryptocurrency…
