As the COVID-19 pandemic hampers on, crypto-criminals have increasingly exploited the situation by using phishing campaigns and other forms of crypto-related schemes to attack unsuspecting victims.
The level of cryptocurrency-related crime increased to an all-time high in 2021, but the statistic doesn’t tell the whole story, according to Chainalysis.
The analytics firm noted that illicit addresses received $14 billion worth of crypto in 2021, breaking the previous record set in 2020 by over 79%.
Read: Why many crypto assets could suffer losses in 2022
A 567% increase in crypto transaction volume was recorded in 2021, according to the total crypto transaction volume report.
“In fact, illicit activity’s share of cryptocurrency transaction volume has never been lower, since the growth of legitimate cryptocurrency usage has far outpaced that of criminal activity usage.
“The raw value of illicit transactions reached its highest level ever in 2021, yet illicit transactions accounted for just 0.15% of cryptocurrency transactions,” Chainalysis stated.
As more crypto crimes are identified, the 0.15% figure is likely to rise, according to the analytics firm.
Read: Nigeria’s interest in bitcoin jumps back, just behind El Salvador
For example, the volume of crypto transactions in the prior year was initially estimated at 0.34%, but ended up nearly doubling to 0.62%.
Chainalysis reports that scamming crypto revenues in 2021 grew by 82% to $7.8 billion. Almost $2.8 billion of those losses were due to rug pulls.
Nevertheless, for investors, it is important to understand that a crypto wallet contains the private and public keys required to buy your crypto assets, enabling digital signatures to approve each transaction. Crypto wallets are safer than crypto exchanges, which can be attacked and hacked. Crypto assets are unlocked from your crypto wallet by a private key (almost like a real key).
Additionally, you need to be aware that losing your private key as a result of a cyberattack or carelessness will result in the loss of your funds. Another person may be able to access those funds and steal your money.
Read: South Korea to tax crypto gifts in 2022
Seed phrases
It is also important to keep in mind that many crypto wallets only have one private key. This type of wallet can hold a wide variety of keys because it is hierarchical deterministic (HD). For you to create those keys, you simply need to know the seed phrase, a group of words that can be used to generate them.
Investing in crypto should be done carefully, as FOMOing (fear of missing out) into just insane coins with anonymous teams could lead investors to lose their money.
