Facebook recently announced the launch of its cryptocurrency platform, Libra, which will operate using a distributed ledger rather than the current wired-based model. While Facebook has invested significantly into the security measures featured on its platform, experts of this industry note that as a brand new cryptocurrency outlet Libra will naturally appeal to hackers looking to introduce new scams or reinvent old schemes.
Cryptocurrency platforms are typically infiltrated by international scammers with the goal to develop new strategies to steal funds or find a way to scam senders out of funds. And with every new cryptocurrency platform comes new opportunities, but Libra is different than its competitors.
Libra was designed to allow app developers around the world to enable their users to use cryptocurrency for sending and receiving various types of payments. This means that the use of cryptocurrency will grow substantially as users who are more unfamiliar with the process join the apps and try out its new functions. For scammers, this represents a more vulnerable market of consumers that may be more likely to fall for new and old schemes through the platforms.
One such scheme is known as a confidence scam, which involves tricking the sender into sending funds to a friend or family member in the event of an emergency.
Experts note that cryptocurrency transactions can typically only be reversed by the receiver, which makes the platforms more susceptible to wire fraud. However, Libra’s security protocols may help prevent this type of fraud. Unlike other cryptocurrency platforms, Libra will require the verification of a government-issued ID, as well as two-factor authentication. This is similar to the protections put in place by more traditional banking programs, and may even expand to include Facebook’s facial recognition software.
However, Libra offers another vulnerability. Libra is an open-source platform, designed to let anyone in the world create apps that can utilize its cryptocurrency features. This means that the security protocols of each app may vary or that apps are developed with fraudulent intentions.
“I believe initially, the security may be a bigger issue, but become more and more stable as time goes on,” stated the president of Wave Financial, Ben Tsai. “I think there will be a lot of buffer set aside to make sure the clients are having a positive experience, so they will cover clients more even if the mistakes are on the client side, initially.”, he added.
While Facebook has stated that it will refund money that has been taken in the event that the platform is hacked, it is uncertain how other forms of fraud and scams will be handled, especially with other app developers and their protocols involved.
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