Wednesday, 23 January 2019

Short-Lived ‘ERC-20 Blue’ Scam Promises Ethereum Scalability

A short-lived scam that promised to improve blockchain scalability emerged yesterday.
ERC-20 Blue, which attempted to lure in Ethereum enthusiasts, was announced on a fake Medium blog that briefly posed as the Ethereum Foundation. The fake account was quickly shut down, and Ethereum’s actual blog was not involved in any way. So, what did the scam involve — and is it dead, or just biding its time?

The Nature of the Scam

Because the fake account was deleted almost immediately, very little is known about the nature of the scam. However, the page’s URL (scaling-ethereum-with-erc-20-blue) implies that the scam intended to capitalize on Ethereum’s upcoming plans for scalability. Those plans are scheduled to be implemented some time in the next few years — meaning that the scam could have hit a sweet spot in terms of believability if it had managed to survive.

Judging by the title of the post, the scam proposed a new token called ERC-20 Blue. There is nothing technically wrong with this: a scalability project could in theory have a token attached, but the fact that the author is posing as the Ethereum Foundation is a red flag. Furthermore, Ethereum has no known plans to release a new token as part of its scalability efforts—actual scalability on the Ethereum network will mainly involve Casper and sharding.

Additionally, the ERC-20 Blue token shares its name with an existing token called Ethereum Blue. It is not clear whether the author deliberately intended to impersonate this token or not. However, a similar incident occurred when Dogethereum, a legitimate project, spawned an unrelated coin with the same name. Dubious hard forks have also been known to skim from the popularity of major coins, making name-sharing a common tactic of scammers.

Preventing Phishing

In short, the ERC-20 Blue campaign seems to be an elaborate phishing campaign: a fake token that could be easily be mistaken for a legitimate token originating from the Ethereum Foundation. Although blockchain data can be uniquely identified and verified, the same cannot be said of the discussion around it, making phishing a common line of attack in the crypto world.

Phishing scams rely heavily on social media and content platforms, which take varying degrees of action against scammers. Twitter runs rampant with scammers who impersonate prominent personalities. Medium, by contrast, has taken a heavy stance against fraudulent crypto projects.

This means that Medium probably took down the ERC-20 Blue page itself. Since the author of the scam presumably did not delete the page voluntarily, it is possible that the scam will re-emerge elsewhere on a more lenient platform.

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