Prof Sudesh Kumar

In a broader sense, any kind of manipulation linked to behavioral psychology can be considered social engineering. However, the concept is not always related to criminal or fraudulent activities. In fact, social engineering is being widely used and studied in a variety of contexts, in fields like social sciences, psychology, and marketing.

When it comes to cybersecurity, social engineering is performed with ulterior motives and refers to a set of malicious activities that attempt to manipulate people into making bad moves, such as giving up personal or confidential information that can be later used against them or their company. Identity fraud is a common consequence of these types of attacks and in many cases leads to significant financial losses.

Social engineering is often presented as a cyber threat, but the concept exists for a long time, and the term may also be used in relation to real-world fraudulent schemes, which usually involve impersonation of authorities or IT specialists. However, the emergence of the internet made it much easier for hackers to perform manipulative attacks on a wider scale and, unfortunately, these malicious activities are also taking place in the context of cryptocurrencies.


How does it work?

All types of social engineering techniques rely on the weaknesses of human psychology. Scammers take advantage of emotions to manipulate and trick their victims. People's fear, greed, curiosity, and even their willingness to help others are turned against them through a variety of methods. Among the multiple sorts of malicious social engineering, phishing is certainly one of the most common and well-known examples.

Phishing

Phishing emails often mimic correspondence from a legitimate company, such as a national bank chain, a reputable online store, or an email provider. In some cases, these clone emails will warn users that their account either needs to be updated or has shown unusual activity, requiring them to provide personal information as a way to confirm their identity and regularize their accounts. Out of fear, some people promptly click the links and navigate to a fake website in order to provide the required data. At this point, the information will be in the hands of the hackers.

Scareware

Social engineering techniques are also applied to spread the so-called Scareware. As the name suggests, scareware is a type of malware designed to scare and shock users. They typically involve the creation of false alarms that attempt to trick victims into installing a fraudulent software that looks legitimate, or into accessing a website that infects their system. Such a technique often relies on users’ fear of having their system compromised, convincing them to click on a web banner or popup. The messages usually say something like: “Your system is infected, click here to clean it.”

Baiting

Baiting is another social engineering method that causes trouble for many inattentive users. It involves the use of baits to lure victims based on their greed or curiosity. For instance, scammers may create a website that offers something for free, like music files, videos, or books. But in order to access these files, users are required to create an account, providing their personal information. In some cases, there is no need for an account because the files are directly infected with malware that will penetrate the victim’s computer system and collect their sensitive data.

Baiting schemes may also occur in the real world through the use of USB sticks and external hard drives. Scammers may intentionally leave infected devices on a public place, so any curious person that grabs it to check the content ends up infecting their personal computer.


Social engineering and cryptocurrencies

A greedy mentality can be quite dangerous when it comes to financial markets, making traders and investors particularly vulnerable to phishing attacks, Ponzi or pyramid schemes, and other types of scams. Within the blockchain industry, the excitement that cryptocurrencies generate attracts many newcomers to the space in a relatively short period of time (especially during bull markets).

Even though many people do not fully understand how cryptocurrency works, they often hear about the potential of these markets to generate profits and end up investing without doing appropriate research. Social engineering is particularly concerning for the rookies as they are frequently trapped by their own greed or fear.

On the one hand, the eager to make quick profits and earn easy money eventually leads newcomers to chase false promises of giveaways and airdrops. On the other hand, the fear of having their private files compromised may drive users to pay a ransom. In some cases, there is no real ransomware infection, and users are tricked by a false alarm or message created by hackers.


How to prevent social engineering attacks

As mentioned, social engineering scams work because they appeal to human nature. They usually use fear as a motivator, urging people to act immediately in order to protect themselves (or their system) from an unreal threat. The attacks also rely on human greed, luring victims into various types of investment scams. So it is important to keep in mind that if an offer looks too good to be true, it probably is.

Although some scammers are sophisticated, other attackers make noticeable mistakes. Some phishing emails, and even scareware banners, often contain syntax mistakes or misspelled words and are only effective against those who don’t pay enough attention to grammar and spelling - so keep your eyes open.

In order to avoid becoming a victim of social engineering attacks, you should consider the following security measures:

Educate yourself, family and friends. Teach them about the common cases of malicious social engineering and inform them about the main general security principles.

Be cautious with email attachments and links. Avoid clicking on ads and websites of unknown source;

Install a trustworthy antivirus and keep your software applications and operating system up to date;

Make use of multifactor authentication solutions whenever you can to protect your email credentials and other personal data. Set up two-factor authentication (2FA) to your Binance account.

For businesses: consider preparing your employees to identify and prevent phishing attacks and social engineering schemes.


Closing thoughts

Cybercriminals are constantly looking for new methods to deceive users, aiming to steal their funds and sensitive information, so it is very important to educate yourself and the ones around you. The internet provides a haven for these types of scams, and they are particularly frequent in the cryptocurrency space. Be cautious and stay alert to avoid falling for social engineering traps.

Furthermore, anyone that decides to trade or invest in cryptocurrency should do prior research and make sure to have a good understanding of both the markets and the working mechanisms of blockchain technology.

Key Takeaways

Tokenomics refers to how a cryptocurrency’s economic model is designed. It describes the factors that impact a token’s use and value.

This can include things like the token’s creation, supply, distribution, key features, reward systems, and token burn schedules.

For crypto projects, well-designed tokenomics is critical to success. Assessing a project’s tokenomics before deciding to participate is common practice among investors and stakeholders.

Introduction 

Since Bitcoin kicked off the cryptocurrency revolution in 2009, the market has grown wildly, spawning thousands of tokens. One of the things that determines whether a crypto project thrives or fails is its tokenomics—that is, how its token’s economy is designed and managed. 

In other words, tokenomics brings together ideas from economics, game theory, and blockchain technology to set the rules for how tokens get made, spread around, and used.

Tokenomics at a Glance 

Tokenomics (a blend of the words “token” and “economics”) covers the economic factors that define how a cryptocurrency works. This includes how many tokens (or coins) exist, how they’re launched into the market, what they can be used for, and the incentives designed to motivate users and maintain the network’s health.

This is similar to how a central bank implements monetary policies to encourage or discourage spending, lending, saving, and the movement of money. But unlike traditional money controlled by central banks, most crypto tokens operate transparently using blockchain and smart contracts.

Key Elements of Tokenomics

Token supply

Max supply: This is the total number of tokens that will ever be created. For example, Bitcoin’s cap is 21 million coins. After the 2024 halving, Bitcoin’s mining reward lowered from 6.25 to 3.125 BTC per block, cutting the pace at which new coins enter circulation. Mining the last bitcoin is expected sometime around the year 2140.  

Circulating supply: How many tokens are currently out in the market, accessible to users and traders. The amount can go up or down based on minting new tokens, burning existing ones, or tokens locked away in vesting schedules.

Inflation vs. deflation: Some cryptos, like ether (ETH), don’t have a fixed limit but use mechanisms like burning fees to manage token issuance and keep inflation in check. Others, like BNB, intentionally burn tokens regularly to reduce supply and potentially push prices upward.

Token utility

Token utility refers to the use cases designed for a token and the different roles it can play inside its network. These often include:

Buying services on a network or paying gas fees, such as how ETH works on Ethereum and BNB on the BNB Chain.

Voting on how the network should evolve, like governance tokens that give holders a say in protocol decisions.

Locking tokens (staking) to help validate transactions and earn rewards (typical of Proof of Stake networks).

Representing ownership or shares of real-world assets, such as security tokens tied to stocks or real estate.

Knowing a token’s utility offers clues about how much demand it might have and how it could grow.

Token distribution

Aside from supply and demand, it’s important to look at distribution. How tokens get spread out when a project launches can impact how decentralized and stable it will be in the medium and long term.

There are two main types of token distribution:  

Fair launch: No private pre-sales or early allocations; tokens are made available to everyone at the same time. Bitcoin and Dogecoin were launched this way. This method helps ensure fairness and decentralization.

Pre-mining or pre-sale: Some tokens are set aside for founders, investors, or institutions before the public launch, as seen with many altcoins. While this helps fund development early on, it can concentrate ownership and increase the risk of large holders affecting the market.

Generally, you want to pay attention to how evenly a token is distributed. A few large organizations holding an outsized portion of a token are typically considered riskier.

You should also look at a token’s lock-up and release schedule to see if a large number of tokens will be placed into circulation, which often puts downward pressure on the token’s value.

Incentive structures

Good incentives are what keep networks secure and participants motivated. For example:

Bitcoin’s Proof of Work model rewards miners with both newly minted coins and transaction fees, encouraging them to keep processing blocks even as rewards shrink over time.

Proof of Stake lets validators lock tokens to earn the right to confirm transactions and get paid; if they cheat, they lose their stake, encouraging honest behavior.

Both models are designed to reward honest participants, which helps maintain the network healthy and secure.

In addition, there are DeFi platforms that offer interest or token rewards to users who lend, provide liquidity, or contribute to the project’s growth.

The Evolution of Tokenomics

Since Bitcoin’s simple but groundbreaking design, tokenomics has become far more diverse and complex. Early models focused on simple emission schedules and rewards. Today, projects experiment with dynamic supply policies, custom governance models, algorithmic stablecoins, NFTs, and tokenized real-world assets. Some may succeed; many will fail. And Bitcoin remains the most reliable and trusted model.

Tokenomics vs. Cryptoeconomics

Tokenomics and cryptoeconomics are related concepts, but not exactly the same. Tokenomics refers to the economic framework of a particular token or cryptocurrency, covering the aspects we discussed above: supply, allocation, utility, etc. 

In contrast, cryptoeconomics takes a wider approach by examining how blockchain networks use economic incentives and system design to maintain security, encourage decentralization, and support network operations.

Closing Thoughts

Tokenomics is a fundamental concept to understand if you want to get into crypto. It’s a term capturing the major factors affecting the value of a token or coin. 

By looking at supply dynamics, use cases, distribution, and incentive models, you can better judge whether a project is likely to succeed or not. No one factor tells the whole story, but having solid tokenomics is an important first step toward long-term success and network growth.

Further Reading

Game Theory and Cryptocurrencies

Bitcoin Halving Date: What Happens to Your Bitcoin After the Halving?

What Are Real World Assets (RWA) in DeFi and Crypto?

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