Cryptocurrency can often be as risky as it is complicated – sometimes riskier.
Its definition alone can be challenging to understand: “a digital currency in which transactions are verified and records are maintained by a decentralized system using cryptography, rather than by a centralized authority.”
And recent headlines have called attention to elaborate scams that have cost investors billions of dollars.
Cryptocurrency scammers have stolen more than $1 billion since 2021, according to a report by the Federal Trade Commission.
Those risks are increasing.
“From January to November 2022, hackers stole $4.3 billion worth of cryptocurrency. This accounts for a 37% increase from 2021 during the same period,” according to a study conducted by privacyaffairs.com – which describes itself as an information provider and content creator dedicated to helping protect their private data and avoid a data breach or cyber-attack.
Scottsdale resident Brandon Pearson was not exempt from these scams.
“I lost $20,000 on one trade and then I lost another $20,000 on another trade,” Pearson recalled. “It’s just that these lessons that, unfortunately, they’re a lot more expensive.”
After sustaining the losses, Pearson figured there had to be a way to create software that could prevent these scams.
Pearson, an alumnus of Northern Iowa University, sought help from younger minds at Arizona State University that could either guide him to software or help him develop one that prevents these scams.
He conferred with members of the ASU Blockchain Club and met Matthew Jurenka, who recently graduated with his master’s degree in computer science.
“I just wanted to talk to somebody capable of or at least knew to let me know if this was doable,” Pearson recalled.
Jurenka told Pearson it could be done but he needed to conduct some feasibility studies.
Pearson took a gamble and paid Jurenka “a few hundred dollars” to run some feasibility studies on whether or not a software with this capability could be created.
The results yielded something much greater.
“The idea went from creating an entire crypto wallet with this added layer of security to ‘let’s just figure out a way to create the added layer of security and take all of that risk of holding people’s funds out of our hands,’” Pearson said.
“What I wanted to do is be able to do was screen transactions and make sure people aren’t losing their money.”
The software screens smart contracts proposed in every cryptocurrency exchange to determine the exchange website’s reputation and safety – and whether or not a proposal is shady.
“What our software does is it front-runs a transaction and it acts as a buffer between your actual wallet and the smart contract and the software defines what this smart contract is proposing and what it’s going to do,” Pearson said.
Oftentimes, the average reader and consumer of cryptocurrency do not easily understand the verbiage of these smart contracts, according to Pearson.
“With smart contracts for a guy like me, or even a guy like Matt or Elon Musk, for example, you can’t just read that when it’s presented to you, you just have to trust that what this website says that the smart contract is going to do, you have to trust that that’s exactly what’s going to happen. And that’s not always the case,” Pearson said.
Not only does the software read through the complex verbiage of these contracts, but Pearson said it also could have been used to catch million-dollar scams like the $120-million loss sustained by BadgerDAO in late 2021.
“BadgerDAO clicked a link …and they got scammed of $120 million,” Pearson said, adding:
“We chatted with somebody who was involved with BadgerDAO and we were told that our software would have prevented it completely.”
The software, known as Core Protect, can be downloaded onto browsers like Google Chrome, Firefox and Microsoft Edge and Pearson hopes that his software will serve as a tool that will provide fortune to its users and restore a sense of security to Cryptocurrency.
“I think that our software is going to help Crypto round that curve and become more mainstream,” Pearson said.
“With software like ours that can screen transactions and make sure people aren’t being scammed, it puts the trust back into crypto and we think that it’s going to open the doors for larger banks to get into something like this because there are actual safeguards now.”