The new zero-KYC proposal aims to secure P2P cryptocurrency transactions
A Reddit user’s proposed idea seeks to prevent MitM scams in peer-to-peer Bitcoin exchanges by safeguarding transactions without KYC. A Reddit user, ShadowOfHarbringer, has posted a draft proposal for a “Zero-KYC Assurance Mechanism for Fiduciary Money Transfer” (ZKAM-FMT). The concept is intended to avoid man-in-the-middle (MitM) financial scams in peer-to-peer (P2P) cryptocurrency markets.
ZKAM-FMT aims to protect transactions without depending on Know Your Customer (KYC) processes, which users who value privacy perceive as burdensome and intrusive.
The proposed mechanism
In a typical MitM scam, a bad actor intercepts a transaction between two legitimate parties and dupes an unknowing buyer into sending funds to a crypto seller account. The cryptocurrency vendor then unintentionally transfers funds to the criminal actor, leaving the buyer without their purchase and the seller facing potential legal ramifications.
The ZKAM-FMT solution proposes an integrated browser within P2P market apps for verifying transaction information such as amount, transfer title, and account number. The procedure verifies the data without retaining sensitive user data or bank system interactions, ensures that money are handled correctly, and addresses privacy issues.
Implementation concerns
Although the Reddit user’s concept is a novel way to scam avoidance, some operational challenges were identified. One significant problem is integration with banking websites, which may provide complications owing to update requirements and the structure of financial platforms.
The “biggest downside” of the suggestion, according to the Reddit user, is the lack of usage of bank websites to make transfers by “young people.” “They use applications. If the consumer wants to use an app, this strategy is pointless.”
Ageism or necessary scam prevention?
In an interview with Cointelegraph on September 1, Adrian Przelozny, CEO of Independent Reserve, stated that “people over 65” are more prone to be defrauded.
According to the cryptocurrency exchange executive, 80-year-olds who make crypto withdrawals “are going to get a call” since they are more vulnerable to scammers. However, in the United Kingdom, younger clients are more likely to be duped, according to Lloyds Bank in November 2023. According to the bank, individuals aged 25 to 34 account for one-quarter of all cryptocurrency fraud victims.
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