Blind-signing scams are a rising threat for smart contract users.
Blind signing is the practice of signing a smart contract without fully understanding its contents. It’s one of the most common tools for cryptocurrency scammers — and if you lose your crypto due to blind signing, you don’t have much recourse.
If you’re new to crypto, you should never enable blind signing, period. There are some situations in which blind signing is necessary, since crypto wallets have certain limitations when displaying blockchain smart contracts.
But if you’re holding crypto as an investment, many popular strategies like staking or using decentralized exchanges require you to mess around with smart contracts, including smart contracts that you haven’t read.
Below, we’ll explain the basics of cryptocurrency blind signing and provide some additional tips for staying safe. If you’ve lost access to your crypto due to a lost password, damaged physical storage media, or for another reason, we’re here to help. Call 1-800-237-4200 or submit a case online to speak with an expert.
When is blind signing necessary, anyway?
The obvious question that you’re probably asking: Why would anyone sign a contract without reading it — whether it’s a digital contract or a paper contract?
Blind signing is not just useful but essential in systems that require both strong authentication and user anonymity. Standard digital signatures authenticate a message, but they link the signer to the message content. Blind signatures are necessary when this link must be broken to protect privacy.
For example:
- Anonymous Crypto Transactions: In certain privacy-focused digital cash systems, to achieve the privacy of physical cash transactions, banks must be able to issue digital currency without being able to trace how it’s spent. But for cryptocurrency to function as currency, transactions must be logged. To solve this problem, a user can “blind” a unique digital coin number, have the bank sign it (simultaneously withdrawing funds), and then “unblind” it.
- Anonymous Credential Systems: Blind signatures can be used to obtain anonymous credentials or attributes. For example, a user could prove they are over 18 without revealing their identity. They would present proof of age to a trusted authority (like a government agency), which would then blind-sign a cryptographic statement confirming the user’s “over 18” status. The user can later present this signed statement to a third party as proof of age, and that party can verify the signature’s authenticity without learning the user’s identity.
- Anonymous Electronic Voting: In theory, blind signing could be used to create truly secure (and anonymous) online voting systems. A voter can blind their completed ballot and have it signed by the voting authority to certify its eligibility. The voter then submits the signed, unblinded ballot anonymously to be counted. The signature proves the ballot is valid, but the authority cannot link the signature back to the specific voter or their choice.
In each of these situations, the requester is an individual, while the signer is an authority of some kind. Typical crypto blind-signing scams work by tricking the potential victim into acting as the signer for a malicious contract sent by a scammer posing as some sort of authority. They might run a fake NFT marketplace, a DeFI protocol promising high returns, or some sort of a phishing site.
The victim believes that by enabling blind signing, you’ll receive something in return:
- A free NFT.
- A token swap.
- Claiming an airdrop.
Scammers may also mimic the interface of well-known crypto websites (such as OpenSea or Coinbase), so the victim will believe that they’re working with a trustworthy company.
But once they’ve enabled blind signing and agreed to the contract, their crypto is transferred to the scammer — and there’s not much that can be done in those situations.
Related: Bitcoin Seed Phrase Recovery
To stay safe, treat your cryptocurrency like real currency.
Something strange happens when people invest in Bitcoin, Ether, and other cryptocurrencies: They stop thinking of their investment as real money.
You’d exercise extreme caution if a site asked for your credit card details; you should apply that same approach if a site asks for any sort of access to your crypto.
We strongly recommend using hardware wallets — with appropriate backup — wherever possible. A hardware wallet keeps your keys offline and its trusted display can often show you the true details of a transaction, allowing you to spot a discrepancy between a website and a malicious contract.
Other tips for avoiding crypto scams:
- Verify Every Interaction. Before connecting your wallet, double-check the website’s URL to ensure it’s legitimate. Scammers create convincing fakes of popular platforms to trick you into signing malicious transactions.
- Use a ‘Burner’ Wallet. For interacting with new or untrusted applications, use a separate wallet with a small amount of funds. This protects your main holdings if you accidentally approve a malicious contract.
- Be Skeptical of “Too Good to Be True” Offers. Free mints, surprise airdrops, and high-yield promises are classic tactics to create urgency and lure you into signing a transaction without thinking.
- Regularly Revoke Permissions. Use tools like Etherscan’s approval checker to review which smart contracts have permission to access your funds. Revoke any permissions for platforms you no longer use or don’t recognize.
While vigilance is your best defense against scams, other issues can still prevent you from accessing your assets. If you’ve lost access to your crypto due to a lost password, damaged physical storage media, or for another reason, the experts at Datarecovery.com are here to help. Call 1-800-237-4200 or submit a case online to speak with an expert.
