Heard people talking about crypto scams but don’t know much about them or how to avoid them? In this blog we will simply explain crypto scams.
A Simple Way To Understand Crypto Scams
There are many different types of cryptocurrency scams. Most of them are similar to online scams you should already be familiar with. If it sounds too good to be true, it usually is. If it looks like a dodgy link or pop-up, it usually is.
Minimizing The Risks
Investing in cryptocurrency and taking advantage of the decentralized finance possibilities the blockchain offers is a great way to diversify your portfolio and grow your wealth. It does however come with some inherent risks. ryptocurrencies are less regulated than other investments so if you lose them, you are unlikely to have any recompense. The Federal Trade Commission says that more than 46,000 users reported losing a total of more than $1b in 2021 alone. It is possible to protect your crypto by knowing how to minimize the risks of the blockchain and avoid becoming a victim. Many are common sense but can be easily forgotten by the unwary or gullible.
- Don’t give your wallet password or seed phrase to anyone
- Avoid logging in on public wifi networks
- Insist on using two-factor authentication
- Password protect any devices that could allow access to your wallet
- Never give anyone remote access to your device
- Never give out your personal information to anyone who calls you
- Never send cryptocurrency to external addresses if requested by alleged agents of crypto exchanges
Purchase A Cold Wallet
Hot wallets are always connected to the internet which means your private keys are vulnerable to hackers. Cold wallets take those private keys and hence your crypto offline and out of the reach of thieves. A mixture of both hot and cold wallets or using multiple wallets can help spread your risk. You should have your most valuable assets in cold storage. Always buy a cold wallet from a reputable company like Ledger or Trezor. And make sure you buy directly from the company to guard against tampering.
Knowledge is King
Before making any crypto purchases read up about the company. Established cryptocurrencies like Bitcoin and Ethereum are not a risk but if you are dabbling in any number of lesser-known currencies or NFTs, you should be finding answers to questions like:
- when were the coins or tokens created?
- who created them and why?
- how many are being produced?
- what technology is the platform using?
- what unique features do they have?
This will help you avoid making purchases of coins or tokens that are created solely as someone else’s get rich quick scheme. It is also important to do your homework on any crypto exchanges you plan on using, especially in terms of their security. Online reviews are a good guide. It’s wise to stick to the bigger players, even if it comes at the cost of higher fees.
There is no shortage of methods and practices scammers will attempt to steal your cryptocurrency. Many of them resemble scams you may already be familiar with.
Phishing – Fake websites impersonating real ones to trick users into providing personal information. They are given visibility via email, SMS, advertising and social media.
Pump and dump scams – Influencers creating hype around a new coin or NFT collection, raising its price, before dumping it for maximum profit, causing the price to collapse.
Catfishing scams – celebrity impersonators or scammers gaining access to celebrity accounts, talking up new cryptocurrencies or NFT drops.
Impersonation scams – fraudulent impersonation of reputable companies such as telcos, banks and retail etc. Scammers may either cold call people or attempt to lure them into calling faked phone numbers with the hope of gaining personal information.
Giveaways – social media is full of links promoting huge giveaways from what appear to be reputable companies with links that have been forged. Victims are tricked into sending crypto to verify their address.
Spoofed websites – avoid giving your personal information to fake websites by closely examining the URLs. Make sure they start with “https”, not “http”.
Extortion scams – Scammers use information from data breaches to try to extort victims via email. If you are the target of one of these scams, change any passwords quoted in the email, report it to police and scan your computer for any malware.
Want To Know More About Crypto Scams?
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