One notable aspect of blockchain and cryptocurrency technology is its complexity. This complexity comes off as mysterious to most people, and hence they are reluctant to understand it. This reluctance has led to scammers, hackers, and opportunists having a field day in the space. According to Coindesk, “cryptocurrency losses due to hacks, exploits, and scams in 2022 reached an all-time high of $3.7 billion—a 189% increase over 2021’s previous record of $1.3 billion.” This reality necessitates the need to educate cryptocurrency users on how to avoid cryptocurrency scams and hacks.
The following tips are for both those who already have crypto, those looking to get cryptocurrencies without buying them, and those intending to acquire some by buying. These crypto thieves have spread their tentacles and can affect all kinds of investors. So, whether you invested your money, your time, or your skills to get your digital assets, the following tips will help you protect them.
Stay mindful of Phishing Links
One known way hackers get access to private information like private keys and passwords is through phishing links. Be wary about clicking unconfirmed links, especially when they come with offers or gifts or rewards. Once clicked, depending on the goal, the hacker can get access to your keys, or install malware on your device. That way they can do whatever they intend.
Many times these links look harmless or legitimate because they are fake, and unless you are extremely careful or alert you might miss the omission or addition that makes it different from the original. So, installing anti-virus and anti-malware goes a long way, especially if you do a lot of activities on your device. The internet is teeming with harmful but innocent-looking links. These installations will help as additional protective measures.
Be careful of the Freebies
Giveaways and airdrops are one of the ways to get cryptocurrencies without buying them. However, in an industry like crypto where stability is yet to be attained some of these airdrops are trojan horses. From the information requested to the tasks given for the rewards, extra care should be taken before you expose yourself to harm in a bid to earn rewards. If you do not understand or trust it completely, do not venture. To avoid cryptocurrency scams and hacks, you have to employ the first rule of investment: if you don’t understand it, don’t invest in it. While looking to get freebies, try not to lose what you already have. Also, if it sounds too good to be true, it most likely is a scam.
Avoid the Ponzi side of crypto
Ponzi schemes have been defined as financial fraud where the funds from more recent investors are used as payouts to earlier investors. Any business where your reward or growth depends on more people joining in is suspicious. One telltale sign of a Ponzi scheme is the unrealistic reward you are assured of. At first, it works, and more people join because of the evidence but it is soon unsustainable and so crashes. The volatile nature of the crypto market makes it hard to predict rewards. Be wary of those who promise you huge and sure rewards when you join the crypto business.
Beware of potential Rug Pulls
A possible loss one might experience when buying tokens is that of rug pull. In summary, rug pull happens when the owners or creators of a token wait for the value and price to rise to a worthy point, then they sell theirs and close the project, leaving people with useless tokens and empty purses. The novelty of new tokens gets people investing cash and hoping that the coin would become the next Bitcoin. Before you invest your cash in a project, do thorough research as deeply as possible. Check out the founders, see their past works and track record, read the white paper and check that the project looks feasible.
Many celebrities are used to advertise new tokens, but this doesn’t mean that the executives are credible or the project worthwhile. Make sure that you know all you need to know before you spend your money on a crypto project.
Watch out for the Fakes
This tip is mainly for NFT collectors or traders. The worth of NFTs lies in their uniqueness. They are supposed to be one of a kind. When you collect or buy a fake NFT, you automatically run a loss. Many of these non-fungible tokens have distinct attributes, so check for their authenticity traits to confirm that your purchase is the real deal.
As cryptocurrencies gain more adoption, more and more people will fall prey to the cyber insecurity associated with the technology. The best way to avoid cryptocurrency scams and hacks is to stay aware and security conscious. Because of the decentralized nature of the industry, recovering crypto-assets is quite expensive and taxing. So, here, prevention is infinitely better than cure. More ways are being innovated on how to steal funds in the crypto space, and it will do players well to also innovate ways to protect themselves.