There have been reports in the past about crypto-exchanges, networks and wallets getting hacked, resulting in lost investor funds. So in this new and evolving market it makes even more sense to try and be as safe as possible. So here are 5 different methods that are common in scamming users out of their crypto and how to avoid them:
- Initial Coin Offerings (ICOs)
Well that one is not a scam per se, but a dubious past and especially the ICO boom last year showed us that ICOs can be a risky business. Varying from pyramid and other suspicious schemes that abused the crowd funding technic and disappeared overnight there have been cases giving the cryptoworld a bad name. To stay safe avoid just investing to a promising new project without proper due diligence investigating as much as possible every aspect of it(team making it, possible backers/alliances etc.) and as with every investment in general understand that the risk to still lose everything exists.
It might come in many forms like email or twitter posting but whenever a suspicious account on social media that looks familiar but not really posts an address giving out rewards contacts you or tweets, be wary. Unfortunately people still seem to fall victims to fake accounts of “Big Bitcoin Entrepreneurs” asking for crypto from the first X people and promising to return Y% more after a while. Just keep in mind that no one gives free money and if something sounds too good it probably is to avoid this method.
- Exchange/wallet apps hacks
This one is a bit tricky to avoid as obviously you need to trust your crypto-exchange of choice to use it at the first place. Keeping your crypto in an exchange wallet is generally not considered as the best of ideas after even the largest and more “safe” exchanges seem to not be totally out of the reach of hackers, so for keeping a peaceful night’s sleep storing your digital funds in an offline cryptowallet seems the safest solution. However…
- Tempered-with cold storage
This seems to be a recent problem that plagues users trying to buy offline wallets on the cheap from E-bay or similar services. There have been however reports even from users getting scammed for buying offline wallets out of more respectable sources than just random online sellers. In any case make sure your hardware is new and the box is not fiddled with, the firmware that is running is what it is supposed to be before storing crypto in it and always make sure to keep your private key safe just in case the wallet is lost or destroyed.
- Pyramid schemes
Ok, this one goes without saying much. Pyramid or Ponzi schemes promise a lot for almost nothing, a discount if you buy early and generally sound like a pretty sweet deal, especially if you drag friends and family into them and get more benefits while climbing the hierarchy. As usually just keep the “sounds to good to be true” mentality to avoid getting scammed into this category.
In general investing into crypto, and in general, should be done after a lot of detailed investigation and only with funds that even if lost will not affect the quality of your lifestyle. Be vigilant and aware and do not let scammers get away with your hard earned crypto!