Crypto scammers lurk in the dark corners of the blockchain sector. These fraudsters seek to prey on new users who are unaware of their presence or of how this technology functions. According to recent reports, cryptocurrency scams have now reached dizzying heights with some studies showing more than $1.6 billion in crypto has been stolen.
These statistics only increase when you zoom out to include those who took losses and never told anyone and those who are in the process of getting scammed and have no idea. Sadly, the markets open nature and easy enrollment makes it the ideal target for scammers and the likes.
Crypto crime is a major problem that users need to look out for because there are no refunds on the blockchain. You need to remain vigilant and ahead of the scammers to stay protected. In 2022, keeping your crypto is all about integrating safety precautions into your trading strategy.
The growth f the crypto market remains impressive with the entire market expanding rapidly. It’s vital that you consider ways to protect your coins as your holdings increase. So how do you avoid crypto scammers and keep your digital assets safe? Here are some great ways to beef up our security and prevent thieves from tricking you out of your digital assets.
DYOR
The first step in your line of defense is to take some time to learn about crypto fraud. It may seem boring, but it’s vital to understand different ways in which attackers gain access to your holdings. Most people are surprised to learn that in many instances the hacker doesn’t attack your security. Rather, they use a technique called phishing to slowly extract data about you over time.
Another great way to prevent startup scams is to ask the crypto community. Social media platforms like Twitter provide you with the opportunity to interact with other users, developers, and traders. You can ask people’s opinions on projects and get feedback. A word of caution, you can also get some offensive and illogical replies you will need to sort through.
Never Participate in Projects You Don’t Understand
Another great tip is to only trade projects you fully understand. In the early days of the market and even today many traders simply select a project based on its market movements when they look at the chart. If the arrow is green they assume the platform is on the rise. However, there is much more to selecting winning trades than this approach.
For one, its vital to understand every project your trade because it will make it easier to select the projects with true longevity. There are projects in the market that are direct copies of other protocols. These projects are more prone to failure because they are less original and usually less established. In most instances, the project will promise higher returns than the original to lure new traders before stealing their crypto.
One of the best ways to determine a project’s longevity is by looking at its functionalities and use case scenarios. There are projects that compete against each other and projects that provide a valuable service for the entire market. These protocols are sure to outlive competing projects and van be excellent ling term trades when used correctly.
Peep the Community
Another easy way to determine if a project has what it takes to remain stable is to examine its community. Every crypto project has a base of followers who help support and promote the platform. Projects that are of the highest quality will include high level developers and experienced crypto Dapp creators as a major component of their ecosystem. These communities are what drive these projects to long term success.
One of the best indicators of a project’s usability is its Dapp ecosystem. It’s often said that the Dapp developers determine the success of crypto project. This phrase rings true when you consider that it’s the Dapps that interface with users. These protocols are how projects interact with their community.
The more Dapps on a protocol and the more popular the network in most instances. For example, Ethereum is the largest Dapp and DeFi ecosystem in the market. It’s also the largest smart contract programmable ecosystem in the world. Much of Ethereum’s success can be contributed to its massive ecosystem that provides functionality and liquidity to traders.
Hard Wallets
Purchasing a hard wallet should be one of the first steps for anyone serious about crypto trading. These devices keep your digital assets safe via a combination of features. Hard wallets create an “air gap” which keeps your crypto offline in what’s called cold storage. When your coins are in cold storage they are safe from online threats.
Hard wallets also employ some other security processes to help keep your crypto safe. For example, most have a physical button that must be pressed to transfer assets. No matter how good a hacker is, they can’t press this physical button. Additionally, the top hard wallet manufacturers, Trezor and Ledger, provide backup and restore functionalities.
Avoid Hardware Wallet Schemes
There are some crucial maneuvers that one should take when deciding on a reasonable hardware wallet. For one, you must stick to only reputable wallet manufacturers. For most experts, Trezor and Nano are the top choices. Both of these wallet providers have been in use for years and have been proven to provide advanced security for your digital assets.
There has been an up-tic in wallet related scams lately. AS such, its best to educate yourself to avid these pitfalls. One of the most popular types of wallet scams are done using auction sites like eBay. You should never buy a used wallet from anyone as there are too many security risks associated with these actions.
In the past, crypto traders have lost fortunes because they skimped out on their hardware wallet. In one incident, the scammer sold the wallet as new. However, they had already taken note of the passphrase. Once the trader loaded their savings onto the device, the thieves removed all of their crypto with minimal effort.
Aside from wallet scammers, you need to be weary of bad quality wallet manufacturers. The hardware wallet sector is getting more competitive which is ideal for traders. This competition can lower prices and improve functionalities. However, all of these factors mean nothing if the wallet is low quality or doesn’t have future support. The internet is filled with horror stories of people purchasing faulty hardware wallets from low end providers only to find that they are unable to use these items as intended.
Never Give Out Your Private Keys
Another premier step to take is taking the time to learn the importance of your private keys. In the crypto market, you hold your digital assets directly. Only your private keys provide you access to these coins. If you lose your private keys, you have lost your holdings. That is what is meant when you hear horror stories of investors losing an HD with 650 Bitcoin on it. What the hard drive really held was the private keys to the wallet that held these coins.
If you give your private key out to someone, they have complete access to your funds. They can move assets and drain your account. Remember there are no refunds on most decentralized blockchains. As such, you need to be 100% sure before you send any transactions and immediately quit speaking with anyone who requests your private keys.
Stick to Reputable Projects or Development Teams
There are a lot of different options in the market today. For new investors, all of this selection can seem a bit overwhelming and confusing. Luckily, there are many platforms that have proven to be ahead of the pack. There are the classics like Bitcoin, Litecoin, Ethereum, and more. These early cryptos have been in operating for over a decade.
You also have new DeFi projects like the META1 Coin that combine next-gen features to provide users with more confidence. For example, the META1 coin can only be held by individuals. Companies, firms, or governments can’t trade or HODL these tokens. The network uses this protection to keep users safe from whale manipulation. Systems like these are the future of crypto.
Work with Open Source and Transparent Projects
Professionals agree that it’s ideal to work with open source and transparent projects. Open source projects are the best option because they enable the community to vet the coding and see if there is anything going on behind the scenes. Open-source projects also encourage developers to build on the user experience to make more immersive interfaces and Dapps.
Community governed projects are another example of added transparency. These networks enable users to put forth proposals and vote regarding the future of projects they are involved in. The community makes the final decision on items such as fee changes, new features, and token burns and buybacks.
Raise Your Skills
If you really want to remain on the outside of scams its best to improve your technical skills. Not everyone has what it takes to understand blockchain programming but there is a large majority of people who have the capabilities to acquire this skill. Once you have ven a slight understanding of blockchain programming protocols, you are going to be able to better evaluate open source projects.
Remember, the developer community is a tight nit faction of the market that can assist you on your journey to success. Becoming part of this community will provide you with access to likeminded individuals and technical skilled developer who you can bounce questions off of and seek further guidance regarding the legitimacy of platforms.
Double Check Project Addresses
When participating in a crowdfunding event, one of the easiest ways to make sure your crypto is going where it is supposed to is by double-checking the contract address. Every crowdfunding event and project will list its contract address. Take this address and copy and paste it into a blockchain explorer. The results of your search should match the project exactly. If not, abandon ship.
Avoid Mining Schemes
Another issue that is worth mentioning is mining schemes. There are a couple of different ways that scammers have found to rob miners of their crypto. The most common way to scam people is by selling fake miners. These scammers go much further than creating a dummy website. In many instances, they will hack the profile of established and reputable firms on Alibaba and eBay.
Once they have control over these accounts. They can place their products on their page and leverage their great reviews to scam you into believing that this is a legitimate offer. These scams are easier to spot nowadays because they usually only accept crypto as a form of payment. Also, another red flag is when the page offers miners and a bunch of unrelated products. This can be a sign that these miners were added by a hacker and not the company directly.
Mining Pools
Online mining pools have helped countless people join in and secure returns protecting their favorite blockchains. Staking is an easy feature to participate but its not without risk of scammers. There have been many incidents of cloud mining platforms simply taking users money and operating ponzi schemes.
In most instances, they claim to provide huge ROIs to miners. In reality, they are simply taking funding from ne signups and recalculating it to hold signups to create the illusion of profits. In realty, the platform is simply creating hype to deepen liquidity before they bail out leaving traders suffering.
Always Avoid FOMO
There is a lot of hype in the crypto market today. The best traders understand that hype isn’t always a good thing. For example, when you hear people who are new to the market hyping a project, it’s best to let them continue as you don’t want to discourage their involvement in the market. However, you need to take their information with a grain of salt versus data you receive from an experienced trader or other experts in the field. If you are able to discern between a new user and an expert, you are sure to find that you can weed through the hype to find the real gems in the market. Once you achieve this level of understanding, you can spread helpful information throughout the market and do your part to teach new users how to avoid the most common crypto scammers. In this way, you can give back to the community and help drive cryptocurrency adoption moving forward.