A decade after its launch, it’s become obvious that cryptocurrencies are here to stay. But with the expansion of the industry and creation of more digital currencies, questions around safety and security are being asked with more vigor.
There are many cryptocurrency crimes, but this should not deter you, especially when these scams can be identified and measures are taken to avoid falling prey to the antics of scammers. In this article, we will share crypto risks and safety tips. Let’s get started.
Risks associated with Cryptocurrencies
The biggest concern in investing in digital currencies such as Litecoin and other altcoins is the risk of fraud and hacking. According to a report from the Federal Trade Commission, losses accruing to $1 900 per month were observed between October 2020 and March 2021 from cryptocurrency transactions.
Usually, these crypto crimes involve cybercriminals requesting payment in cryptocurrency or offering to increase your crypto holding. For instance, a scammer could promise to increase your holding if you buy Litecoin.
“One sure sign of a scam is anyone who says you have to pay by cryptocurrency,” FTC says. Before buying any digital currency, it’s best to research and purchase your coins only through a credible crypto exchange.
Other scams to watch out for
The cryptocurrency market is filled with many scams. While some have been mentioned, there are others.
Pump and Dump schemes
Here, a small group of investors come together and pump so much money into a particular cryptocurrency, thus inflating the price, albeit falsely, while convincing investors to invest. After such investments, the pretend investors sell off their shares for a huge sum, just before the price crashes.
Avoid crypto investments that look too good to be true. Also, avoid investing in digital currencies that have risen so much in value without a clear reason, as this may be a sign of a pump and dump scheme.
ICOs for fake cryptos
Cryptocurrencies offered to investors before their launch are usually referred to as ICO (initial coin offering). However, these coin offerings may be fake, and without knowing, investors can be lured to put their money in a cryptocurrency that does not exist.
It is important to carry out proper research before investing. If the offer looks too good, it’s probably bad. Ensure you read extensively on the company and its founders.
How to invest safely: best practices
Hackers can access a person’s cryptocurrency wallet to steal their money. At other times, they can breach the entire cryptocurrency exchange. This is why cryptocurrencies must be stored in a safe and secure place. But beyond that, it is important to imbibe good online security habits. These habits include:
Secure locks on mobile devices
Ensure all computer and mobile devices that operate wallet software have two-factor authentication. Also, mobile devices should require PIN, facial recognition, or fingerprint recognition to unlock them. Install anti-malware software on your mobile device as this will guard against malware, false websites, and phishing attacks. Overall, hardware wallets are better than software wallets as they never expose keys and often require physical interactions before they can be accessed.
It’s always essential to back up any bitcoin wallet. This way, even when your computer or mobile device crashes, you are safe. Backing up your cryptocurrency wallet also guards against human error and theft. However, avoid storing backups online, more so when it is not encrypted. Use encryption tools such as VeraCrypt and GnuPG. They are free and easy to use.
Use of secure and complex passwords
Always ensure your passwords are complex, secure, and unique for each crypto wallet and exchange. Also, ensure wallet software is regularly updated. It is also important to keep abreast of the latest cryptocurrency scams being used by cybercriminals to avoid exposing your keys or falling prey to such scams.
Research cryptocurrency services
By researching cryptocurrencies, you will avoid being scammed, blocked from accessing your funds, or overcharged. Cryptocurrency transactions are pseudonymous, as you know, thus if someone knows how much you spend, where and when you spend your money, they could potentially discover your transaction in the bitcoin ledger and find your wallet address which they can use to monitor your habit and thereafter rip you off your money. This data is only available through someone else’s web browsing activities, though.
Keeping your bitcoin and other digital currencies safe and secure is achievable. You will only need to plan effectively, and put in the effort by cultivating and practicing good digital security habits. It’s also not as complex and difficult as it used to be in the past.
Cryptocurrency is not merely an internet fad. There are dedicated hardware wallets that help create a balance between ease of use and security while also increasing acceptance and use for all financial transactions.