These days why bother investing? You would probably make more money scamming new crypto investors on telegram or simply posing as Charles Hoskinson DMing people on Twitter.
The sad thing is that is actually happening. Lately, scams have been on the rise and there are a few reasons for this. In this post we are going to discuss why scams seem to be magically popping up out of no where, and what you can do to prevent them!
Why Are Scams Everywhere Right Now?
It seems like every other post mentions scammers or how to protect your funds these days! Lets go over why this topic is so hot lately.
When the market booms and the bulls take over, there is always a massive influx of investors. Although not just any investors, specifically new investors. These encompass young 18 year olds looking to throw their money at the hypest project they just learned about, and even 60 year old CEOs with millions following the advice of their nerdy friends telling them just to invest.
The problem is the crypto market is difficult to understand. Not just the market, but the technology as well. On top of all of that, there are people constantly trying to take advantage of that lack of knowledge to scam people out of their money. Out of the millions of people entering crypto, there are bound be a few huge scams that become talk of the town.
Upgrades To Projects
Charles Hoskinson recently posted a youtube video about this. I will link it here for those interested. In short, when projects go through major updates that require hard forks, or even soft forks at times, scammers have a huge opportunity to profit.
Many investors in this space are not technically inclined and struggle to understand the necessary steps to navigate these events. That leads to people easily taking advantage of them and instructing them how to “update their wallets” by sending their funds straight to them or revealing their private keys to help with the process.
Just like new investors, new projects always spike up during a bull market.
Why? Obviously because the influx of capital in the market makes leading ICOs or Token Sales that much easier. Investors are more willing to contribute to projects when they have the additional capital.
With new projects comes errors in the code base that can lead to hacks, mistakes in moving funds to new wallet tickers, and the occasional scam site they appear to allow you to invest in these new projects only to take your funds and run.
I remember an ICO in 2016 I was involved in that had thousands of people in one telegram room waiting for the chance to invest at 8:00 AM eastern. Instantly, once the team announced you could invest and posted the link, 10-20 scammers posted similar scammer links in the telegram chat that stole millions in Ethereum.
The investors sitting in the chat waiting wanted to invest so bad, they clicked the first link they saw in the chat and sent their Ethereum hoping to secure a spot in the ICO. Unfortunately, they soon found out their money was long gone.
The last common way people get scammed is from the infamous lending platforms.
There are always several platforms that claim to be legit lending platforms where you can be rewarded by simply leaving your native assets on the platform. These come and go but the idea remains the same.
Almost every time the owners of the platforms miscalculate funds and promise more in return then they can actually lend leading to devastating devaluation of the native currency and loss of funds. Sometimes everyone loses their funds never to be recovered. These are not to be confused with interest accounts though.
Ways To Protect Your Crypto
That is enough of the reasons why scams are so popular. Lets now dive into the top ways to protect your funds.
To give you some back ground, I have been involved in the space since 2014 and have a decently good track record of protecting my funds. Aka – I have never been hacked. Here are my top steps to keeping my assets safe!
Check Your Wallets Regularly
If you plan on keeping your assets on an exchange or in a native wallet of any kind, make sure to check them regularly.
This does not have to be a thing you do daily, but 2 to 3 times a week should suffice.
Make Sure Your Accounts Have a Withdraw Delay
This is extremely important. Every place that I have stored my crypto, I make sure has a delay before you can withdraw them.
Most exchanges or wallets will have a whitelisting feature, but the real important part is the delay to be whitelisted or withdraw your assets regardless. Now, you might be thinking, “Why would I want to want a day or two to withdraw my assets?”
Well to answer it plainly, if you have to wait a day or two to withdraw your assets – so does someone who hacks into your account. This gives you the most time to respond and prevent loss.
Constantly Check Your Email For Suspicious Activity
Most people do not realize this, but today almost 90% of hacks are from people logging into your account with your actual password and email. Not fighting a firewall on the exchange and backdooring their system to exploit the code to allow them entry. Why would anyone go through all that trouble when they could just log in?
Protecting your email will decrease your chance of being hacked by almost 90%. Why is your email so important?
Well, your email is typically what exchanges and some native wallets use to communicate you with. They send you password resets through it, information on your statements, and occasionally let you know, “Hey thanks for using us for storing all of your wealth on our platform!”
Which is great information for a hacker to know.
A good way to tell if your email has been hacked is to check your deleted box constantly. Hackers will typically try to reset your passwords once they find your accounts and then delete the emails so that you are unware of their activity. Obviously you can also update your email password every few months if you want to be extra careful.
Never Share Your Private Keys
This is probably the thing most people hear, but what does this mean?
When you create an online wallet, or purchase a cold storage device like a Trezor or a Nano, the wallet will come with a “private key”.
This is basically what your wallet uses to access your funds and lets the blockchain know that it’s ok for you to move them. If anyone else ever gets access to it, then they can tell the blockchain that it is ok if THEY move your funds. In short, this is a common no no.
Use An Account With Insurance
If all else fails and your account is hacked from behind the scenes, you better make sure the platform you had your assets on has assurances.
Historically, Coinbase has been the worst when it comes to this. There has been a number of people getting hacked through the Coinbase platform just to never have their coins returned. Just a warning, but it has happened before.
Platforms like Blockfi offer asset protection through their custodial partner Gemini who is insured by AON. This means that if the platform gets hacked and your funds are lost, you would be compensated in that case.
Stay Ahead Of The Game
My last piece of advice is to always stay ahead of the game.
Continue to research preventative ways, constantly monitor your assets, and never stop learning about the market and tech behind it. If you are educated, chances are you will be just fine.