The crypto world is still very much so a new frontier, with projects coming and going, and lots of money being involved outside of the custody and control of banks.
As a crypto holder you have become your own bank, and it's extremely important to understand what the risks associated with crypto are so you can protect your finances for the future.
In this series we'll be looking at many of the risks within the cryptocurrency space, as well as how to protect ourselves against them.
Scams. Hacks. Leaving Crypto on Exchanges. Not Using 2fa Authentication. Not Owning Your Private Keys. Investing in Risky Cryptos. Investing All At Once and Not Dollar Cost Averaging.
Wow that's an extensive list, and I'm sure there's more, but let's start with common crypto scams and how to avoid them.
Understanding common cryptocurrency scams is paramount to safeguarding ourselves from falling victim to bad actors out there taking advantage of newcomers to the space.
There are many scams out there, but the two most common are phishing and giveaway scams.
Phishing is a scam where a scammer or hacker sets up a fake login page or app to masquerade as the service or protocol you're attempting to use. If you enter your info into this fake page, the scammer will now have your username and password and could potentially drain out all of your funds.
The best way to protect against this type of scam is to always always always check that you are on the correct website when logging in. Bookmarking the correct websites will help with this.
All it takes is one typo when entering in the website and next thing you know, you could be on a phishing website.
In addition to websites, always watch out for emails and double check the sender's email address. I've received multiple emails with links to fake log-in pages that are trying to steal my info. This doesn't just happen in crypto, but with social media sites such as Facebook and Twitter as well, as well as with banks and legacy financial services.
Always check to make sure you're on the correct website.
Also be weary of comments on places like Reddit and Twitter, or even on crypto blog sites such as HIVE and Steemit. Just the other day someone commented on one of my posts with a supposed 'crypto airdrop' which sent me to a page which asked for me to log in with my Steem private keys.
The key here is to never click a link from someone you don't know, and always triple check that you're on the correct website when logging in. And NEVER give out your private keys.
It's crazy to see the massive amount of crypto scams taking place on YouTube these days. The giveaway type of scam is when the scammer pretends to be a celebrity or popular entity, and either hacks into their account or creates a video with a giveaway offer stating something along the lines of "Send 1 Ethereum and we'll send you 2 back!"
Earlier this year, multiple Twitter accounts of prominent celebrities and public figures (even Elon Musk, Barack Obama, and Joe Biden!) were hacked and were used to market this exact scam, which I'm sure resulted in many people sending their money to the scammer, all in hopes of doubling their investments.
Photo courtesy of http://www.engadget.com
This particular hacker did get caught, but unfortunately there's tons of these types of people out there.
Photo courtesy of http://www.wfla.com
These giveaway scams are all over YouTube as well and are being run as advertisements on legitimate cryptocurrency channels.
I remember the first one I saw earlier this year, which was a 'Litecoin giveaway' from Charlie Lee, the creator of Litecoin.
The giveaway promised to give me 1 free LTC for every LTC I sent. After looking at the video and the account a little harder, I realized that this was definitely not Charlie's real YouTube, and this 'giveaway' wasn't mentioned anywhere else. Not on his Twitter, or Litecoin's Twitter, not on Reddit, nowhere.
This was a huge scam, and I reported it and made sure to steer clear of any similar style videos and report those as well.
Apple co-founder Steve Wozniak has now sued YouTube for his image and likeness being used in such scams.
The cryptocurrency space is one of amazing opportunities and one which opens the door to a more positive financial future, but along with those opportunities comes those who wish to take advantage.
You can find more of our articles on crypto security and risk mitigation here.
Thanks so much for reading and I hope this post helps you on your crypto journey!