Cryptocurrencies got a bad reputation when scams multiplied like ants on a piece of cake. Even today many people associate bitcoin and other cryptocurrencies with scams, although limited information on investing safely is the main reason there are so new victims of scams every day.
Of course, most projects involving cryptocurrencies have transparent intentions. However, criminals often find new ways to try to bamboozle someone, despite the legitimate use that many people make of cryptocurrencies like bitcoin.
So, if you want to know what you should do to avoid being scammed by someone who thinks they are smarter than you, take a look at this guide that shows you different security tips.
You should always start at the beginning. If you want to enter the world of cryptocurrencies, it is vital to educate yourself first: read about what a cryptocurrency is, what bitcoin is, how it works. You need to learn you can get it, which wallets or cryptocurrency wallets are available, how you can exchange and spend them.
Also, always learn from resources that do not ask you for any kind of investment: the Internet is free. Your education, beyond the connection costs, should be free, unless you want to access a more specialized course from a university. The more you know, the less they can cheat you.
It doesn’t matter what the project is: if you are going to invest in it, you should know every detail, from how it works to who its administrators are. If it has a whitepaper, you should not read it. When a whitepaper is just a copy of any other, it is most likely that a scam or simply has no future at all.
Now, if it’s a service like an exchange or a payment platform, you should research it as well. Look for reviews, complaints, recommendations or read the reviews on sites like CryptoNews. Also, keep up to date with the news about it. Many exchanges on the verge of bankruptcy after a massive hacker choose to keep their users’ funds.
Don’t believe everything you read
Even if it looks legitimate, you should leave room for doubt and pay attention to the details. In the case of phishing, the spelling is often wrong, so check the spelling when you receive an email. Some phishing scams replicate every last detail of other legitimate sites, but cannot copy their exact address or domain. Also, if they guarantee you astronomical profits in a very short time, rest assured that they are lying. The cryptocurrency market is volatile and nothing is guaranteed.
If you read very positive news, you should not believe it until you find the original source. Check if it is reliable or not. Go beyond social networks, because there is usually not everything you need to check the veracity of a news item. Check the official pages of the companies or organizations involved.
If the networks are flooded with positive comments about an unknown cryptocurrency or a new service that gives away money, don’t get carried away by a trend. Reread and contrast the different information you get.
Keep your private keys out of sight
The private keys to your wallets should not be stored on easily accessible digital servers or in the cloud. Hackers could exploit a vulnerability in your computer or a service and get that vital data for the security of your money. Nor should they be shown to anyone who asks to see them for any reason. Legitimate bitcoin exchange services and bitcoin wallets will never ask you for this information.
Should you run into any issues, the support team will guide you without asking you for any background and any data beyond the problem you are experiencing.
Avoid buying hardware wallets such as Trezor or Ledger from online or second-hand stores. Rely only on the methods offered by the manufacturers. If a middleman has access to the device you bought, you could become a victim of cryptocurrency theft. Think about the story of that Ledger user who once received a counterfeit wallet, with swapped parts.
A hardware wallet can be manipulated by third parties, check it well. Jjrand from Reddit shared this advice.
Don’t leave funds online
At least, not for a long time. If you are going to trade cryptocurrencies on some exchange or deposit on some marketplace, make sure you do it only when necessary and don’t leave any remnants there. These platforms are not bitcoin wallets: your funds may be at risk there, either from a hack or an eventual exit scam. If you don’t believe it, check out this article of the 7 biggest bitcoin thefts in history. Among these are fraudulent companies and hacks of legitimate exchanges.
Use only trustworthy people and companies
There are a variety of scammers disguised as exchanges, bitcoin wallets, traders or other services. Therefore, it is important to use only those who have amply proven that they are legitimate during their time in the cryptocurrency market.
In the case of people you don’t know, when it comes to transferring funds, trust them only if they are backed by some reputable system, such as the one you can find on LocalBitcoins.
Do not download files from unverified websites. Fake Apps abound on the Internet today. One practice you might find useful is to download Apps or any other software from official GitHub repositories.
Use common sense
If something looks too good to be true, it’s too good to be true. Key phrases to identify scams are “100% guaranteed”, “100% real”, “daily earnings”, “No scam”, “The new Bitcoin”, “blockchain will make you a millionaire”, “technology nobody knows about”, “1000 free coins for joining”, “minimum investment”, “earn cryptocurrencies easily”, “I’m giving away cryptocurrencies”, “multiply your bitcoins”, “risk free” or “earn without investment”.
Example of a suspicious Facebook ad: “Do you want to start earning $4,960 in Bitcoin every week? With $400 investment, it’s a walk in the park. Private message for information.” Source: Hackernoon screenshot.
No one gives away money to strangers just because, no investment is guaranteed and if someone must insist that something works and is “100%” real, it is surely because it is not. Also, no business works without initial investment, so “earning without investment” actually implies a referral system (pyramid) or hidden costs afterwards.
Always ask the standard questions. If something seems suspicious, don’t give out information or money until you investigate thoroughly. If you want more information, check out this article about the most common bitcoin scams.