5 Fool-proof Strategies to Save You From Cryptocurrency Scammers!

 When you think of the word 'cryptocurrency' other than the popular options such as Bitcoin, Ether, Litecoin and Dogecoin, what will definitely come to your mind are the scams that were done using it. Though in total, the cryptocurrencies have a net worth of $653 billion still they are a fraction of the world's paper money, estimating $2 trillion. With the massive number of people not acquainted with the best practices of trading crypto coins, falling into traps conceived by hackers is inevitable. 

That doesn't mean you have to curb your desire to become a cryptocurrency holder! A willingness to gain at least basic know-how of the different security tools and strategies can minimise the loss of your crypto assets. 

If you are still pondering over the fact that if cryptocurrency is for you, you can read our beginner's guide here. 

For those who are excited to buy some shiny bitcoins or other altcoins, below are the steps to make their investment safe. 

1. Checking Legitimacy of ICOs - 

First, let's understand what ICOs are. 

Mining a new coin and maintaining its supply is a big challenge. Why? Because it requires both extensive manpower and advanced computer systems. When a tech innovator comes up with a coin idea, he needs a talented team, powerful machines, and financial resources to execute it. Only if the idea behind the coin is revolutionary, it gains the approval of a decent population. 

Why are ICOs needed?

The coin start-up needs financial backing to build the blockchain on which the functioning of the coin relies and launch it in the market. It is raised with ICO, the acronym of initial coin offering. For their project to take off, the crypto coin company asks you to invest in their cryptocurrency. In return, they either provide you with a certain % of their coins or dividends that will come later. 

For ownership of the coins, you have to invest money. This concept is termed an initial coin offering. 

Now, there are two chief reasons why ICOs can sometimes be scams in the disguise of crypto assets. First, they come at a price you can easily afford and are available to anyone how has access to the internet for purchase. 

It can be tempting to feel emotionally invested in a coin that promises you high returns, but unless the coin is solving an ever-growing problem, its success is not guaranteed. 

The Problem with Initial Coin Offerings

Many countries do not have any regulatory bodies to stop crypto startups from scamming the innocent public. For example, in the US, CFTC has made registration of cryptocurrencies mandatory. While the UK has Financial Conduct Authority in place to regulate the crypto assets.  

However, they can't catch every fraudulent new coin since the number is massive. Here, your personal research and common sense will come into play.

1. Competent Team - Make sure you are dealing with real people and not made-up profiles. The easiest means to do that is conducting a thorough Google research with the name of the CEO and the team.
2. Site Quality and Branding - Ideation of a crypto asset that creates hype can take a significant amount of time. A good cryptocurrency start-up will invest its time in creating quality content and branding to cut through the noise. Instead of vague language, they will focus on their value propositions and have working contact details and real addresses.

1. The Essentials - When you don't find a roadmap, whitepaper and registration details of the company, you are dealing with a firm that can't be trusted. 

Generally, fraudsters lack proper details and content because they don't want to invest much time in orchestrating the crypto coin's release in the market.

   

2. Connecting to Community - Although you are still on the border of the crypto world and haven't yet decided whether to make the plunge, some connoisseurs make earnings by trading cryptocurrencies. 

These individuals hang out in forums where they discuss their experiences. When you read Reddit threads, you will see warning signs about fake coins as people repeatedly reveal their frustrations about fake deals.

Another site that you must check is Github. Every coin has its open-source code available for the public on Github. Not finding a Github account/repository is a red flag.

 

3. Identifying Mining Prospects - For any tech-savvy person interested in making money and knows how cryptocurrency works, mining can be a silver lining. The point to note is, you have to either gather all the expensive resources and pay huge electricity bills to become a miner or buy a cloud mining service. 

Not everyone has the budget to have their own setup, and the only option they are left with is buying the cloud mining pack. They get the server space on the cloud to perform the tasks that make up the mining after they pay for the package. 

With the growing popularity of cloud mining services, imposters are taking advantage of it to scam people. They create websites that promise to help you with mining; however, in reality, install malware in your system under the pretext of installing applications mandatory for work on the cloud. If such an incident occurs, you can become a part of a data breach and lose all your cryptocurrency / personal data as the file might allow hackers to access your PC.

A simple solution to keep your data safe is removing all your important files from your system and storing them on external hardware. We advise not to store any of your personal credentials in your system. A printout is a better alternative. 

You can refer to the page where you noted the passwords to make your system secured. 

3. Pump and Dump - It is not just Elon Musk who has the power to manipulate the cryptocurrency market. When a significant fraction of people invests in a crypto asset, its prices reach significant inflation. The reason is the basic principle of supply and demand. 

An increase in demand makes it an attractive asset for investors. 

In this scenario, people purchasing the digital currency are essentially the stakeholders or the team itself. However, it is impossible to do so in the long run. This is called the pump and dump scheme.

When an altcoin in its infancy has a sudden rise in its price, you should be wary of it.

A little research goes a long way. Such an altcoin will not have any discussions around it on the forums or support from the social media community.

 

4. A Robust Wallet - If you buy coins from a broker or a trading site, it is vital to invest in a secured wallet. 

You have two options. 

Either you can spend on a software wallet. It is an application which will be installed on your system and take charge of your passwords and protect them from hacking attacks. 

We recommend going for the second option, a hardware wallet. Even if someone else manages to get access to your system, he wouldn't access data on the hardware wallet. It is a device that you need to connect to your system only at the time of login. By keeping your cryptocurrency in a hardware wallet, you will not lose it even when your trading account is hacked. Having a minimum supply of the cryptocurrency you need online is truly a safe bet. 

For an additional layer of safety, install a fully functional antivirus and a firewall so you can browse freely! 

5. Password Usage - Most often than not, people have to take leave of their wallets because they forgot the password. With the overwhelming amount of work you do daily, you are prone to do that; we don't blame you! 

They feel setting the same passwords on multiple platforms can save them time and ensure they do not face any trouble logging in. 

Doing so makes you an easy target because access to one of your accounts opens doors for hacking the others.

 

Follow these instructions.

1. Set multi-factor Authentication on your wallet and trading account.
2. Rely on cold storage. As stated above, no hacker can access a page that you have hidden in a secret location in your home!
3. Make sure the site you are using for trading has SSL/TLS encryption. 
4. When a potential trader reaches you out to make a transaction, check them on Bitcoinabuse.com. The search bar will instantly tell if you are dealing with a hacker. 

Conclusion: The cryptocurrency economy is evolving. It is fairly new to a large fraction of the populace, especially people who aren't tech-savvy. As a result, when they start using cryptocurrencies, they become the prime prey of hackers and scammers. 

With the bright prospects that cryptocurrency entails, you might want to begin your journey with crypto. By taking care of the safety of your account with an antivirus, firewall and buying a hardware wallet, you can make your computer safe.

When you plan on investing in any cryptocurrencies that are yet to hit the market, you need to do proper research and validate their credibility. The secret lies in knowing if it has been registered under the authority regulating crypto assets in your country. In addition, looking at the history of the coin and its price graph can also provide hints if it is worth your money.