With the cryptocurrency market size expected to grow by 7.1% to reach USD 2.2 billion by 2026, more people than ever are jumping on the crypto bandwagon. As with any emerging investment market, scammers are increasingly targeting those who are considering “getting into crypto.”
While the crypto market can be a great investment method to realize gains unattainable on the stock market, consumers should be wary about the massive amount of crypto scams.
In this article, we’ll present our top tips for avoiding getting caught out by cryptocurrency scams.
Tip 1: Don’t take any information at face value.
Remaining stalwartly skeptical is a brilliant way of protecting yourself again scammers. Remember, if it sounds too good to be true, it most likely is. Beware of people advertising otherworldly gains, investment opportunities or “back-door secrets.”
You should do your own research to validate any claims being made around a crypto investment.
Tip 2: Use a recognized, safe cryptocurrency exchange
If you’re looking to buy or trade crypto, you should be using a reputable exchange or trading platform. Some exchanges could be scams, taking your money and giving you nothing in return.
Before making a purchase, consider who you’re buying with. Is this company legit? Do they have enough active users? You could search up the name of the company on Trustpilot to check if anyone has reported the exchange to be a scam.
Tip 3: Don’t trust anyone who contacts you directly about a crypto opportunity.
Many scammers will contact potential victims directly to sell them on a “once-in-a-lifetime” investment opportunity. No matter who they’re claiming to be – a start-up, crypto guru or even a government official – this is most likely a scam.
Also, you should watch out for pyramid schemes where scammers will take your money and convince you to recruit other people into a crypto scam in the hope of earning even more money. Not only will you lose your initial outlay, but this may also be illegal.
Tip 4: Enable two-factor authentication on your crypto wallet
Whilst this isn’t a guaranteed method to keeping your crypto wallet safe, you should definitely consider enabling two-factor authentication. This means even if hackers get your login details, they are far less likely to be able to crack into your account.
Tip 5: Never give out your private key
When it comes to a crypto wallet, your private key is your password – and you should treat it like such. As cryptocurrencies are decentralized, you’ll need a private key to make and manage your transactions.
Where are your private keys stored?
You can either keep them in “cold storage” – this refers to any offline storage like a post-it note, a piece of paper or in your notes. However, most keep them stored in “hot wallets” like Coinbase.
You should never give your private keys to anyone – even those who claim to be from your cryptocurrency platform. These scams are known as “tech support scams,” where scammers will try to convince you that they need your private key to recover some “lost funds” or “fix a security breach.”
The secret to keeping safe online – whether it’s with cryptocurrency or just your everyday financial transactions – is to stay skeptical, be cautious and curious.
Do your research about a token before investing in it; make sure you’ve done your homework on your chosen crypto exchange. Inspect emails before trusting them. Never use a “log in from here” link on an email unless you’ve requested it.
If you think you’ve been the victim of a scam, contact the FTC, the Commodity Futures Trading Commission, or your own government agency responsible for dealing with trading fraud.
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