1.3 k

The Ultimate Guide to Protecting Yourself in the Crypto Space

The year 2008 was the year that the world saw one of the biggest financial disasters since the Great Depression. The Housing market crash slowly but exponentially resulted in a domino effect that took down some of the game’s biggest financial giants. It resulted in the loss of trillions of dollars and financial turmoil to millions of families.

All of that turmoil and financial loss could’ve been averted. The poverty and job loss could’ve been avoided if there was a little more transparency from people who run the game.

Banks and Governments, but mostly the people who control the market, engineered the crash. If it weren’t for their greed and manipulation of the people in power, there wouldn’t have been a crash at all.

And that’s why October of 2008 was a crucial one. The month where an anonymous member of a closed online mailing list came up with a novel idea that would change the face of finance forever.

In October 2008, Satoshi Nakamoto, an anonymous member of the CyberPunk group, came up with Bitcoin: a P2P e-Cash system. Bitcoin, built on the invention of Blockchain technology, was a mechanism to “decentralize cash” as we have come to know it. The idea of distributing trust and building transparency so that there was no central point of failure was something people had been exploring for several decades. But in that 8-page paper, Satoshi made it seem entirely possible and novel.

It has been about 12 years since Bitcoin was released. It has been 12 years since people worldwide started to realize the importance of a mechanism built by the people and works for the people. It’s been 12 years, but there are decades, or even centuries more to go.

The Importance of Being Vigilant

In the 12 years of its existence, Bitcoin and the eventual “cryptocurrency” market laid the foundation for has shown great potential. But then, as in any industry involving power and value, there will be people who will try to steal it. Also, the fact that the cryptocurrency industry is highly under-regulated doesn’t help with security and protection. Scams and Ponzi schemes, and quick money promises are seen everywhere among people who are still new to the technology.

Within the cryptocurrency market, scams often denote dubious startups, fake initial coin offerings (ICOs), Ponzi schemes, or the dark market. The scammers play on the ignorance and greed of a prospective victim to push them into the scam. Since scams are globally prevalent, the area of cryptocurrency and blockchain is no different.

When a particular project seems to lack any practical usefulness and the business idea behind it is suspicious, more often than not, it is a scam. The newfound complexity and unfamiliarity of the sector is a ripe area for all types of scrupulous activities. As one considers knowing about and investing in different projects in the cryptocurrency ecosystem, it is essential to be aware of the possibilities of losing one’s investments.

Scams – What Can Go Wrong

Scamming is the elaborate process of taking advantage of uninformed individuals or organizations and using the ignorance to get away with their money. Scamming has always been prevalent anywhere money or wealth is involved.

Scams are highly common in the crypto market as well. Through the years, there has been quite a long list of scamming techniques in the crypto market. As the area is nascent and unfortunately quite complex, it is easy for the few to overwhelm the many by making all sorts of false promises. All scamming techniques are unique in their way, trying to steal money from innocent investors looking to make a quick buck. The following are a list of some of the most prevalent and well-known scamming techniques in the market.

  • Wallet Hacks

Although it is quite difficult to do so, cryptocurrency wallets can be hacked if the attackers find an internal way. By internal ways, we mean finding out the password of your phone, cloning your device, getting to know your backup phrase, and so on. Wallet hacks are not that common as they are usually stored offline and carry heavy encryption. If a wallet is hacked, it is usually due to the wallet makers’ negligence as it has happened in the past.

  • Fake Social Media Influencers

Sometimes, many influencers and celebrities on social media platforms like Instagram, Facebook, etc. get involved in promoting projects that pay them to do so. Most times, the promoters have no idea what they are trying to promote. Celebrities like 50Cent, DJ Khalid, and a dozen others have been known to promote crypto projects and ICO that most probably looked like scams or false projects.

  • Cryptojacking

In a sense, cryptojacking is a way for cybercriminals to make free money with minimal effort. Cybercriminals can hijack someone else’s machine with just a few lines of code. This leaves the victim bearing the cost of the computations and electricity that are necessary to mine cryptocurrency. The criminals get away with the tokens.

  • Telegram Scams

One of the more common types of scams these days are the Telegram scam groups and Telegram chatbots. People are led to join groups or influencers on telegram that promise to make money for their customers. They make fancy displays like showing you their crypto balance, snapshots of their trades, reviews from past customers, all of which are usually fake. Later, when a person is convinced and sends them funds, they close up show and change their credentials, looking for another victim.

  • Dusting Attacks

As the name says, a Dusting attack is made by mass sending, or ‘dusting,’ small amounts of cryptocurrency to hundreds or thousands of wallets. Scammers realized that cryptocurrency users do not pay much attention to these tiny amounts showing up in their wallets, and since then started using this to their advantage. Using the tiny amount, hackers take note of the wallet ID they send to. After dusting multiple addresses, the next step of a dusting attack involves a combined analysis of those various addresses to identify which ones belong to the same wallet.

  • Fake ICOs

With the introduction of the ICO or Initial Coin Offering Concept and the constant updates in the Ethereum Ecosystem, scamming has never been easier. ICO scams might be the most difficult to pinpoint as they mostly look like the normal ones. The projects carry a fancy website, a broad and unfeasible whitepaper, and promise to solve a wide range of problems. Newcomers to the market are easily swayed away by the beautiful and aesthetic presentation of the fake project and readily send money to them in the hopes of exponential return. As soon as the time limit is over, the developers run away with the money. According to certain estimates, around 1/3rd of all ICOs in 2017 were fake. One of the major drawbacks is that it does not help that most investors do not have direct contact with the developers behind the project.

  • Fake Airdrops

The concept of an airdrop is simple. It involves a business “dropping” small amounts of free crypto en-mass to individual wallets. Benefitting from an airdrop usually involves registering through a google form, a Telegram bot, or directly on a project’s website. In a dump airdrop, the developers’ goal is to generate short-term buzz about a token so that people will be eager to buy it when it hits exchanges. Another scamming technique is using airdrops to trail the accounts. By sending an airdrop, one’s account comes into the limelight. After that, standard dusting attack techniques can be used.

Check out the Top Scams in 2019 to get an idea of the malpractices.

How to Protect Yourself

Most scammers are just like wolves in the wild. They will not go after something that will force them to expend a lot of time and energy. They will go after the weakest links simply because that’s the easiest way and requires the least amount of effort. To ensure you are not the lone victim, go out of your way to ensure your online security is rigid and secure.

Safeguard Your Devices

  • Use Antivirus

Much of the malpractice that goes on also has to do with unknown malware that enters your system or mobile. Hackers use malicious code to corrupt your system and gain control over it. For example, some hackers in 2017 hid pieces of code inside an innocent-looking application that mined Monero and other cryptocurrencies by using the hacked computing power. We recommend you to use a trusted anti-virus that periodically checks and removes malicious applications and code from your system.

  • Do Not Download Unknown Applications

It goes without saying that to ensure no viruses and malicious applications enter your system, do not download applications from platforms that do not seem trustworthy. It is enticing and cost-saving to download “free” applications. But note that if the application turns out to be something it shouldn’t, you’ll end up losing more than the amount you could have spent on the right application.

  • Use VPN

Using a VPN while browsing through sensitive information is highly beneficial. When you use a VPN, all your traffic becomes encrypted. Neither the ISP nor nearby coffee shop neighbor can get a single clue about your online activities. A VPN also contributes to your security. As your traffic is encrypted, WIFI hackers can’t hijack your session cookies or steal your plain-text passwords. Although a VPN is not the complete security solution for your coins, it is an essential protection component.

  • Use Trusted and Offline Wallets

Another important way to ensure your cryptos stay safe is by making sure the wallets you store them in our secure and trusted. As the saying goes in the community – “Not your keys, not your crypto,” it is important to ensure that you have direct ownership of your funds. Make sure the wallets you use to give you direct ownership of your funds. Storing large amounts on your exchange or third-party application is not a good idea as it puts your funds at risk if the exchange or third party is hacked.

Choosing the Right Exchange

When choosing a cryptocurrency exchange, it is important to balance several different considerations. Exchanges are different ways of building security precautions, regulating users, building their network, and building a user experience. Also, it is important to choose an exchange that meets all the needs of the buyers. One cannot choose a compatible exchange right away. So it is recommended that one makes accounts in various exchanges and experiment with all of them before settling on a particular exchange or exchanges.

It is important to balance several different considerations. Exchanges are different ways of building security precautions, regulating users, building their network, and building a user experience.

Right now, there are more than 200+ established exchanges worldwide. In all the hassles and complexities, it cannot be easy to pinpoint the right exchange. Make sure to settle upon an exchange that has the best track record and aligns with your principles. Some are comfortable with centralized exchanges because they are easy to use, while some prefer decentralized ones, as they provide maximum security.

  • DEX – Decentralized Exchange

A decentralized exchange (DEX) is a cryptocurrency exchange that operates in a decentralized way, i.e., without a central authority. Decentralized exchanges allow peer-to-peer trading of cryptocurrencies. In a traditional centralized exchange, the platform ensures that each buyer is matched with a seller based on a first-come-first-serve basis. Centralized exchanges provide efficiency in exchange for privacy. On a decentralized exchange, one can rest assured that privacy is maintained as they control their funds and data but sometimes give up much of the efficiency and liquidity that most centralized exchanges boast.

  • CEX – Centralized Exchange

For investors looking to enter the cryptocurrency space, a centralized exchange is still the most common means of doing so. Although there are many cryptocurrency exchange platforms currently available, it is evident that most of them follow the standard model and protocol that offers a limited and frustrating trading experience to traders who would love to get more out of exchanges. The main essence of a centralized exchange is that it is the intermediary between user-traders’ two roles (taker and maker). Centralized exchanges currently form the cryptocurrency ecosystem’s backbone by bringing most, if not all, of the traction.

To know more about cryptocurrency exchanges, their classification, and more, you can visit our complete guide here.

Securely Store Your Crypto

  • Hardware Wallets

A Hardware wallet is a physical, electronic device designed to protect an individual’s cryptocurrency funds by securing their private keys. The idea behind hardware wallets is to separate the private keys from online storage methods, such as computers or smartphones, which are more susceptible to being compromised by hackers. Storing your private keys offline prevents this, as hackers would have to physically steal your hardware wallet to access a user’s private keys.

The Ledger Series hardware wallets, i.e., Nano S or Nano X, are among the most popular and versatile hardware wallets out there. The Ledger wallets’ best feature is that they are immensely more secure and trustworthy than online or Hot wallets.

  • Include 2FA Protection

2FA or 2-factor authentication is the process of externally depending on several devices or platforms to confirm a request. 2FA has been generally used by people trying to log in to sensitive websites, trying to withdraw large funds, and so on. All users are encouraged to use 2FA mechanisms such as password + OTP protection, a password + email identification, etc. Remember that the greater the barriers to entry, the safer the information stored. For a detailed guide to securely storing cryptocurrencies, check here.

Get Your Resources Right

  • Read Whitepaper

Blockchain and Cryptocurrency are technologies that involve multiple streams of knowledge to function. Some of them, but not limited to, include Economics, Network Theory, Cryptography, Distributed Computing, and Game Theory. To help people understand the technology, a new market has developed – the Market for Educators. Many educators have summarized their thoughts into simple books that can help you understand concepts easily.

Reading the white paper of any project before investing is also immensely important. A whitepaper’s abstract is there to give you a quick overview of the project and to lure you in to read the entire paper to find out more about the project and its cryptocurrency. The whitepaper contains useful information, such as the problem/issue the company is looking to solve. They also talk about the product/service concept, the utility of the tokens, go-to-market strategy, and the timeline for implementation.

  • Check Multiple sources

It will be easier for you to learn and understand cryptocurrency if you have someone to work with. When you come across a lucrative investment, website, application, or anything else, it is considered good practice to consult various online and offline sources. By consulting several platforms and individuals, one can gain confidence about the validity of the product or service being looked at. Most hackers take advantage of misusing the trust of users who come onto fancy-looking sites and plant malicious code or application in devices without the user’s knowledge.

  • Stay Away from Quick Money Schemes

Quick money schemes are the major reason why scams in the crypto community are always hitting the news. People who design scams always prey upon the people who have the least knowledge in the space. Take the example of the PlusToken scam or OneCoin scam. All of them targeted individuals who wanted to make money quickly and with no risk. And then they ended up losing all of it. Just make sure that if it seems too lucrative and promised too many things than usual, it is almost always a scam. If you stumble upon any, do make sure to report it to make others aware of it.

  • Stay Wary of Phishing Scams

Phishing scams are websites that are a copy of the original sites. Unbeknownst, users, are rarely able to find the difference as ultimately become a part of the plot without knowing they are. Before buying any particular cryptocurrency or any asset in general, we urge the reader to do brief research into it. It is common for cryptocurrencies to turn out as scams, leading the buyer to lose their initial funds. DYOR or Do Your Own Research Principle must always be followed.

Investing Techniques

  • Have Fixed Investing Strategies

When it comes to traditional financial assets like Stocks, Bonds, Debt Instruments, etc., the market has developed dozens of strategies to make the best buck out of one’s investment. Although still nascent, investors and traders have a lot they can carry over into the crypto market. Yes, it is volatile, but having an investment strategy will act as a safety net. It is like having an instruction booklet guiding you through the investment process. Setting up your investment strategy is like buying a new car. Before one looks at the different models, they need to figure out what style suits them best. And just like cars, there are many styles to choose from when creating an investment strategy.

  • DYOR

The First Rule of trading cryptocurrencies or any asset that always matters to DO YOUR OWN RESEARCH (DYOR). Avoid falling over other people’s opinions and form the habit of making informed decisions on your own. At the end of the day, the best advice one could give is thorough and DYOR – Do Your Own Research. That’s the best possible strategy when going about deciding on the exchange of your choice.

  • Risk Management

Bitcoin live price
price change

Finding out the risk preference of the investor is more important than any other component. If an investor’s risk preference is low and does not wish to get into a market with unstable and volatile returns, the crypto market is what they are looking for. The returns of the market are unpredictable, to say the least, and not for the light-hearted. Although the risk is high, the potential reward of exponential increase is as well.

Stay up to date with our latest articles

More posts

3 Ways DeFi Can Recover After Alameda and FTX Bankruptcy Shock

In early November, Alameda Research became insolvent. FTX tried to bail it out but faced a liquidity crisis that shortly led to its bankruptcy and marked the start of a cataclysmic meltdown in the cryptocurrency market. Here’s a brief aftermath of it in numbers: $223 billion was lost in the market cap for the entire crypto market in less than 5 hours. $15 billion was lost in total value locked (TVL) in DeFi protocols. $4,700 drop in value for Bitcoin in a…

SuperBots – A Case for Imminent Decentralization amid Recent CEX Failures

Crypto trading has taken the back seat in the digital economy in 2022, with the market remaining under the bears' control for most of the year. Furthermore, traders have seen their faith rocked by the consecutive failures of centralized exchanges. These intermediary marketplaces have been the powerhouse of the industry since its humble beginnings. Now, they seem to crumble under mounting allegations of scams, lawsuits, and solvency concerns. Meanwhile, they make a convincing case for the imminent decentralization of crypto…

Smart Contract Security – Pitfalls and Solutions

Smart contracts are becoming increasingly prevalent as the world moves towards a more digital and automated future. Still, they are far from being the panacea of all technological ills. Smart contracts are self-executing contracts with a predetermined set of rules. They are stored on the blockchain and run by computers, which makes them tamper-proof and reliable. However, as with any new technology, smart contracts have associated risks. This article will explore some of the most common pitfalls and how to…

Looking for Crypto Marketing? Here are The Best Crypto Advertising Agencies in 2023

It is vital to have a strong marketing strategy if you wish to succeed in cryptocurrency. This is where crypto marketing agencies come in. You may successfully promote your project and reach your target audience through a crypto marketing agency.  This article will explore the top crypto marketing agencies in 2023. Moreover, we will look at their services and how to choose the right one for your project.  We will also discuss the benefits of using a crypto marketing agency.…

The Risks of Investing in Crypto Projects without Smart Contract Audit

Smart contracts are self-executing contracts that run on blockchain technology. They are stored and verified on the blockchain, which means they are transparent and cannot be tampered with. This makes them a secure way to conduct transactions without needing a third party.  Despite their many advantages, some risks exist with using smart contracts. One such risk is investing in crypto projects that have yet to have their smart contracts audited by a qualified auditor.  Without an audit, it cannot be…

SuperBots Trading in DEX – The Future of DeFi Trading is Here

Trading in decentralized finance is evolving rapidly and empowering people worldwide to access new forms of income. Spearheading this revolution are platforms like SuperBots, a BSC-based protocol enabling users to deposit their capital in vaults for secure and efficient trades on decentralized markets. SuperBots accelerates the mainstream adoption of DeFi trading through high-performance bots that automatically trade for their owners. This way, users can achieve profitable trades, regardless of their experience or skill. Furthermore, the platform does not charge any…

Top Smart Contract Audit and KYC Companies in 2023

It's no secret that business is undergoing fast change. Companies must adapt when new technologies, like smart contracts, emerge to remain competitive. A crucial part of this adaptation process is ensuring compliance with regulations and safety. This is where a company's KYC (Know Your Customer) process or smart contract audit come into play.  To ensure that your company is compliant, working with a reputable smart contract auditor or KYC provider is essential. This blog article discusses the benefits of using…

Automated Trading with No Subscription Fees – How UpBots is Revolutionizing the Trading Industry

Cryptocurrency trading has enhanced the universe of assets available to traders worldwide. However, this practice is challenging for inexperienced or unskilled traders. Furthermore, the ongoing bear market makes trading costly and inconvenient when most platforms charge upfront or subscription fees. As a result, many people avoid entering the market. UpBots aims to change that and take the trading industry to a new level through innovative and affordable solutions. For one, its automated trading service allows users to trade in CEX…

Top 5 KYC Solutions for Crypto or NFT Projects

As the importance of blockchain technology grows, many people look for ways to get involved in the crypto world. One of the most important aspects of any cryptocurrency or blockchain project is KYC/AML.  Without proper KYC/AML procedures, your project could be at risk for fraud and illegal activities. This article will discuss the types of KYC solutions available and how to choose the right one for your project.  We will also provide tips on how to implement these solutions properly.…

DeFi Scams – Most Common Scams in the DeFi Space

In the world of Defi, scams are unfortunately all too common. This article looks at popular Defi scams, how they operate, and how to protect yourself. We'll also provide tips on what to do if somebody scammed you and how to report a scammer. Finally, we'll discuss the implications of DeFi scamming and present examples of successful prosecutions. What Are DeFi Scams, and How Do They Work? Decentralized Finance (DeFi) is a term that has gained enormous popularity over the…