When the market shows renewed interest in cryptocurrencies, you can be sure that scammers will have renewed interest as well. Here are some of the best ways to protect your assets.
Posted on February 22, 2024 at 7:00 AM EST. Updated on February 22, 2024 at 12:58 PM EST.
If the past few years have taught us anything about cryptocurrencies, it's that they are no different from any other asset class in this respect. Where there is potential to make wealth, scammers are never far behind. Now that the crypto market is recovering, investors should be especially careful about keeping their investments safe, whether they hold them or are looking for new ways to invest in cryptocurrencies.
This month, all eyes will be on the price of Bitcoin, which is arguably the most important indicator of the health of the crypto market and the public's perception of cryptocurrencies.over $50,000 A lot has happened since 2021. First, all major banks began devoting major resources to cryptocurrencies and their underlying technology. Given the bull market and the growing public confidence that cryptocurrencies are valid investments, it's a perfect storm for the bad guys to trick you. Here are some measures you can take to protect your crypto investments.
1. Beware of “impersonation scams.”
This is an old standby, but the advent of Web 2.0 and social media has taken a complicated turn. Maybe he got an email about 15 years ago from someone hacking his friend's account saying he had no money and was stranded in a foreign country and needed to fund Western Union. Now it's more sophisticated. People are impersonating celebrities and influencers on TikTok and Instagram, sliding into your DMs and demanding cryptocurrency.
read more: House Hearing on Cryptocurrency Crimes Highlights Benefits of Cryptocurrencies for All Legal and Illegal Applications
According to the California Department of Financial Protection and Innovation, in California (DFPI), an unsuspecting citizen was approached by five different “celebrities” on social media, and the victim was solicited to participate in various crypto investments, with the victim receiving $4,700 worth of Bitcoin. It was equivalent to Basically, don't send cryptocurrency to anyone you meet via DM, whether it's a friend or a celebrity.
2. Get a hard wallet.
This can also be translated as “Not your key, not your cipher.” In other words, if you're really worried about someone stealing your money, you should keep your “key” offline on a device that isn't connected to the internet. This is good advice in any market, but especially when cryptocurrencies are at their highest in value.
To be clear, they are not 100% foolproof. In January of this year, hardware wallet company Trezor announced that some of its users' data may have been compromised in a “security incident.” But at least it's an additional layer of protection beyond what online crypto exchanges can typically offer to retail customers.
Read more: Hardware wallet company Trezor announces 66,000 users affected by 'security incident'
Hard wallets refer to the fact that the information is in “cold storage” (which also means offline) and are sometimes referred to as “cold wallets.” These days, hard wallets usually resemble USB data sticks.
The question on everyone's mind is, if you lose your hard wallet, will you also lose your cryptocurrencies? All you need is a seed phrase (a randomly generated list of real words that acts as a code) and you can collect your funds. Otherwise, you will lose your cryptocurrency.
3. Use a multisig wallet.
As a corollary to hard wallets, if you have large holdings, a multisig wallet based on smart contract technology is a good idea. Unlike typical crypto wallets that only have one private key, multisig wallets require multiple signatures (or multisig) to access them. Think back to the once common bank safe deposit boxes. To open these, you will need to show your identification to a bank employee. In that case, you and your employee will each need to use separate keys to retrieve the box.
Multisig works on the same principle, but imagine that not only you and the bank needed the key, but other parties as well. The smart contract aspect of multisig means it can only be unlocked if certain conditions are met. So even if one party gets hacked for the signature, the funds are theoretically still safe.
4. Start using your password manager.
Remember when we used to say, “Choose a password that's easy for you to remember and difficult for others to guess?” Never forget the first part of that sentence. If you've been using the same cute variations of passwords for years just because you can memorize them, you're way behind the times. That's him in 2024. If you change “CatNameAndBirthdateFall” to “CatNameAndBirthdateWinter” it will take him less than a second for a password cracker to guess. Unfortunately, it's time to stop and use ridiculously long, nonsensical passwords from random password generators. Browsers like Chrome and Safari automatically provide this feature for free. It also conveniently stores your passwords.
However, some experts advise against using browser versions of password managers. According to ZDNet, standard browsers are so widely used that “this is Target at the back of the browserIn other words, hackers will specifically target browser-based password managers. You may be better off using a dedicated password manager such as Dashlane, NordPass, or 1Password (this list is illustrative and only recommended). Such apps are often free if you use them on a single device (e.g. only your computer), but are free if you use them on multiple devices (e.g. your computer, phone, tablet). There will be a charge.
If in doubt, security.org has a popular free tool that lets you determine the strength of your passwords, letting you know exactly how long it would take a standard computer to crack them.
Five. Use a reputable trading platform.
With so many trading platforms out there these days, it's not uncommon to come across one you've never heard of. While it is now generally fashionable for people to support small and local businesses, crypto trading is not the right situation at all to do this. Brand name is important. The California DFPI reported an unfortunate incident in which someone was “persuaded by 'Emily of San Francisco' to trade cryptocurrencies on her exchange, 100Ex.” The victim then received an email informing him that his initial investment of $2,000 had been increased 50 times. , but in order to access that money, they had to pay taxes on it. A 5% penalty will be imposed if the tax is paid late.
Not sure which trading platform to trade with? Investopedia regularly updates ratings of the best crypto exchanges and apps., And BitDegree, the self-proclaimed “Web3 learning hub,” has a searchable tool that lets you compare the pros and cons of different exchanges.
last tip
Financial technology and cryptocurrencies are developing at an ever-increasing rate, so it's hard to keep up with all the ways people are trying to separate you from your money. His DFPI in California tackled the issue in a headline-grabbing article last year.Cryptocurrency scam tracker” reports a log of ongoing crypto-related fraud in the state (the identities of all involved will be kept confidential). There's nothing wrong with checking out this book for entertainment, education, or a lesson.
Read more: $4 million stolen by Solana wallet drainer in one month
Updated (February 22, 12:58 PM ET): Added information to the section on using reputable trading platforms.
