By Edul Patel
Cryptocurrency is one of the new emerging asset classes that has gained much popularity over the past two years. With scammers wanting to make quick money, there has been a rise of crypto-related scams seasonally. These scammers are trying to take advantage of people’s lack of awareness around the sector. While more governments are working towards introducing progressive regulations to control such illicit activities, it is also important for investors and traders to be cautious at their end. Until there is a good amount of clarity around the regulations on cryptocurrencies, these five tips can help you prevent falling prey to these sorts of scams.
1 DYOR or Do Your Own Research
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Before investing in any cryptocurrency, it’s important to do your own research. Investors should take some time to learn about the project, its team, and its technology. It is also vital to check the credibility of the sources of information, such as the project’s official website, whitepapers, and social media channels. One must avoid projects that promise unrealistic returns or use complex jargon that are difficult to decode and understand. Looking for projects with a proven track record of development, transparency, and community support can be a good idea.
2 Use Trusted Exchanges and Wallets
Cryptocurrency exchanges and wallets are the most vulnerable points in the crypto ecosystem. Hackers can steal funds by exploiting vulnerabilities in the platforms. To avoid this, investors should use trusted exchanges and wallets with a proven track record of security. Look for exchanges that offer features like two-factor authentication, encryption, and cold storage. When using a new exchange or wallet, make sure you check the reviews and do your due diligence to ensure it’s legitimate. Additionally, since fake applications can also end up in the Google Play Store or Apple Store, it is also good to download the apps of exchanges and wallets from their official websites.
3 Use Two-factor Authentication (2FA)
Two-factor authentication (2FA) adds an extra layer of security to your account. This involves using a password and a secondary authentication method, such as a fingerprint, face scan, or authentication code. By using 2FA, you make it much harder for hackers to gain access to your account. Most exchanges and wallets offer 2FA as an option, so make sure to enable it on your accounts.
4 Do not Respond to Unsolicited Messages
Scammers often send unsolicited messages, either through social media or email, to help you invest in a new cryptocurrency. Be wary of these messages and never click on links or download attachments from unknown sources. Investors should always verify the authenticity of any communication before taking any action. You can check the sender’s email address, verify the sender’s identity, and check the message’s content for any suspicious elements.
5 Keep your Private Key Safe
Never give out your personal information to anyone, and be wary of any requests for sensitive information. If someone is asking for personal information, it’s likely a scam. Avoid sharing your private key with anyone to better protect your crypto funds. One should also not store their private key in any digital format as it can be easily accessed or stolen. A better approach is to store your private key in a hardware wallet or offline cold storage, which provides a high level of security against hacking and theft.
The author is co-founder and CEO, Mudrex
