How common are Crypto Theft and Fraud?
Cryptocurrencies are known to be relatively safe when it comes to scams. No one can trace the purchases because of the very secure nature of transactions. But, the frequency of the release of a new currency every other month also caught the attention of scammers and hackers.
What’s even worse is it gets impossible to trace the hackers in a network that advocates anonymity. So before you fall under the trap of any lucrative offer, it is advisable to be aware of the type of fraud that commonly happens in the world of cryptocurrency.
Fake ICO: Initial Coin Offerings are a marketing scheme used by a company to raise funds for developing a new cryptocurrency. People are offered ICOs to buy the new cryptocurrency from the company. They are equivalent to stocks.
It has been observed through research that most of the ICO currently offered are either fake or can’t be exchanged for goods and services. The scammer will make you believe these ICOs just launched when they don’t even exist.
Fake Crypto Currency Exchanges: You may be easily tricked by an imposter cryptocurrency exchange app in the App store. Scammers make these apps impersonate real exchange apps to swindle potential victims by promising outstanding financial returns.
Money-Making Schemes: Scammers will promise you to increase your earnings by an x% if you pay a fee with cryptocurrency. Any company or firm promising you some quick money-making opportunity in a short time by investing through cryptocurrency can be screened upon for suspicion. You will often find such offers in your mailbox or get intrusive telemarketing calls.
Fake Giveaways: These messages with links lead you to a fraud website that poses a threat to your digital security. They will attempt to take information like email address, your IP, location and so that will make a hacker’s job easy. Celebrity endorsements and false social media propagation of such scams are common.
Best Exchanges Where is it Safe to Store Crypto
Binance is only a popular exchange platform but, they offer Trust Wallet that you need to download separately to transfer and store all your crypto coins. Binance came into the limelight in 2019 for a major security breach where hackers stole almost $40 million worth of cryptocurrencies. Since then, it has invested in improving security by removing bugs, identifying suspicious accounts, and releasing approximately 2.5 million USD as bounty rewards. So, now it is much safer to use this platform than it has ever been before.
Like Trust Wallet, you can use secure digital wallets, where you can transfer your earned cryptocurrencies from different exchange platforms to store them safely.
- De-Fi wallet
- My Ether Wallet (MEW)
Redot crypto exchange is always among the top 5 crypto exchange platforms which are suitable for both entry-level and advanced traders. You can exchange crypto coins with and store them in your account wallet securely in one place. Redot also provides high security level of your funds while most of the currency is stored in cold storage with the 2FA feature.
It is one of those exchange platforms that prioritizes security. With regular audits and certifications under its hood, it can be considered one of the safest platforms. Some of its best security features are;
- WebAuthn API
- Cold Storage facility
- Insurance coverage
- SOC 1Type2 and SCO2Type2 certified
Crypto Wallets: Online or Offline?
Online wallets or hot wallets store cryptocurrency in cloud storage. Most mobile wallets, software-based wallets, and exchange platforms use this online method.
- They are not affected by hardware failures
- They can be easily accessed and ensure the fast transaction
- Vulnerable to security breaches
Offline wallets are either hardware wallets like cold wallets or paper wallets. You won’t need an internet connection to access them. You can store the private keys in your hardware system.
- Reliable and highly secure
- There can be physical damage or hardware failures.
Choosing between online and offline crypto wallets depends upon your priorities. If you prefer convenience, then online wallets are your buddies. It is usually used by people who do frequent transactions of cryptocurrency. If you need more security, going for offline wallets would be a better option.
What About Paper Wallets?
A paper wallet is exactly as the name suggests. It is a piece of paper that will hold all your crypto property. A private key with a QR code is obtained from a website and printed on paper. These codes enable cryptocurrency transactions.
This strategy was regarded to be safe in the early times when cryptocurrency was just introduced in the market as it completely takes it off the internet. But the potential threat to a paper wallet is that anyone with the paper could make the transactions. So, one can physically steal it from you. Also, the paper is prone to damages. If you can’t scan the QR code, you will be losing all your crypto coins. So, to this generation of digital advancement, a paper wallet is not the safest option.
How to Avoid Cryptocurrency Fraud
Don’t be discouraged by the fraudulent aspects of investing in digital currency as it happens in almost every other field. You only need to be mindful and use the safety precautions properly to avoid this situation. You can do it by various means.
High-security Digital Wallets– Use digital wallets with cold storage facilities and private keys. Cryptocurrencies that are stored offline are anyway inaccessible to hackers. Furthermore, they have encrypted passwords which only you should know.
By any means, do not reveal your security codes or passwords to the customer support of whatever exchange you are using. They will never ask you to share sensitive credentials. Having an up-to-date antivirus such as McAfee can also help you secure your investments.
FDIC Insurance– If you are making big investments in cryptocurrencies, getting it insured will be a safe move. Through FDIC insurance, you can receive up to $250000 for lost or stolen money, including the value held by cryptocurrency.
Bug Bounty Programs– You are using the hackers vs. hackers technique here. Ethical hackers work for your organization to identify system vulnerabilities and help you notch up the security.