Crypto avoid fraud bitcoin
Image source: iStock

The crypto market is ripe with lucrative investment prospects, but fraud and other security flaws continue to plague the sector. Therefore, learning ways to avoid crypto fraud is now imperative. 

How can you protect yourself from falling victim to cryptocurrency fraud? How do you keep your personal crypto information uncompromised? See the following tips:

Determine the validity of an initial coin offering (ICO)

Investment and trading are two distinct activities. However, ICOs veer into the trading realm since they are marketed to those with low crypto experience. 

It’s hard to resist the allure of a promising  ICO. However, this is where many inexperienced traders (and investors) fall victim to con artists. 

Ways to spot phoney ICOs include:

  • Looking into the people behind the website 
  • Reading more about the company’s history
  • Going through their social media pages for clues
  • Verifying the ICO has sufficient resources, a workable implementation plan, and an accurate financial model
  • Inquiring about code or examples that have been posted to a hosting service like GitHub
  • Verifying that the ICO’s creators have established an actual escrow service to handle investor funds
  • Investigating before acting on a deal that sounds too good to be true

Use a programme to cover your tracks on the internet

You can also avoid crypto fraud by cleaning up your internet tracks. A person’s online activities leave a trail known as a digital footprint. In other words, almost everything you publish or enter on the internet is on record. 

Information you enter on social media accounts, things you search for on Google, login details, and so on are all stored. 

Hackers may use these to crack your private data. Therefore, your crypto assets’ safety is at stake. So you should block this loophole at all costs to avoid crypto fraud. 

You can conceal your digital footprints using virtual private networks (VPNs). This way, you hide your virtual identity and prevent third parties from monitoring your online pursuits.

Ensure you keep tabs on your account activity

You should take the time to inventory your cryptocurrency holdings thoroughly. Check your logins, wallets, and other accounts where you may have crypto-asset information. Not doing so subjects your financial security to jeopardy.

Firstly, carefully check your mailbox to see which cryptocurrency platforms you joined. Afterwards, record these wherever you feel is safest for you. It could be on paper or electronically.

You can keep tabs on all activities once you have a thorough understanding of all your accounts. And it’ll be easy to react swiftly in case of anything fishy.

Limit access to your API keys and implement two-factor authentication

Two-factor authentication improves the safety of your online profile by requiring a second piece of information other than passwords,

Using SMS 2FA isn’t advisable nowadays due to the possibility of interception. Instead, crypto experts recommend Google Authenticator. The app works even when you’re not connected to the internet.

It’s advisable also to limit access to your API keys from specific IP addresses. This restriction is especially vital if you’re engaging a third-party app to facilitate and aid your trades. That way, even if someone discovers your keys, they’ll be unable to access your account.

Don’t keep all your cash at the exchange

In 2019, hackers stole almost $4.2 million worth of cryptocurrencies from Bitrue – a Singapore-based crypto exchange site. So, you as an individual need to be careful if such an established platform could be hacked.

Cryptocurrency exchange platforms have fallen prey to hacks and other security vulnerabilities over the years. Many of their user accounts were frozen or perhaps compromised as a result.

Because of this, you shouldn’t trust any cryptocurrency exchange platform with your tokens. Instead, put it away in a secure wallet.

You can choose any of the following wallets: 

  • A paper wallet
  • A cold wallet
  • A hot wallet
  • A mobile wallet

The crypto community best recommends a cold wallet(also known as a hardware wallet). In it, your keys are safely stored in a non-connected device thanks to a Secure Element (SE) chip.

Beware of phishing emails 

Another way to avoid crypto fraud is to be conscious of thieving emails. Hackers are getting more sophisticated in their attempts to gain access to sensitive information via phishing. As a result, you should always exercise caution when clicking on links in emails received. 

These phishing emails often impersonate reputable businesses to make them difficult to spot. But you can identify and avoid them by:

  • Verifying the domain name of a website before entering any personal information
  • Be suspicious of any communication that requests confirmation of sensitive information
  • Treat any attachments from unknown emails with suspicion because they can contain malware

Final thoughts

Don’t make it easy for hackers to defraud you of your hard-earned money. Hacking skills will get even better. But taking basic security measures will keep you a step ahead in your crypto journey. 

Get the best African tech newsletters in your inbox