In May 2021, the Federal Trade Commission (FTC) reported that scammers impersonating Elon Musk had stolen over $2 million (roughly Rs. 14.63 crore) in cryptocurrency since October 2020. The US consumer protection body’s data revealed that nearly 7,000 people had been defrauded of their money in digital currencies. It further said that these scams happen in many ways and involved “fake promises and fake guarantees”.
The fact that cryptocurrencies aren’t regulated makes their users even more susceptible to scams and hacks, but there are ways you can always be sure if an individual or an entity is genuine in approach. The responsibility, mind you, is on you to ensure that you aren’t scammed.
How to avoid scams while trading crypto
If an individual, company, or a group of people promises you a guaranteed payout — for example, “we will double your amount in X number of days”; it’s a scam. No single entity can claim to be in control of how an entire industry will behave.
Has someone promised your free money? If yes, the possibilities are that they are trying to trick you. At no cost should you trust them and deal with them.
Alright, while the aforementioned statements may make you believe it is easy to spot scammers, there are dedicated groups whose only purpose is to scam gullible traders or investors. Therefore, always invest your money through a registered cryptocurrency exchange and use a cold wallet to store your digital assets.
Before you think of trusting anyone, do your research. Look for the name of the company on Google, check their reviews and see if they have ever been accused of scams earlier or a complaint has ever been filed against them. Besides, read as much as possible to know how scammers have fooled investors in the past.
Traders store their digital assets on crypto wallets and make purchases and sales through them. Your passkeys enable access to your wallet and therefore, it’s not easy to hack into someone’s wallet.
However, hot wallets that are always connected to the Internet are considered less secure as compared to cold ones that are in the form of a USB device. Hence, you connect the cold wallets to the internet only at the time of trading or making a transaction.
To avoid any threats of hacking, experts suggest a two-factor identification process as a security measure. Remember the key is to guard the access to your wallet. If someone accesses your wallet, chances are you will lose your digital assets.