Common Cryptocurrency Scams

There are countless ways to loose access to your cryptocurrency. Cryptocurrencies can be stolen by online hackers or physically in the real world. It is important to protect yourself from both types of attacks. They can also be stolen if stored with a third party broker or if you secure bitcoin yourself. Below is a list of common scams and suggestions for ways to protect yourself. Purchase “The Bitcoin and Alternative Cryptocurrency Course” to learn how to safely store your money.

Protecting yourself from third party exchanges or brokers:
If your crypto is stored with a third party exchange or broker you are inherently trusting them with what you have deposited. This means they store the private keys which are used to move your money. It is similar to a bank. The primary benefit of cryptocurrencies is that you don’t have to trust a third party to store your money. If you must keep your crypto at an exchange for convenience purposes here are some suggestions.

1) Keep a small percentage of your money in any given exchange. Hacks on exchanges are not uncommon. Cryptocurrencies make it easy to use various exchanges.

2) Use 2 Factor Authentication apps such as “Google Authenticator” or “Authy”. Do not use SMS for 2 factor verification because it is easier for a hacker to gain access to this information remotely than the information within either of the apps. If you don’t use 2 factor authentication and your password is compromised, your crypto can be stolen just as easily as it was deposited.

3) Don’t assume “regulated exchanges” in your home country are safe from hacks. There are many global exchanges that have proven reliable, but keep in mind to only keep small amounts in any cryptocurrency exchange.

Protecting your cryptocurrencies if you store them yourself:
If you store bitcoin yourself, it means only you or those you authorize have access to your private keys and seed words. Unauthorized access to your private keys and/or seed words can come from online hackers or¬†people in the physical world and it’s important to protect from both threats. Neither people nor crypto companies share how they store their private keys/seed words because it is proprietary information that can result in loss of funds. There are varying levels of security, but the most secure rely on a combination of memory, redundancy, time locked funds and keeping parts of your private keys/seed words in various locations/jurisdictions and with third party services.

Preventing theft online:
By far the most common scam online is when users unknowingly enter their seed words on a website solely created to steal your private keys/seed words. Anytime you type your seed words on any website you are risking your money. If you must type your seed words into a website or app triple check you are using the correct website, wallet or app.

Preventing theft in the physical world:
You may have heard about “cold storage”, which means keeping your private keys/seed words offline, usually written down on a piece of paper. This is a good start, but many precautions are necessary. The goal is to obtain a level of security where if you where physically attacked, robbed or if anyone broke into your home, office, computer or phone their would literally be nothing to steal because you have developed your own proprietary system for securing your money.

Cryptocurrency is one of the few assets that allow individuals to store their money without relying on a third party. Purchase “The Bitcoin and Alternative Cryptocurrency Course” to learn how to safely store your own money.