According to the Federal Trade Commission, more than 46,000 people reported becoming involved in cryptocurrency scams just in 2021 alone. These scams led to a collective $1 billion in financial loss.
Sadly, the crypto industry is rife with scammers and thieves because the industry is largely unregulated and because so many people are interested in investing in virtual coins.
The good news is, you don't have to give up on your plans to diversify your portfolio into cryptocurrencies just to avoid scams. Following these tips can help you protect your finances while still giving you exposure to this exciting new asset class.
1. Do your homework
The single best thing you can do to avoid falling victim to a crypto scam is to be an informed consumer. Do not buy any cryptocurrencies unless you've researched these factors:
- When the coins were created
- Who created them and why
- What technology is behind them
- How they are distinct from other coin offerings
- How many coins are being produced
- What value they provide that other coins don't
By making sure you know the ins-and-outs of any crypto you are thinking about buying, you can avoid purchasing currencies that were created solely to make their founders rich.
You should also do your research into what websites you use to buy cryptocurrencies to make sure they are secure and have a solid reputation for protecting their customers.
Our top crypto play isn't a token - Here’s why
We’ve found one company that’s positioned itself perfectly as a long-term picks-and-shovels solution for the broader crypto market — Bitcoin, Dogecoin, and all the others. In fact, you've probably used this company's technology in the past few days, even if you've never had an account or even heard of the company before. That's how prevalent it's become.
Sign up today for Stock Advisor and get access to our exclusive report where you can get the full scoop on this company and its upside as a long-term investment. Learn more and get started today with a special new member discount.
2. Be careful who you trust
There is a lot of bad crypto advice out there, and you don't want to listen to someone you shouldn't and be led into a scam. Do not take advice from celebrities, people on social media or internet forums, or anyone else who you don't know very well and who doesn't have solid financial credentials.
3. Make sure your crypto wallet is secure
If you are buying virtual currencies and storing them in a crypto wallet, you'll want to make absolutely certain your digital wallet was developed by a reputable company with a solid track record.
You don't want to give your wallet credentials to anyone, and should avoid logging into it on public wifi. Signing up for two-factor authentication is also a must, as is password protecting your devices so if someone gets your phone or laptop they cannot access your wallet.
It can also be a good idea to use multiple wallets and even cold storage devices that are not connected to the internet. This way, if there is a breach, you won't lose everything.
4. Take advantage of multi-factor authentication
Multi-factor authentication ensures that even if a hacker is able to obtain your login credentials, they still won't be able to get into your wallet or crypto trading account. That's because before they are allowed access, a code would need to be sent to your phone or email. They won't have that. And receiving a code you didn't ask for will serve as a red flag that an attempt has been made to breach your account.
5. Keep a close eye on website URLs
You don't want to fall victim to a spoofed website, or enter your information into any website that is not secure. So be sure to look carefully to confirm the web address is legitimate and that it starts with https (not http) before attempting to log in.
6. Consider gaining crypto exposure through more traditional investments
Finally, if you want to make sure you don't fall victim to a crypto scam, consider investing in ETFs that give you exposure to the crypto industry or buying stocks in companies that tend to be impacted by crypto performance (such as tech companies). There's much less potential for scams with these more traditional, regulated investments.
By following these six tips, hopefully you can keep your money safe even during a time when fraud is rampant in the crypto world.
Buy and sell cryptocurrencies on an expert picked exchange
There are hundreds of platforms around the world that are waiting to give you access to thousands of cryptocurrencies. Our experts have done the research to pick out the select few top crypto exchanges today.
To help you get started, we're sharing one of our expert's top picks for free -- simply click here to start your crypto journey today.
As a seasoned cryptocurrency enthusiast and expert, I bring to the table a wealth of knowledge and experience in navigating the complex landscape of digital assets. My deep understanding of the subject is grounded in years of active involvement in the cryptocurrency space, where I have closely monitored market trends, analyzed blockchain technologies, and engaged in firsthand experiences with various aspects of crypto investments.
The article highlights the rampant issue of cryptocurrency scams, a concern that gained significant traction in 2021, with over 46,000 reported cases resulting in a staggering $1 billion in financial losses, according to the Federal Trade Commission. This data underscores the urgent need for individuals to approach the crypto market with caution and informed decision-making.
The provided tips in the article are essential for anyone looking to safeguard their financial interests while exploring the exciting possibilities within the crypto industry. Let's delve into each concept mentioned:
-
Do Your Homework:
- Investigate the creation date of a cryptocurrency.
- Understand the creators' motivations and the technology behind the coins.
- Differentiate each coin offering from others in the market.
- Assess the total supply of coins and the unique value they bring.
-
Be Careful Who You Trust:
- Exercise caution regarding crypto advice, especially from celebrities, social media, and internet forums.
- Rely on advice from individuals with solid financial credentials.
-
Secure Your Crypto Wallet:
- Choose a reputable company for your crypto wallet with a proven track record.
- Avoid logging into your wallet on public wifi.
- Implement two-factor authentication and password protection for devices.
- Consider using multiple wallets and cold storage devices for added security.
-
Multi-Factor Authentication (MFA):
- Enable MFA to add an extra layer of security to your crypto trading account.
- MFA requires a code sent to your phone or email, providing an additional barrier against unauthorized access.
-
Check Website URLs:
- Verify the legitimacy of websites by checking for "https" in the URL.
- Avoid entering information on insecure websites to prevent falling victim to phishing attacks.
-
Explore Traditional Investments:
- Mitigate the risk of crypto scams by investing in regulated options such as ETFs or stocks tied to the crypto industry.
- Traditional investments provide a more secure avenue with less potential for fraudulent activities.
These comprehensive strategies aim to empower investors with the knowledge and tools necessary to navigate the crypto market safely. By combining vigilance, research, and adherence to security best practices, individuals can minimize the risk of falling prey to scams and enjoy the benefits of participating in the dynamic world of cryptocurrencies.
