The history of the Internet knows many cases when personal data of people fell into the hands of fraudsters, which led to the theft of funds from bank cards and accounts. And although over the years, society has more or less mastered the basic rules of security, the new time has brought new risks – we are talking, of course, about cryptocurrencies.
Typical Crypto Fraud Schemes
Perhaps you think that the noise around any, a variety of crypto topics is now more than enough. This, of course, is true, but despite the wide distribution of the topic, the vast majority of people do not fully understand how it all works. And most importantly, they don’t understand how to protect their virtual money.
Yes, crypto, as a completely new niche in the economy, has given rise to completely new methods of fraud (although, of course, in some cases, the good old schemes also work). The key difference is that security in the world of the digital economy is much more dependent on one’s own actions. If a traditional bank has security services and technical support that are on guard and ready to help at any time, then in cryptocurrencies, due to their decentralization, there is nothing like that.
The basic and already largely familiar way of stealing money from gullible citizens also works in the world of cryptocurrencies. Indeed, why reinvent the wheel?
Between 2011 and 2018, hackers stole about $ 1.7 billion from low-security crypto wallets.
An interesting fact is number one – 40% of these funds, about $ 670 million, were stolen from January to March 2018. Why is that? Because the hype around the ICO and the astronomical growth of the BTC rate at the end of 2017 brought many inexperienced investors to the market, which became easy prey for attackers.
An interesting fact number two – attacks by hackers, and often quite successful, are all crypto-exchanges and exchangers. Without exception.
Aren’t you attracted to the idea of becoming a victim of hackers? Then do not open suspicious sites and links (in order to protect yourself from viruses) and never give anyone under any conditions and circumstances passwords from your wallet or account, protect them in all possible ways (for example, two-factor authentication).
Another important nuance – do not store all your assets on cryptocurrency exchanges.
Why? Because, unlike users of exchanges of the “real world”, that is, those sites where fiat is traded, crypto-adherents are less protected. Many beginning investors, due to their imaginary convenience, mistakenly store all their assets (that is, even those that they are not going to trade at all) in one place. This situation, of course, makes the accounts of people who confused the exchange with a wallet a tempting prey for hackers interested in stealing large sums of money.
Make reserves and store funds that you are not currently using in crypto-wallets, but not on exchanges. Hacking exchange accounts is many times easier because the exchange, in essence, is just a website, a private service with its servers and a database in which your money is stored. Crypto wallet, on the other hand, is part of a huge network, the resources for hacking it also require considerable resources. Plus, you need to seriously interest a particular hacker with something, so that he aims precisely at you, whereas during the hacking of exchanges mass attacks usually occur. That is, in the case of a wallet, not only common sense plays a role, but also a theory of probability. By the way, when choosing a wallet, it’s best not to use desktop wallets at all – it’s easiest to crack them with a virus – instead use web or hardware, physical wallets.
In general, when choosing a wallet for storing treasured coins, do not lose vigilance, because fake wallets have long been a rarity (perhaps the most famous of the latter are counterfeit MEW and Coinbase wallets).
An experienced programmer can easily write his own pseudo wallet. It will look exactly like the original, and also have a couple of pleasant (for a fraudster) properties. For example, in the form of a convenient withdrawal of your funds into the pocket of the software creator.
Attention and attention again – when installing a wallet, be sure to make sure that you are downloading the original and trusted client. If you download the wallet as an application, make sure that its developer is verified. When downloading from the site, check the address bar – so you are sure that you are downloading the real program from a trusted developer. It is also better to use large and well-known companies (represented on the market for several years, with a good history and reviews) that provide crypto-wallets, and do not use third-party wallets from unfamiliar and medium-sized manufacturers.
The fact is that it’s not necessary to disguise yourself as a giant of the market in order to hit your jackpot — you can create a fake wallet and lull users’ vigilance for a while, ensuring stable and high-quality work. Transactions go through, the amounts are full, the number of users grows … And as soon as the indicators reach the limit of interest to scammers, the wallet is empty, and the traces of developers are lost on the World Wide Web.
Ponzi scheme, or financial pyramid
Like hacker attacks, another type of fraud that has “established itself” long before the advent of cryptocurrencies. allows attackers not to exert too much effort – people carry money to the pyramids themselves (remember, at least MMM).
Сryptocurrency financial pyramid and fraud
Creators only have to spend money on advertising, because in order for people to bring their money, they must see the point. For example, hearing promises of incredible profits and seeing real examples of rich people. And they, it’s worth saying, are there – the very first investors in the pyramid always make a profit. True, their percentage of the total number of participants in the pyramid is not so high. All that people who entered the pyramid later than the profitable point will receive is a guarantee of the loss of invested funds. It is due to the late investors that the creators of the pyramid and its first participants are earning money.
According to the Ponzi scheme, many one-day ICO projects or fake cloud mining services are built.
In order not to become the next brick in the pyramid, carefully study the projects in which you decided to invest. Advertising is good, excessive hype is suspicious. It is known where free cheese lies, so if you are promised incredible profits (promises from 300% per annum are a serious reason to think about it), it’s not very clear how it will be provided, it’s better not to risk it.
Fake crypto exchanges and exchanges
Here the situation is approximately the same as in the case of fake wallets – only instead of the analog of a well-known exchanger or exchange, is any new one created that lures people to profitable deals. For example, incredibly beneficial interest or commissions when exchanging or trading. Once you transfer your funds to fake and that’s it, you can say goodbye to them.
Clone sites of popular exchanges and exchangers, of course, are also made – for phishing purposes. Here the calculation is inattentive: usually, clones differ in a pair of characters in the domain name. The scheme is simple: the user personally enters the details of his account on a non-real exchange and permanently loses access to his funds.
The good news is, the crypto community has learned how to self-regulate and defend against fakes. Are you going to exchange your cue ball for fiat? Check out our reliable exchange ratings. For example, the top trusted exchanges can be viewed on coinmarketcap.com, and for a list of honest exchanges, it is better to contact aggregators like okchanger.ru. Use only trusted services and, of course, providing some data, do not forget to make sure that you are dealing with a real site.
A level lower, already inside a completely honest exchange or exchanger, fraudsters can also lie in wait. In this case, the protection schemes from them will directly depend on the device and the functioning system of the selected service. In particular, you can read about how to protect yourself when working with Bitzlato services in a separate article.
Remember: any user can become a victim of theft, it is not necessary to have huge funds on your wallet to interest a fraudster. But what you need to do is to take maximum care of your safety by carefully studying the common fraud schemes and methods of dealing with them.