How to Protect Your Digital Coins from Covid-19 Cryptocurrency Scams
September 17, 2020
Guest post by Amy Cavendish
Cryptocurrency scams – Nigeria is one of the fastest-growing cryptocurrency markets in the world. The country is the largest source of Bitcoin trading volume in the continent and has recorded the biggest influx of crypto wallet creation since April 2020. In recent months, there have been reports of incidents whereby crypto investors have had their money stolen or lost, often through hacks and scams. This article focuses on security risks associated with storing and trading cryptocurrencies and how to stay protected.
A Rise in Crypto-Related Scams
Thanks to advances in crypto technology and the growing number of businesses accepting crypto payments, the popularity and acceptability of digital currencies have grown tremendously over the past few years. As a result, more and more people are trading or investing in cryptocurrencies such as Bitcoin. While cryptocurrency is a relatively secure way to transact, it’s not exactly risk-free. As a matter of fact, there has been a sharp rise in cryptocurrency-related fraud schemes during the Covid-19 pandemic.
Online scammers are exploiting the high levels of fear and anxiety during the pandemic to lure unsuspecting victims into different types of fraudulent activities involving cryptocurrency. As an investor, it’s important to understand the various types of crypto-related scams out there if you are to protect yourself. Here are some of the major risk factors that crypto-investors should become familiar with.
According to the FBI, cryptocurrency-related fraud has increased drastically during the Covid-19 pandemic. There have been incidents where well-intentioned people have been duped into making crypto payments to fraudsters while under the impression that they are providing assistance to Covid-19 victims. Scammers are using phishing emails to impersonate organizations such as the WHO and various government ministries in an attempt to dupe people into donating Bitcoin to non-existent charities or clicking on malicious links.
Digital currencies rely on a ledger known as blockchain to make transactions and verify records. Blockchain is decentralized, and that makes it extremely difficult to compromise. It’s a very secure way to make transactions, but it’s not 100 percent safe. Cryptocurrency exchanges and third-party service providers may be susceptible to hacking and other malevolent activities. According to findings from a June 2020 study by CipherTrace, crypto criminals have already gotten away with $1.4 billion this year.
Lack of Regulation
Crypto investors buy and trade digital currencies on online marketplaces known as cryptocurrency exchanges. Since these online platforms are largely unregulated, they only provide limited transparency with regard to their operations. In such a case, the risk of a security breach (often with no compensation for losses suffered), business failure, and fraud remains high. Due to this lack of regulation and oversight from the government, many cryptocurrency exchanges have made headlines after massive security breaches.
How to Protect Your Crypto Assets
Hackers, scammers, and other online criminals are naturally opportunistic and won’t hesitate to take advantage of the anxiety and confusion brought about by the coronavirus pandemic. During these tumultuous times, crypto-related crime can take any form, and crypto investors should be ready to protect their wallets from such. Here are a few tips to help you secure your Bitcoins and other cryptocurrencies.
Enable Two-Factor Authentication
You have probably heard of two-step verification, also known as two-factor authentication (2-FA). 2-FA makes it harder for bad actors to gain access to your account and steal your cryptocurrency by setting up your account to require a second login credential. Two-factor authentication provides an extra layer of security for your crypto wallet. To login to your account, you will need both the account password to your wallet as well as an OTP (One-Time Password) in the form of an SMS, YubiKey, or Google Authenticator.
Typically, an electronic wallet requires only one signature or a private key to grant access. Any person who has possession of the private key can transfer coins at will, without authorization from anybody else. The problem is that hackers steal private keys all the time. Short for multi-signature, Multisig refers to a crypto wallet configuration that requires more than one signature to complete a transaction. Using a Multisig wallet creates an additional layer of security for the funds stored in the wallet.
Phishing remains to be the most prolific method for hackers to obtain sensitive information. Use a secure email service with a strong set of anti-phishing protection to effectively keep scammers from accessing your crypto wallet and steal your digital coins. Hackers and scammers often use phishing emails to target crypto investors and lure them into sharing their login credentials. The bad actors will, in turn, use this information to take control of their victims’ crypto wallets and accounts.
The easiest way to get compromised and lose money in crypto is by storing your crypto assets in an exchange such as Binance, Coinbase, et al. Experts recommend that you hold your cryptocurrency in a hardware wallet. A hardware wallet can be in the form of a USB stick or any other portable storage device used offline. This ensures that your digital assets are not exposed to the internet, hence safe from hackers and other malevolent actors. We’ve heard good things about Trezor and Ledger as potential hardware wallets.
Use a VPN
A VPN (Virtual Private Network) is one of the most effective security tools in the online world. There are a lot of prying eyes watching you as you surf the web. Hackers can use trackers to look into your online activity. The snooping puts your cryptocurrency at risk of theft, and validates cryptocurrency scams. Using a VPN solves this problem since it hides your IP address and encrypts your internet traffic helping you maintain privacy and anonymity online. Using this service is one of the best ways to secure your crypto.
Nigerians have been showing a lot of interest in crypto lately, but crypto investors need to be more careful. Exacerbated by the Covid-19 pandemic, we’ve seen a sharp rise in online crimes involving crypto over the past few months. The Covid-19 crisis is far from over, which means that scammers will continue with their attempts to take advantage of well-meaning crypto holders. If you want to hold on to your coins, you need to take adequate steps to protect your crypto wallet and exercise caution when transacting via cryptocurrency.
Raphael Orji is a freelance writer, professional blogger and a content marketing consultant. I work with small businesses, startups and entrepreneurs in building their brand image with high quality blogging and content marketing strategy.
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