The rise of cryptocurrency has opened up the possibility for hackers to exploit loopholes in blockchain and scam millions of users worldwide. If the online crypto industry is attracting new users at an unprecedented rate, the number of hacking incidents is bound to increase in the days and weeks ahead, warn industry experts. Already some estimate that more than $650 million has been targeted in major cryptocurrency thefts, hacks, and fraud between January and July this year. Many more are yet to be reported because of a variety of reasons, including a lack of proper understanding of the technology.
Like any industry, cryptocurrency too is not immune to thefts and scams. However, experts recommend investors that they fully understand the risks involved while trading in these digital assets. The best a trader can do to protect their investments is to make themselves aware of the potential pitfalls and common mistakes others have made.
Here are a few tips:
1) Research thoroughly
Investors should always invest time in thoroughly researching the crypto or any other digital asset they want to invest in. They can start with the crypto project's official website. Learn about its founders, developers, and current backers. Find out where the project is available to buy. These should give an initial indication to determine whether the project is doubtful or not.
2) Imposter websites
Do not fall prey to imposter websites. There are a surprising number of imposter websites being set up regularly that resemble the official website. Amateur investors often fail to identify the fake ones from the real ones. If doubtful, ask those who have already been in the industry for some time. Beware of phishing emails.
3) Fake mobile apps
Another frontier to protect is downloading crypto trading or exchange apps from verified sources. Scammers often trick investors through fake apps. Although these apps are quickly identified and removed, this does not mean fake apps are going away anytime soon. Look for obvious spelling mistakes in the copy or in the name of the app. Ask yourself whether the branding is flimsy or has an incorrect logo.
4) Pay attention to smart contracts
On the blockchain, smart contracts are codes that carry out a set of instructions. Although they are technical, usually they help understand the overall potential of a crypto project. If there is an issue with the smart contract, there could be weaknesses within the project.
5) Keep your wallet safe
Finally, protect your wallet wisely. All wallets carry two keys – private and public. Ensure the private key is not disclosed to the public under any circumstances. Despite that, there are risks with wallets and cold wallets are usually the safest option to store private keys.