6 tips to avoid crypto scams

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Don’t lose your money in a crypto scam.

Important points

• Cryptocurrencies are often less regulated than most investments.
• There are scammers out there looking to take advantage of crypto investors.
• It is possible to protect your money by following some smart tips.

According to the Federal Trade Commission, more than 46,000 people reported being involved in cryptocurrency scams in 2021 alone. These scams led to a combined economic loss of $1 billion.

Unfortunately, the crypto industry is full of 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 that you don’t have to give up your plans to diversify your portfolio into cryptocurrencies just to avoid scams. Following these tips can help you protect your finances while gaining exposure to this exciting new asset class.

1. Do your homework

The best thing you can do to avoid falling victim to a crypto scam is to be an informed consumer. Do not buy cryptocurrencies unless you have investigated these factors:

• When the coins were created
• Who created them and why
• What technology lies behind them
• How they differ from other coin offerings
• How many coins are produced
• What value they provide that other coins do not

By making sure you know the ins and outs of any crypto you’re thinking of buying, you can avoid buying currencies that were created solely to make the founders rich.

You should also research the sites you use to buy cryptocurrencies to make sure they are safe and have a solid reputation for protecting their customers.

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. Don’t take advice from celebrities, people on social media or internet forums, or anyone else you don’t know well and doesn’t have solid financial credentials.

3. Make sure your crypto wallet is secure

If you buy virtual currencies and store them in a crypto wallet, you want to be absolutely sure that 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 that if someone gets your phone or laptop, they can’t access your wallet.

It may 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 get your login credentials, they still won’t be able to get into your wallet or crypto trading account. That’s because before they get access, a code has to be sent to your phone or email. They don’t want 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 URLs

You don’t want to fall victim to a fake website, or enter your information on a website that isn’t secure. So be sure to look carefully to confirm that the URL 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 buy shares in companies that tend to be affected by crypto performance (like tech companies) . There is much less potential for fraud with these more traditional, regulated investments.

By following these six tips, you can hopefully keep your money safe even at a time when fraud is rife in the crypto world.