By Zac Amos, Features Editor, Rehack.com.
Cryptocurrency has exploded in popularity. Some people believe it will replace the traditional monetary system and are eager to be involved in that change.
What could go wrong? Fraudsters want to use your crypto coin holdings to get rich quickly – and they’re getting better every day. Here’s a closer look at crypto fraud and what you can do to protect yourself.
What Is crypto fraud?
Cryptocurrencies are digital currencies that use encryption techniques to generate and verify transactions. To make a transaction using crypto, you must have two parties – someone who owns the coins and the person who wants to receive them.
The two parties must engage in a process called mining. This involves sending off some data about themselves and then waiting for their reward after performing complex mathematical calculations on behalf of everyone on the network.
Cryptocurrencies are complicated, with new ones appearing regularly – and few people understand how they work. That makes them an ideal target for fraudsters who want to make money. This means you could invest your hard-earned money into something where criminals are waiting to scam you.
From phishing schemes to fake apps promising free currency, it’s important to make sure you’re familiar with everything before taking any risks.
Why Is crypto fraud on the rise?
Crypto is a highly volatile market and is seeing a large volume of public interest. This alone makes it attractive for fraudsters, since there are more opportunities to scam people – which is why fraud activity is increasing so rapidly.
According to the FTC (Federal Trade Commission), consumer reports have skyrocketed in 2021 concerning crypto scams. In 2020, consumers lost a total of $130 million to crypto fraud. Reports increased dramatically the following year – Americans lost $680 million in 2021.
In 2022, victims lost over $329 million in the first quarter of the year alone. However, some scams go unreported, as 35% of people said they didn’t know they could file a report. That could mean even more losses this year.
Here are a few reasons as to why fraudsters continue to exploit people in this market:
Cryptocurrency is digital, making it easy for fraudsters to leverage attacks because they only need a computer.
Transactions are final. Once you transfer your funds, it’s impossible to retrieve them unless the other person reverses the process.
Cryptocurrencies are decentralized, meaning there’s no payment protection for the crypto owner. Plus, it can be hard to determine who is responsible for the fraud.
The process is anonymous. While crypto regulation is evolving, you don’t need to store personal information. It’s possible to track where transactions come from, but fraudsters can make it difficult by creating multiple wallets. Additionally, it’s even more difficult to identify who owns the wallets.
Crypto fraud can affect anyone who invests in cryptocurrencies. However, there are several ways in which you can protect yourself from it.
How to protect yourself from crypto fraud
If you’re getting started in crypto and want to learn about ways to protect yourself from fraud, here are top tips:
Avoid rushing into it. The first thing you need to do is know the ins and outs of crypto. The more informed you are, the less likely it is that you’ll fall victim to crypto scams.
Know who you’re dealing with and avoid being quick to trust. Anyone you don’t know well could be trying to scam you.
Make sure you secure your crypto wallet using two-factor authentication and avoid giving your credentials to anyone. It also helps to have multiple wallets so you won’t lose everything if there’s a breach.
Research before investing. There are a lot of scams out there and you don’t want to take any risks.
Keep your money safe from fraudsters
One thing you must remember is that cryptocurrency is still a very new technology. It’s not yet as secure as other forms of payment, and many scammers are waiting to deceive you into giving them your money. However, with careful planning and some common sense, you can avoid most pitfalls and enjoy all the benefits of investing in cryptocurrencies.
For more from Rehack.com’s Features Editor, Zac Amos, click here. Lastly, to receive cutting-edge cyber security news, exclusive interviews, expert analyses and security resources, please sign up for the CyberTalk.org newsletter.
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