Are Crypto Crooks An Authentic Threat To Your Coin Investments?

Posted: Aug 13 2018, 8:25pm CDT | by , Updated: Aug 13 2018, 11:26pm CDT, in News | Technology News

 
Are Crypto Crooks An Authentic Threat To Your Coin Investments?

Are Digital Crooks An Authentic Threat To Your Crypto Investments?

Speaking out against cryptocurrencies and blockchain technology, John Oliver is causing people to question the security of their investments. His main point is the lack of regulation, acknowledging that billions of dollars are at play in an unregulated marketplace full of digital crooks.

The concern for digital crooks is warranted, and it’s something all cryptocurrency investors need to be aware of. In 2018, in the UK alone, 203 victims reported losing £2,059,501.29 to cryptocurrency scams in June and July combined.

John Oliver isn’t the only one staying on top of these crypto crooks. In a move to combat this type of fraud, search giant Google banned cryptocurrency-related advertising across its network. The policy doesn’t ban only cryptocurrency. It also bans other risky financial opportunities like rolling spot Forex and financial spread betting. Facebook has a similar policy.

Most incidents that get reported to authorities involve scams that people fell for. The fraudsters use sneaky tactics to make their ads believable. For example, they’ll claim industry experts have approved the investment opportunity by using made-up quotes. People buy into these scams and never receive their promised investment.

Generally, criminals look for ways to get people to give them money and never provide the cryptocurrency. Conversely, a man in India lost 1.5 Bitcoins when he transferred the Bitcoins and the other party failed to send the fiat currency they had agreed on (about $620 USD at the time).

Stories about most fraudulent operations are published shortly after they’ve been uncovered. Some news sources have faster access to this information than others and you need to keep an eye on all of it. If you’re significantly concerned that you’ll miss something while you’re out and about, subscribing to Coinzy will keep you on top of crypto-related news, including fraud alerts.

Bitcoin wallets aren’t hacker-proof

Investment scams aren’t the only thing crypto investors need to watch out for. Like everything digital, cryptocurrency is easy for hackers to steal. The wallets of crypto-mining exchanges have been frequently hacked. For instance, in 2017, over $70 million in Bitcoin was stolen from NiceHash – the largest Bitcoin mining marketplace.

Technically, a crypto wallet is a fancy term for software that holds the data that represents digital coins. Like all software, it’s not impervious to hackers. Legitimate wallets use public and private keys to facilitate transactions along with a password, a pin, and sometimes two-factor authentication. Despite these measures, great care needs to be taken to protect that information.

Wallets that give users control over their keys require them to enter their public key during transactions. If this information is sent across a public network or stored unencrypted on a computer, it’s susceptible to being stolen.

What investors can do to protect yourself

While there are no guarantees in the digital world, there are ways to protect yourself from falling into an investment scam:

  • When you visit websites promising investment opportunities, no matter how professional the website looks, be skeptical. Anyone can buy a professional-looking template and hire a designer to customize it.
  • Don’t jump into a transaction because someone you trust supposedly supports the company asking for your business. Unless you can verify the source of testimonials or quotes, don’t automatically believe it’s true.
  • Take time to research the company thoroughly before parting with your money. If you’re pressured to make the move immediately, that’s a red flag.
  • Always get financial advice from an expert advisor. Not all financial advisors support cryptocurrency, but you can find one who does.

Accepting risk means accepting the risk of being hacked

Even though you control your password and sometimes your authentication keys, you don’t control the data when it’s on someone else’s server.

Servers and networks get hacked daily and most consumers don’t know about it. Data needs to be encrypted in transit and at rest in order to be protected from hackers. The data can still get hacked, but it will be unreadable. Although, if a hacker gains access to the decryption key being passed over an unsecured network, they can decrypt the data.

All investments come with risk, and in the digital world, those risks include being hacked. Cryptocurrency is a fun investment, and comes with the potential for high rewards. Nobody wants or expects to get hacked. It seems like something that happens to other people. It’s important to acknowledge the possibility that it can happen to you, so you’re not shocked if it does.

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The Author

<a href="/latest_stories/all/all/68" rel="author">Larry Alton</a>
Larry is an independent business consultant specializing in tech, social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.

 

 

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