Ten years after the first Bitcoin exchange, the cryptocurrency landscape still resembles the West Traveler. For some, a good decision can mean big gains, while others can lose everything in a single day. So how can you protect start-up capital from changing exchange rates and your profits from scammers? How to choose a cryptocurrency and minimize risks
The first step is to decide which cryptocurrency you want to invest in. There is no rule; almost any token can rise in one day and plummet the next. A beginner cryptocurrency investor needs a lot of luck to anticipate these movements. That said, you can take some steps to protect your investment.
True beginners should choose a currency like Bitcoin or Ethereum, with a demand and tracking record among traders. These coins do not usually rise in price as quickly as altcoins (alternative and little-known cryptocurrencies) and, in case you have to get rid of the tokens quickly, it will be easier to find a buyer. You can check a list of the most popular currencies and the dynamics of their exchange rates here, for example. Higher market capitalization usually means less risk.
If you are a daring investor, confident in your skills and prepared to take risks with additional capital, check out the list of emerging altcoins. They are cheaper and promise faster profits, but they also have disadvantages, such as low demand among merchants, which, as we said, makes it difficult to convert them into real money. Of course, do not play everything on one card, invest in several cryptocurrencies to improve your chances. Read the fine print
When choosing a cryptocurrency and an exchange platform, don’t get carried away by overly generous offers. Even in the realm of cryptocurrency investing, no one gives anything away. Therefore, always be wary of being promised extraordinary benefits.
Remember the cautionary story of Chinese service PlusToken, which promised investors a return of 10-30% per month? More than 3 million people (many from outside China) took the bait, causing PlusToken to reach the value of $17 billion at its peak, during the spring of 2019.
Early investors got the promised return, but others weren’t so lucky. The “revolutionary platform” was nothing more than a Ponzi scheme. Chinese authorities arrested some of the scammers, but most of the money disappeared without a trace.
Most Ponzi schemes don’t go as far as PlusToken, but that doesn’t mean their creators are any less cunning. For example, the XtraderFX platform, recently shut down in the UK, used famous and trusted faces from the world of television and finance to fraudulently advertise its services. In Spain we have also seen well-known faces used fraudulently to promote cryptocurrency scams.
Common points among cryptocurrency projects of dubious reputation are:
- Project team members do not appear in previous cryptocurrency-related news. In some cases, the project team may be made up of famous actors, but that’s uncommon.
- The creators of cryptocurrencies promise guaranteed profits. This smacks of a Ponzi scheme.
- The project code repository on GitHub almost never receives updates. That means that no such project exists or that it has not been assigned to anyone permanently.
If the cryptocurrency that calls your interest meets any of these requirements, think twice before investing.
Tokens are stored in cryptocurrency wallets, so yes, you need one. In this post we look at how they work and how to choose the safest.
In short, “hot” and “lukewarm” wallets are software-based, permanently connected to the Internet, and allow for the fast transfer of funds. However, they are relatively vulnerable to an attack because of that constant internet connection. If you’re using a hot wallet, be sure to turn on two-step authentication to increase security and make the attack more difficult, as happened to an investor who lost more than $70,000. And it is better if the two-step authentication code arrives not by text message, but by the application or by other means, to eliminate the risk of cloning the SIM card.
The most secure “cold” wallets are standalone devices. They usually resemble a USB stick or keychain; the most popular models cost between 50 and 200 dollars.
Platforms for cryptocurrency exchange grant users a hot wallet, but we do not recommend that you keep all your tokens in it, because trading platforms are constantly in the crosshairs of cybercriminals. Use it only for short-term transactions and store most of your assets in a cold wallet.
It also saves any passwords and codes you see during the setup and use of your wallet. For your own safety, many wallet developers show it only once. Write them down on paper if you’re sure you won’t lose them (or that kids won’t scratch them or anything else that compromises them), but regardless of how safe you may be, secure storage, like that of a password manager is much better.
Remember: if you forget a password, you won’t be able to restore access to your wallet and your assets will be lost. You don’t want the same thing to happen to you as to a Silicon Valley worker, who accidentally threw away a wallet with a USB stick that was worth millions, do you? How they steal cryptocurrencies without the need for an attack
Sometimes, attackers don’t even need direct access to victims’ wallets to steal their money. Sometimes, the owners are the ones who uncover the cake.
In mid-2020, for example, scammers breached the Twitter accounts of Elon Musk, Bill Gates, Kanye West and other celebrities, and then promised on their behalf that they would double the number of coins users sent them. In just a few hours, the scammers made a fortune of more than $100,000.
Even if you’re sure you’ll never be fooled that way, stay alert; attack strategies are constantly evolving. If someone offers you free coins, think very carefully about what their reasons might be. And, if an offer involves a deposit request of a certain amount in advance, it is very likely that they are setting a trap for you.
Keep in mind that cryptocurrencies attract scammers like flies to honey, because such projects are speculative in nature, and cybercriminals exploit the risky character of cryptocurrency investors. How to Protect Yourself During Cryptocurrency Exchange
It is essential to use a secure communication channel for all your cryptocurrency transactions. If you have access to the platform’s website through the use of public wifi, for example, cybercriminals can intercept the transaction details or make a fake replica of a website to steal your assets.
It’s safer to trade from a home network than a public one, but you need to protect it properly. To get started, you need to replace your router’s default password with one of your own. Often, the factory password is the same for all routers of the same model, making your Wi-Fi vulnerable to brute force attacks.
In any case, it is always best to perform every cryptocurrency exchange on an encrypted VPN channel, which adds an extra layer of security.
When choosing a VPN service, pay attention to the connection speed (which depends on the quantity and quality of the server set) and the availability of an emergency button. The latter is especially important because of high-risk transactions: if the secure communications channel goes down for whatever reason, the thumb switch automatically disconnects your device from the internet, preventing data from being sent unencrypted.
For cryptocurrency investors, we recommend the Kaspersky Secure Connection solution, which is optimized for this task.
Originally posted 2022-04-19 23:31:34.