Can Cryptocurrency Be Hacked, Stolen Or Scammed? How Can You Be Safe?

The fact that cryptocurrencies aren’t regulated makes their users even more vulnerable to scams and hacks.

By Edited by Gadgets 360 Newsdesk | Updated: 9 August 2021 16:50 IST

Can Cryptocurrency Be Hacked, Stolen Or Scammed? How Can You Be Safe?

Traders store their digital assets on crypto wallets and make purchases and sales through them

Highlights

Cryptocurrencies aren't regulated
Hot wallets that are always connected to the Internet
Experts suggest a two-factor identification process as security

Cryptocurrencies, especially Bitcoin, Ethereum, and Dogecoin, have taken the world by storm, especially in the last year. It is becoming more mainstream, allowing users to buy goods and services with it, or trade them for profit, just like real currency. Having said that, there have been several ups and downs as well as some critical questions around the future of cryptocurrency One such question is whether these digital tokens can be stolen, hacked, or scammed. Just like fiat currency or cash, these can also be potentially stolen, so naturally you need to take a few basic steps to keep yourself safe.

In May 2021, the Federal Trade Commission (FTC) reported that scammers impersonating Elon Musk had stolen over $2 million (roughly Rs. 14.63 crore) in cryptocurrency since October 2020. The US consumer protection body's data revealed that nearly 7,000 people had been defrauded of their money in digital currencies. It further said that these scams happen in many ways and involved “fake promises and fake guarantees”.

The fact that cryptocurrencies aren't regulated makes their users even more susceptible to scams and hacks, but there are ways you can always be sure if an individual or an entity is genuine in approach. The responsibility, mind you, is on you to ensure that you aren't scammed.

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How to avoid scams while trading crypto

If an individual, company, or a group of people promises you a guaranteed payout — for example, “we will double your amount in X number of days”; it's a scam. No single entity can claim to be in control of how an entire industry will behave.

Has someone promised your free money? If yes, the possibilities are that they are trying to trick you. At no cost should you trust them and deal with them.

Alright, while the aforementioned statements may make you believe it is easy to spot scammers, there are dedicated groups whose only purpose is to scam gullible traders or investors. Therefore, always invest your money through a registered cryptocurrency exchange and use a cold wallet to store your digital assets.

Before you think of trusting anyone, do your research. Look for the name of the company on Google, check their reviews and see if they have ever been accused of scams earlier or a complaint has ever been filed against them. Besides, read as much as possible to know how scammers have fooled investors in the past.

Hacking wallets:

Traders store their digital assets on crypto wallets and make purchases and sales through them. Your passkeys enable access to your wallet and therefore, it's not easy to hack into someone's wallet.

However, hot wallets that are always connected to the Internet are considered less secure as compared to cold ones that are in the form of a USB device. Hence, you connect the cold wallets to the internet only at the time of trading or making a transaction.

To avoid any threats of hacking, experts suggest a two-factor identification process as a security measure. Remember the key is to guard the access to your wallet. If someone accesses your wallet, chances are you will lose your digital assets.

Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

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