With the rise in popularity of digital assets, investors are turning to cryptocurrencies in an attempt to cash in on the price volatility and rapid adoption of the technology. However, as cryptocurrencies become mainstream, there is a lower barrier to entry into this space for inexperienced investors. Many of these investors are at risk of being exposed to scams, usually in the form of an invitation to an investment opportunity or being a winner of a giveaway.
However, one needs to bear in mind that there is nothing such as guaranteed returns as the case with investing in other asset classes. If there is a crypto investment offer that sounds too good to be true, it’s better to stay away to avoid getting scammed. Below are some tips to safeguard yourself from potential crypto scams:
- Protect yourself from phishing
Phishing is a type of social engineering attack that is used to get user data, such as login credentials and credit card numbers. This happens when the attacker impersonates a trusted body to lure users into opening a link in an email or direct message on social media or downloading an attachment.
To avoid getting phished, one should notice the below:
- Do not click or open email/message that is unknown or suspicious
- Do not believe ads or offers that sound too good to be true that promise a guaranteed profit
- If you have not participated in any giveaway, do not acknowledge any winner announcement messages sent to you directly
- Do not ever reveal your personal information or your cryptocurrency private key in messages or emails
- Check the domain name when using a website
- Protect your device by using security or antivirus software
- Use a protected crypto wallet
A crypto wallet is an application or hardware device that allows individuals to store and retrieve digital items. It is recommended for you own multiple wallets for more security.
For example, one hot wallet for your daily transactions and one cold wallet to store your crypto portfolio for the long term.
It’s important to choose a safe hot wallet, one that is backed by a trusted entity and has good security practices. In Malaysia, exchanges that are regulated by the Securities Commission come with a built-in wallet. This is a preferable option as you are protected by local laws hence is suitable for both daily transactions and storage.
A cold wallet is entirely offline, making it less prone to cyberattacks. Only you have the access to your funds stored in a cold wallet. However, drawbacks for active traders such as repetitive withdrawal fees make this an option more suited for just longer term storage.
One should take a hybrid approach to own digital wallet security considering personal requirements.
- Use multiple + strong password
One should not use a single password for all accounts. A study undertaken with respondents in Malaysia showed more than 80% of respondents use the same password for multiple sites, with two in five (45%) admitting to using a single password for up to ten unique sites of their accounts. If the security of one account gets breached, it leaves the rest vulnerable to attacks. Experts advise using a unique and strong password for your crypto accounts. You can use a trusted password manager to help manage this if you think this is too much of a hassle.
On top of using a robust password, one should also set up two-factor authentication (2FA). Also known as 2-step verification, 2FA helps to prevent a stranger from getting unauthorised access to your account. Through 2FA, users will be asked to enter a login code or special security key to access the account. They will receive an alert anytime a login attempt is made from an unknown browser or device and will be asked to confirm the login attempt every time.
- Use secure internet
On average, one in every three people experiences a cyberattack every day with most of these cases targeting devices connected to an insecure internet. Your cryptocurrency is very vulnerable when connected to unsecured internet connections. You should only use secure internet connections when managing your crypto.
For example, avoid insecure networks like public Wi-Fi connections and consider using a VPN. A VPN connection establishes a secure connection between you and the internet. All your data traffic is routed through an encrypted virtual tunnel via VPN, and this disguises your IP address when you use the internet, making its location invisible to everyone. VPN acts like a barrier that protects and gives you online privacy and anonymity in navigating the internet. Ensure that you select a reputable VPN that is proven for its reliability and security, as well as offers more features for your convenience.
- Use only reputable and regulated crypto exchanges
It is important to do your own research on your country’s regulations before deciding to trade on a crypto exchange. Look at the security measures, crypto activities, and past testimonials and reviews of the exchange to help you validate a trustable platform to invest safely.
Tokenize Malaysia is one of the regulated digital assets exchanges in Malaysia recognised by the Securities Commission that ensures you have a secure platform to buy and sell cryptocurrencies. By using IP whitelisting, 2FA and putting into place numerous other security protocols, Tokenize ensures your asset safety when trading with us.
In a nutshell, the cryptocurrency industry continues to evolve with new security measures getting more advanced. To be on the safer side, keep yourself regularly updated with the latest on crypto security and scams to identify potential threats to your digital assets.
It is always good to equip yourself with more awareness to protect your digital assets. Before investing in cryptocurrencies, investors should read all the information available, do their research and be vigilant about any potential suspicious activities.