22 April 2024
Protecting your investments in 2022
Well, this year has undoubtedly been an interesting one for cryptocurrency so far. Some countries are adopting it as legal tender while others are banning it outright and central banks are discussing developing their own digital currency. Current events are also playing a part in the status quo.
Even with all that and everything else cryptocurrency has faced since its inception in 2008, it has managed to make big comebacks, and for a good reason. Everyone from nine to fivers' to corporate companies have been investing and building their portfolios.
However, it is not without its own risk factors to consider. Investing in crypto is a high-risk, high-reward scenario. And the fact that it doesn't adhere to the same regulations as standard money is both a blessing and a curse. While you can make your transactions faster and more openly, this freedom also opens us to clever scamming plots. It's not for everyone, but anyone can learn to make it work for them.
Even this past year, nearly 20 million new users started using crypto wallets to better secure access to their digital coins!
Security above all else
As the saying goes, "No good deed goes unpunished," and we've seen that play out with crypto. At its inception, where it was purely intended for people to invest and make transactions more efficiently, its recent boom in popularity has attracted the eager attention of scammers and hackers over the years—resulting in a worrisome uptick in crypto-related cyber crimes
Some of these crimes include:
False promises
These apply to crypto companies and startups that make many promises to deliver their excellent services to people, which could make you a lot of money if you invest in them—the tactic appeals to either your heart or your wallet by presenting false hope.
A good way of avoiding this is to make sure that they 1. Track their transaction data 2. Present achievable business goals and not spewing hot air 3. Have real people with actual credentials working for them, and 4. Ensure their website is legit; that means checking the URL for the lock symbol or "HTTPS." You'd be surprised how convincing scammers have become at making fake websites, so be careful when looking for investing opportunities.
Social engineering
These types of scams are designed to "engineer" you to behave and respond in specific ways that benefit scammers.
You can see this play out through:
- Dating sites where fake profiles gain your trust and convince you to either send them money or invest in a "great business opportunity."
- Phishing emails where scammers can pose as your bank saying they've detected "strange activity" on your account and ask for your credentials to "fix it."
- Giveaways don't even need an explanation; they're one of the oldest tricks in the book.
Social Media Bots
These days, social media is a treasure trove for scammers; many use your trust in your favorite celebrities and brands to rob you blind. Scammers use bots and imposter accounts to trick people to either:
- Make a small donation to a worthy cause.
OR
- Join in benefitting from an incredible opportunity with significant results.
If no one is talking about these events on other platforms, it is likely a scam.
Crypto Wallets can be a lifesaver
Now despite their namesake, crypto wallets aren't actually wallets. They don't store your currency; they act as more of a safe that contains the credentials that connect you to the blockchain.
- The way they work is when you send any type of coin to another user; you are actually handing over ownership of the crypto on the blockchain to their wallets address. It's like giving the deed to a property to a new owner. Every wallet user needs to have public and private keys to make this work efficiently. These act as your username and password essentially, and for each transaction to be processed correctly, they both need to be verified when transferring funds.
Now there are two types of wallets that you need to consider as to which benefit your needs best; hot wallets and cold wallets.
- Hot wallets are digital software like an app that you can use to access your account at any time. So the biggest plus is it's a convenience both for being digital and for storing your public/private keys as well. Saves time if you are an avid investor.
- Cold Wallets are just the opposite, and they come in the form of hardware like a USB. They grant you access when you have it connected to a computer. This makes it a better choice for people who prioritize security.
Both have their benefits and drawbacks. While cold wallets are a fast and convenient way to access your transactions at any time quickly, the fact that they are digital software leaves you open to cyber-attacks and theft. On the other side, hot wallets provide better security because even if it gets stolen, it's useless without the private key; however, since it is a physical device, you risk losing it along with your investments and transactions.
Conclusion
Which one you choose comes down to the needs that define your choice, like speed, functionality, security, types of currency you're hoping to trade, and how much you're willing to pay. Whatever choice you make, an important thing to do to keep your assets as safe as possible is to be diligent and pay close attention to any irregularities that may pop up, and stay up-to-date on the latest risks so you can stay ahead of the game.