As cryptocurrency adoption is increasing there is also an increase in fraudulent activities. Bad players have leveraged on the ignorance and greed of crypto investors to scam them of their crypto assets. It started with fake ICO then flash loans and rug pulling. Today, there are tons of other cryptocurrency scams on the internet. As it stands now, scammers cannot be weeded out of the internet, because as more security measures are being created, more loopholes are being created as well. Decentralized Finance was created to stop the loss of crypto assets when a centralized exchange is hacked but it has presented several opportunities for scams. The solution then is for people to work with some of the existing security strategies and protect their accounts.
Below are some of the cryptocurrency scams on the internet and some protective measures.
Keyboard Hijacking: This is a scam method that involves Malware having access to one's keyboard. This makes it possible for the Malware to detect when the keyboard user copies a wallet address. The user's wallet address is switched with the Malware developer's address. If the user didn't cross-check the address before sending out the fund, he ends up sending it to the wrong address.
Solution: Always avoid clicking on suspicious links because they are mediums through which Malwares are downloaded.
Whenever you want to send out funds from your crypto wallet, ensure to cross-check the receiver's address before making the transfer.
Clone Wallet Extension: There are many wallet extensions out there such as MetaMask, Kepler, Keychains, etc. Scammers have created a clone copy of these wallets and made it easier for them to access information imported into the wallet. When a user accidentally downloads such an extension, his seed phrase or passwords as the case may be are accessible to the hacker.
Solution: Always download wallet extension from the official website of the project. Do not use Google results from a search to download wallets.
Clone Website: As little as a change in a letter's appearance on a website can make two websites exist with similar URLs. For example, atomiçhub.io is not the same as atomichub.io. When you look at the two websites, you may think that they are the same but they aren't. The *c" in atomic is not the same. The first URL is a clone copy of the second URL. When someone searches for a website name through Google, he is likely to fall into such a scam, and by inputting his login details, he has given the information to the site developer. His account can be compromised afterward.
Solution: Always cross-check the URL of any crypto-related site you are using.
If the site allows 2FA, ensure you enable it so that the account won't be easily accessed even when it is compromised.
Fraudulent Smart Contracts:
In Decentralized Finance, to make transactions, we need the help of smart contracts, and for us to proceed with the transaction, we need to permit the Smart Contract to spend our tokens. Now, a normal smart contract is coded in such a way that it has limited access to our funds such that it needs permission to access our funds each time. Today, scammers have created smart contracts that once given one-time permission will have unlimited access to the wallet.
Solution: Always disconnect from any smart contract you interact with.
Clear your Dapps after each interaction.
Check if the smart contract of the project has been audited before using them.
Finally, use this amazing tool by beefy finance to know if there are smart contracts that have unlimited access to your wallet. ( allowance.beefy.finance).
Fake Presales: Presently many pre-sales are going on in the crypto space. It seems that the Binance Smart Chain has opened doors for these fraudulent activities. It is better to do proper research before investing in any pre-sale. Check if the project team is well-known and perhaps doxxed.
Fake Airdrop: Many airdrops with huge monetary value. Most times these projects claim that they have locked the liquidity over some time for people not to be able to sell the airdrop until a certain point. People who want to make more profit buy more of the project token only to see that the tokens are not tradable even when the "said" lock period is over. Some of them that are tradable contain fraudulent smart contracts that can steal your funds after interacting with them.
Solution: Ensure you have a separate wallet for airdrops. Try as much as possible to avoid buying any airdrop tokens until they have utility.
There are many other scams out there that may not be included here, so on a general note, we always must secure our crypto wallets. This is why we need to be careful with our private keys and passwords. Avoid suspicious links
Avoid login into a website you are already logged in to when prompted to do so by a link you clicked on.
Say No to GREED. There is no free money on the internet.
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This content was also posted here by me.