Disclaimer: The below is solely intended for informational purposes and in no way constitutes legal advice or specific recommendations.
It seems that everyone’s talking about cryptocurrency these days, and where there’s buzz, there’s sure to be scammers taking advantage of people who don’t know any better.
Cybercriminals have stolen $1.1 billion in cryptocurrency in the first half of 2018 alone using sophisticated tactics and complex processes to fool even the most cautious crypto users. In fact, Fortune recently reported a major cryptocurrency scam in which hackers infiltrated the company behind the ICO (initial coin offering) of EOS – a blockchain-based system for developing decentralized apps.
These fraudsters sent realistic emails promising to “give away” the remainder of the EOS’s unsold tokens to individuals who entered their private crypto wallet key into a very convincing-looking website. Once the scammers obtain someone’s private key – which is like sharing your bank account number, PIN and password with a stranger – they can clean out the account and disappear.
What Is Cryptocurrency And How Does It Work?
Cryptocurrencies are digital forms of money that are not controlled or regulated by a government or bank. As the name suggests, these “encrypted currencies” are verified in a public ledger known as the blockchain, in which every transaction makes up a “block” and is added in the sequential “chain.”
Every time you buy or sell a cryptocurrency, you create a transaction that is broadcast to the entire blockchain network. Before the transaction is complete, however, it must go through the confirmation process to be successfully recorded in the ledger.
Adding a block to the ledger is permanent. It can’t be altered or changed by any single individual. This means cryptocurrencies, and other blockchain technologies, are incredibly immune to fraud and are very secure. For these reasons, the future of cryptocurrencies looks promising, and many experts predict that blockchain technology will spread to other sectors.
If Blockchain Is Secure, Why Do People Still Get Hacked?
While the blockchain itself is essentially immune to hacking or fraud, human error becomes the weakest security link and the primary target of hackers and scammers. Rather than attempt to disrupt a worldwide, decentralized, encrypted and publicly-verified technology, scammers prey on people’s enthusiasm and “FOMO” (fear of missing out) to create a sense of urgency and trick them into giving up their private information.
In general, if an offer seems too good to be true, it probably is. If you get an email promising free cryptocurrency, ask yourself, why would a Bitcoin investor offer to give you free money? You should also consider the “price” you pay in exchange for this supposedly free cryptocurrency – in this case, it’s access to your entire crypto wallet.
Finally, remember to check the details. Phishers will try to trick you by mimicking a legitimate website, email template, logo, etc., but they can’t copy a website’s URL. Always check the website’s URL to make sure you are on the correct page. If the URL is even one character off, close the page and type in the correct address manually.
The fear of missing out and the temptation of getting rich quick are tantalizing, dangerous and effective. If you want to invest in a cryptocurrency, be overly suspicious of anything that seems too good to be true. Stay educated on the latest cryptocurrency fraud tactics, like fake crypto wallets and cloud mining scams. These will continue to rise with the popularity of cryptocurrency, so always be on the lookout and never give away your private key.