6 best tips to protect your cryptocurrencies
Protect yourself and your money against common crypto hack, scams and thefts…
Owning cryptocurrencies opens up a whole new and exciting world for you, but it’s still a world that is finding its feet and there are some risks out there (like with traditional banking). In this guide we will talk through some of the common risks with crypto, like cryptocurrency exchange hacks, email phishing scams, ICO frauds and more. But don’t worry it sounds maybe worse than it is.
With this guide you can sleep better knowing you are far less exposed to these common crypto-risks
Here we list some of our best tips to protect your cryptocurrencies and sleep better at night.
The best tips to keep your cryptocurrencies safe
1) You need to be in control of your own crypto
You can’t completely trust that an exchange will always protect your cryptocurrencies. Remember it’s you that are in control of your own crypto, not the exchange, not a bank, or a government. Therefore you need to make sure that you also are storing your crypto somewhere safe, and an exchange isn’t the safest place for your crypto. Unfortunately there are still new crypto hack happens almost weekly. And you need to protect yourself against those risks the best you can.
How you can protect yourself against crypto hack and more
- A hardware wallet is the way to to go, find a good wallet for you in our wallet comparisons – helping you stay safe with crypto
- Research each cryptocurrency exchange before signing up, and especially before depositing money into it. You can use our exchange comparison guide – we only list the most trustworthy exchanges – with hopefully less risks of crypto hack
2) Keep your passphrase / keys somewhere safe
When you are in charge of storing your cryptos in your own wallet, then that means that you are also the one that is in control of the keys. the private keys are what you need to access your wallet. So without those then you might lose your cryptocurrencies. That means it’s super important that you store those keys (passphrase) somewhere safe, where you won’t lose them. Or where they are in the risk of getting stolen, through crypto hack or thefts.
How you can protect your keys
- You can also store your keys at several places (maybe even in several locations), password protected and other security methods to be sure that you’re crypto is in YOUR safe hands.
- If you decide to store them online, make sure you take extra precautions, with extra passwords, etc. DON’T email yourself private keys, passwords, etc. Email crypto hack via hacked websites, etc is a common problem.
3) Beware of spams, ads, emails and phishing sites
As with traditional money (USD, EUR, GBP, etc) and with traditional Internet banking, there are always bad people out there trying to steal your money. And that’s also a thing in the crypto world. And you can bet that the bad guys are creative when it comes to trying to steal your money, via email scams, fake websites or crypto hack. This could happen trough ads on social media sites, fake websites or emails asking you to login with your private keys, etc.
How you can protect yourself against scams
- Don’t click on something that feels strange, don’t open emails from people you don’t know, don’t enter your private keys on a website that is new to you and don’t give your private keys to anyone else.
- Make sure the website’s you visit, and even more so access to store crypto with are using SSL certificates to further secure the website (what is SSL).
4) Use 2FA and secure passwords
2FA (Two-Factor Authentication / Multi-Factor Authentication) is an authentication method in which a computer user is granted access only after successfully presenting two or more pieces of evidence to an authentication mechanism: knowledge, possession, and inherence. You need to make sure that you setup a 2FA for the exchanges, online wallets and other sites connected to your crypto. Without this you’re adding unnecessary risks to your investments, like crypto hack or other thefts.
How to secure your account and password
- Please don’t use easy to crack passwords, have a look at a passphrase for secure hardware wallets and you get a good idea what a good passphrase or password is. A stronger password is much harder to hack.
- Oh and please make sure you store the backup phrase/code for your 2FA authentication to an exchange or wallet somewhere safely too. In the case of you losing your phone, etc.
5) Don’t invest in ICOs before researching them well
With the huge ICO boom that has taken place in the past years it has attracted plenty of people trying to get rich quick and take advantage of people who willingly ‘invest’ into dubious ICOs, also in hopes of getting rich as quick. During the 2016 & 2017s boom and bull market any ICO you invested in almost guaranteed you a 2x-200x return of investment. When this started spreading to even more people, of course your everyday investors wanted to get in of those ROIs. But unfortunately that also attracted scammers with fake projects with the sole purpose of trying to get your money. By a quick Google search you’ll find plenty of those ICOs.
How to invest safely and smartly into ICOs
So what can you do? Well you should do a full research into the project behind the ICO.
- Who’s the team members, are they completely unknowns or do they seem to have credible backgrounds? Can you find them on social media sites like LinkedIn (this doesn’t prove that they’re genuine but might add confidence), Twitter, Facebook? Are there genuine articles about the team or the project? Visit their Telegram and Reddit page and gain yourself a better idea if they’re genuine or not.
- Whats the idea behind the project? Even if it’s not perhaps a scam, do your research and find out the reasons to why this might be a good idea. As with any startup, it’s about supply and demand. But also is it a completely unknown team with no track record, are they going to be able to deliver?
- Obviously read the whitepaper if they have one. Some would argue, that if they don’t have a 100+ pages whitepaper then it’s an immediate scam. I’m not sure about that, but you need to find proof in their existence, their ability to produce something of value and for sure a well written whitepaper does help amongst other things.
- If it sounds too good, then most likely it’s too good to be true. As in any ICO promising big returns is 99% likely to be a scam or Ponzi scheme, or even in the risks of exposing yourself to a crypto hack. Speak with fellow investors, maybe someone else on Reddit or Telegram has found some reliable evidence in support or the opposite. But remember to be wary of unknown strangers that you talk with on Telegram or Reddit, they might have something to gain from this conversation.
- There are more good suggestions a Google away, but don’t be too afraid to invest, research or learn more about the crypto projects. But be safe!
6) Beware of the pump / FOMO / rush into a quick profit
At some point a friend at work, someone on Reddit/CC (CryptoCurrency subreddit), Twitter, Telegram or wherever might tell you about how this one coin is going to boom at any point. Your first reaction should be to put your money into it, but looking into what’s the benefits of the coin, and why would someone else want to share the great news about this coin increasing in price and then sharing all the profits with internet strangers?
Also the same applies to when you’ve seen a coin increase in price heavily in a rather short time (upp 100-200% in 48hours or less) then your first reaction should not be to try and catch that pump. In most scenarios you’ll be too late to the party and the always following dump to a pump will happen when you put your money in. Short burst of increasements should be a sign for you to be wary and not to rush into investing in that crypto.
How to avoid the FOMO
- Don’t over-invest because of a feeling or the rush to earn a quick profit
- Watch out for the big drop – when a coin has increased a lot in value quickly there will always be a drop, but no one know exactly when. You don’t want to be caught getting in too late. But just because something has grown too quickly doesn’t mean there’s no value in the crypto. So being aware of the fact that a drop is likely could work in your favour. If you invest for a longer time period in mind
- Research the crypto before investing – this matters for all types of investments
We hope this guide was helpful and you now know a bit more how you can protect yourself against crypto hacks, scams, thefts and other risks that still are a big problem in this space. Remember cryptocurrency exchanges are not your bank, you are in control of your own money.
Other popular guides:
- What is a Cryptocurrency?
- 10 Best Proof of Stake coins of 2019
- How to invest in Bitcoin the beginner guide
Per Englund – Founder of Go CryptoWise a cryptocurrency and tech fan that wants to see better and smarter products and services that makes our lives better and easier