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Fundamentals of Cryptocurrency

Learn the basics of cryptocurrency and how to protect yourself from crypto scams with this 6-part beginner-friendly course, created in collaboration with Luno Discover.

Lesson 5

• 5 mins

How to Avoid Crypto Scams

It is widely known that cryptocurrency has become increasingly popular over the recent years. However, crypto does come with its risks of financial crime and scams such as phishing and social media scams. Some users have lost millions of dollars just within seconds in a very simple hack – even celebrities such as Jay Chou lost his Bored Ape NFT in a phishing theft. 

It is vital to take note of some precautions to ensure maximised security on your assets and protect yourself from hackers. 

Seed Phrase 

If there is one thing you have to take away from this course, it is never to compromise your seed phrase. A seed phrase, a form of private key, is a series of 12 to 24 random words generated by your crypto hot wallet that gives you access to your wallet. Think of it as a master key to your crypto within a wallet. This seed phrase is information that you should never share with anyone. If this information is shared, the master key will be exposed to a hacker to gain access to your wallet. 

Tips on storing your seed phrase:

  • Seed Phrase Splitting: This involves separating your seed phrase into 2 or more sections and storing each section separately.
  • Physical Hiding Place: store your seed phrase that completely negates the use of technology, such as using the trusty old pen and paper. Again, we encourage seed splitting where you can note down different sections of your seed phrase on different pieces of paper and store them in different secure places – like a safe or a bank’s deposit box. 
  • A secure Steel Plate or Capsule: steel plates or capsules – like Ledger’s Cryptosteel capsule or Blindfodl steel plate. These gadgets help by separating each word of your seed phrase using character plates and separator plates and securely locks.

Social Media 

Most commonly, hackers will contact the victim directly on social media (Discord, Twitter, Telegram etc.). Some may even leave baiting comments on Youtube or Instagram to attract vulnerable victims to engage with scammers. 

In certain cases, the scammers will offer you an awesome deal that provides unrealistically high returns. These usually require an initial deposit. Once the initial deposit is made, the scammers will request more transactions with different excuses for commission, tax, or fees. Eventually, these scammers go silent when the largest deposit is made.

Tips to avoid these scams: 

  • Always ignore private messages from strangers (even if they claim to be associated with a well-known crypto company). This is applicable to all types of social media platforms 
  • Do not click any links sent by non-official accounts and strangers, always go through official channels or the official website to make any transactions. 
  • Do not share personal information, verification details, or passwords.

Trust your own instinct, and make sure to do your own research – especially if it sounds too good to be true.

Imposter Websites 

Always check the URL of the site where you will invest your money or mint an NFT. Scammers typically will create a website or widget with an identical interface and change the URL ever so slightly from the original official website’s URL.

The scammers’ motive is to trap users that are not careful enough and fail to notice the URL difference, ultimately making an investment on the fake site. This is a form of phishing scam and results in you losing your crypto or getting your wallet drained. 

Tips to keep you safe & alert: 

  • Keep a lookout for the URL whenever you are making any crypto transaction or about to connect your wallet.
  • If you are unsure about a website, try signing in with a fake password. If it is a phishing website, your sign in will claim to be successful and it will continue to prompt you to make transactions.
  • A secure site will always have a lock icon and the site URL should have “https” that indicates protection for the user’s connections to the website.

For more advice on how to protect your crypto from hacks, scams, and phishing, Luno’s security team has got you covered on what to look out for

This educational course is created in collaboration with Luno Discover – your beginner-friendly cryptocurrency education portal. For more bite-sized learning and webinar invitations, join Luno’s Telegram Channel.

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