How to Avoid Traps in Cryptospace
In this section you can find 10 golden tips in order to protect yourself in Cryptospace, the highly unexplored and dangerous world of cryptocurrencies. The potential traps are numerous because the profits that some groups make by scamming newcomers in this world, are huge.
We have organized the section in 10 golden tips, trying to cover every single aspect. By following these tips, you will eliminate every possible risk!
1. Cryptocurrencies are very volatile and risky assets
Even the most popular cryptocurrency with the largest capitalisation, the original Bitcoin, is extremely volatile making often even double digit daily moves changing its value like +12% or -15% in just a few hours.
Take in mind that the cryptocurrency markets never close, the exchanges are open in a basis of 24 hours / 7 days per week and at this first era of cryptocurrencies with many people not knowing about them, the liquidity can be very thin, so just some news related with a specific Project can dramatically change the price of a currency in very short time.
We strongly recommend that you should never invest in cryptocurrencies any funds that you cannot afford to lose. Their prices are reacting strongly to governments’ decisions for stricter and stricter regulations or even for plans to block their popularity.
2. Be extra cautious with the new cryptocurrencies
After the big success of the Bitcoin, came an endless wave of new cryptocurrencies. Only very few of them really tried to fix any flaws and weaknesses of the revolutionary Bitcoin having a sincere approach. Unfortunately the majority of them have been proven to be scams, with only goal to make rich their founders. We ended up with thousands of cryptocurrency Projects, with many of them completely dead, without Communities around them and endless “scam exits”.
Usually, the newer a cryptocurrency is, the biggest the possibility for a scam. Always check if there is action in the development history of a coin and the most important: life in its developing social media channel. Most Communities and development groups are using Discord/Slack channels or Telegram for their communication. Ask to join their channel to check if there are active people caring for the project. This is far more important than a shiny advertisement about a project.
3. Community driven Projects always have a big advantage
In addition to the previous tip, it is always better to prefer really Community driven Cryptocurrencies. It is more than obvious that the original cryptocurrency idea wouldn’t have ever succeeded without the support of the World Community. Having companies behind a Cryptocurrency is like suggesting the central bank model with just some Blockchain tech elements. This cannot be considered as a decentralized model and of course it is impossible to ever offer real transaction freedom.
People around the world should understand that they have the power of option. They can either use the gift of the original Bitcoin philosophy in order to gain their freedom, by empowering a truly decentralized digital coin network, or they could possibly fall victims of companies which will abuse them economically in the short or long term, using the mask of a cryptocurrency project.
4. Be extremely careful with Projects that have ICO, premined coins or instamine period
In many occasions, developers gather funds either by automatically allocating a big percentage to their wallets before launch (premining) or by raising their funds with an ICO (Initial Coin Offering). Another method is enjoying a period that they alone mine their coin before launching it publicly (instamine).
After such scenarios, they follow a few price pumping techniques, for example by hyping in social media, announcing a fake plan or delivering just a small part of their plan. So they sell their coins in high prices (as they have technically created a high demand) and they disappear.
5. Everything that shines is not gold
You will often see impressive ads, describing endless high tech characteristics of a Project that is selling its newly launched cryptocurrency through ICO (Initial Coin Offering). However you should always remember that this new project madness is not going to stop, while there are many potential victims and fraudulent developers who take advantage of the buyer’s ignorance.
6. ALWAYS BACKUP your digital coin wallet
This is a must for all the digital coin users: The only way to secure your coins is to backup your wallet by either writing down the security phrase (usually for the mobile wallets) or by saving a file containing your private key.
This way you are able to recover your wallet and the funds of your addresses after a data loss in your hard disk drive, a loss of your mobile device or other scenarios.
7. NEVER share your private keys
You have to keep your private keys in a safe place. You should never share them in possible social media messages or phishing emails and you should never enter them in 3rd part applications that you don’t trust. The private keys should be used only in the digital coin’s original applications in order to restore your wallet and track your funds in the blockchain.
8. AVOID the various scams that ask you to send funds for any reasons
There are endless scams in the world of cryptocurrencies. An easy way to save yourself is to follow this rule: Never send any funds to addresses for any other reason than paying for something that you really wish to have (a product or a service or tipping/donating).
A real giveaway promotion would never ask you to pay for anything. It would only ask to leave your address in order to receive your prize or to do a small legitime task like participating in a trivia or leaving a comment or sharing a post and leave your address.
9. Don’t trade coins with unknown people, choose an exchange carefully
In the world of cryptocurrencies, the right way to buy a digital coin is by using a trustworthy exchange. Like you would never trust a stranger as a tourist, to exchange your money to another currency, you should never trust strangers in the internet in order to send them a type of digital coin for getting another.
We must always have in mind that a digital currency is simply a medium, so the fact that a well known digital coin is accepted by an exchange, doesn’t necessarily means that this exchange is trustworthy (and vice versa).
10. Never use an exchange to store your digital coins and turn 2FA ON!
Exchanges should be used only for selling a coin and buying another. You should never use an exchange address for the storage of your digital coins. In reality, you should even try to minimize the time that your funds are in an exchange’s addresses.
Finally, something really important: you should never consider that the 2FA (two factors authentication) is just another “boring” parameter. It is a really important thing and you should always turn it ON, because ONLY this way you can really protect your exchange account from hackers.
