Cryptocurrency Scams and Hacks: How You Can Stay Safe

Cryptocurrency Scams and Hacks:  How You Can Stay Safe

“Protect Ya Neck!”  

Those prophetic words from the Wu-Tang Clan in the early 90s couldn’t be more prescient right now.  With all the unprecedented growth seen in the world of cryptocurrencies this year, and the fear, greed and uncertainty such volatility is bound to bring, such heady times attracts many individuals seeking opportunities to gain at the expense of others.

In June 2017, the cryptocurrency market overall reached an all-time high of $116 billion.  The follow month, the market saw a plummeting to an overall cap as low as $60 billion!  That’s a lot of money exiting the ecosystem in a very short period of time. Many cryptocurrency investors, some of whom are relatively inexperienced in investing generally, are not emotionally comfortable with that kind of volatility.  Some of these investors end up panic selling while others are all too eager to buy into a coin that seems to be bucking the downward trend.  Doom and gloom prophets gain more prominence and, inevitably, scammers execute on some incredibly calculated operations that prove to be successful in stealing lots of money.

One of the scams to emerge during times of heightened worry are the “pump and dump” scam.  One notable scam that recently proved successful was the pumping and dumping of Chaincoin, which has been trading on low volume exchanges for years at the bottom of the barrel.  On July 1, 2017 however, an organized cartel started buying up Chaincoin in volume when it was trading at 7 cents.  Two weeks later, Chaincoin reached an all-time high of $6.59, generating a 9,300% ROI from the time the pump started.  Very quickly afterwards, the dumping started in earnest but as of today, July 24th, Chaincoin is still up more than 1,400% from the time the pump commenced.Almost immediately after the cartel began dumping Chaincoin, they seized on a new target, Arctic Coin.  According to a message I read, the reason this was being targeted was because it was a low cap, Proof-of-Stake coin that had developers willing to redesign the roadmap and website to be more English-focused (the website was Russian).  The goal according to the sender of the message was to get the price from 10 cents to over $1 in two weeks.

The interesting thing about operations like this is they can evade detection given how volatile cryptocurrencies are.  At this stage, 100% or greater gains in a day are feasible, as is the converse. Websites like Coinmarketcap.com track these coins and even feature the top 20 gainers in valuation in their trending section.In addition to pump and dump operations, there’s also been hacking of websites during token sales that have emerged.  Recently, Coindash had its website hacked and a hacker placed a different ethereum wallet address as the ICO contribution address, netting millions of dollars in the process.  Now, Coindash is doing the right thing by honoring the contributions made to that wallet address during the ICO, but this is nevertheless concerning.  Token sale investors are worried about the value of their investment was Coindash tokens (CDT) begin trading on exchanges.  Coindash has recognized this concern and created a loyalty program designed to incentivize token holders to not dump their tokens.

One of the salient lessons from these recent events is to be choosier in your investment strategy.  Resist the temptation to chase coins when their prices are pumping.  Do not invest in coins solely for that reason.  You want to focus on coins that trade on more popular exchanges with higher trading volume.  For those of you getting more active in the space and investing larger amounts of money, consider getting a Ledger Nano S.  I have the Ledger Nano S and what I love about it is that it supports many of the prominent tokens (bitcoin, litecoin, all erc-20 tokens, etc) but also is not connected to any severs (cold storage) and has unbeatable security features.  The Ledger Nano is the equivalent of a safe for which only you know the password and only have three chances to use it before it disables.  The peace of mind is priceless and the cost is worth every penny.If you liked this post, then please leave a comment.