Cryptocurrency, such as Ethereum, is different from digital currency, and this distinction is crucial because it has tax implications. Crypto leverages blockchain for verification, so information is traceable and verifiable, even if it doesn’t run through financial institutions. If you hold Ethereum coins, there’s no immediate gain or loss, so the cryptocurrency isn’t taxed.
There’s no way to recover ETH that’s truly lost because the Ethereum network is designed to be irreversible, and you have no control over what happens.
You can buy Ethereum with debit card if your card supports 3D secure, meaning pre-funding your account is unnecessary. Bitcoin is a good investment, but many agree that ETH is a better buy. Regardless, with Ethereum, you can store value and pay for things.
One of the biggest reasons why people get scammed is a lack of knowledge. If you don’t understand the ins and outs of the Ethereum blockchain, you’re likely to be deceived. Scams are rife, but there are steps to follow to help avoid losing money.
Be Mindful of Unsolicited Messages from Exchanges or Wallet Providers
Fraudsters often target information linked to online wallets, and their modus operandi is similar to phishing attempts. More exactly, they send an email to lure the recipient into handing over private information, tricking them into believing that the message comes from a crypto exchange or wallet provider. You’re asked to click on a link that takes you to a replica of a trusted site or installs malware on your device. If you receive any unwanted email, the best approach is to delete it right away. Should you reply, the malicious actors will know your address is valid and you’ve read the email, so you’ll attract more unwanted messages.
A phishing attack compels you to take action by instilling a sense of urgency, so you do what needs to be done without a second thought. For instance, a message might say there’s an issue with your account, and you must log in at once to fix it. Preventing an attack is as easy as recognizing a phishing email, so be on the lookout for these tell-tale signs:
- The email is sent from a public domain, like @gmail.com, @hotmail.com, or @yahoo.com
- The email threatens a negative consequence or a loss of opportunity if not addressed
- There’s a file attached to the email
- The email uses an unfamiliar greeting/salutation
- The email requests log-in credentials (or any other sensitive data)
Don’t Share Your Private Keys, Seed Phrase, Or Passwords
With interest in Ethereum growing, it’s best to practice caution, so never, for any reason, share your private keys, seed phrase, or password. If they fall into the wrong hands, it’s difficult, if not impossible, to recover access to your funds, which is why you must up your security game. As opposed to the world of fiat currency, you can’t complain to a bank manager or have the transactions reversed, so it’s better to be safe than sorry. It’s not a good idea to keep sensitive data online, in the mail or cloud storage, as you don’t have direct control; if someone guesses or steals your password, they’ll find a way to hack in, and the information will be compromised.
Wait Before Making Any Transactions on The Ethereum Blockchain
The Ethereum blockchain gives you the freedom to transact in ways you haven’t been able to do before, such as programmable transactions through smart contracts. Unfortunately, there’s the potential for the transactions to go sideways, something you’re not accustomed to. Track and monitor transactions to ensure you don’t fall victim to fraud. If a transaction succeeds, Ethereum will remain available to the recipient, and you’ll pay some gas for the failing result. Double-check the characters, so it’s exactly like the original address to avoid sending ETH to the wrong wallet because threat actors rely on your carelessness.
Address poisoning is a new type of scam lurking around, with perpetrators poisoning victims’ transaction histories using almost identical addresses. The cybercriminal poisons your account by sending a small number of crypto coins (in rare cases, an NFT) so that the transaction is recorded in the transaction history. The cyberattacker will get your address from the transaction history and send the ETH to their account “by mistake”. There’s the risk of copying the attacker’s address instead of your own and using it somewhere else, which can easily cost you your funds. Until now, it’s clear that it’s crucial to manually check the address before you send any Ethereum tokens.
Don’t Believe Anyone Promising ETH2 Trades, Swaps, Or Investments
There’s no such thing as ETH2 tokens, so be wary of anyone guaranteeing trades, swaps, or investments because they’re trying to trick you out of your Ethereum. ETH2 refers to the new consensus layer, which handles the proof-of-stake, so it’s simply a naming convention. There are no plans in sight for airdropping new tokens following the Merge, so no ETH2 tokens actually exist. If you’re contacted by someone pretending to be an Ethereum support agent, don’t give them any information. Scammers are skilled at convincing people to part with their funds, so be suspicious if someone contacts you out of the blue.
Final Thoughts
Ethereum scams cost people, and many victims struggle with depression. Individuals of almost all ages, backgrounds and geographical locations can be affected by this crime. If you lose your Ethereum to a scam, it will be lost forever. You’ll be happy to know it’s not necessary to give up your plans to diversify your investment portfolio into cryptocurrencies. You can protect your finances while still gaining access to this asset class, which has won the acceptance and participation of institutional investors. At the end of the day, fraudsters will have a hard time tricking you if you act vigilantly.
All things considered, it’s best to triple-check everything because the scenarios presented above are a reality, and avoiding them is essential to secure your Ethereum. If something looks too good to be true, it probably is. There must be something wrong with it.