10 Web3 Security Hacks & Scams to avoid in 2023 (Part 1)
There’s been plenty of buzz around Web 3.0 and innovations in blockchain and cryptocurrencies, but only a few understand the hidden risks of this technology. As it is still emerging, it has created opportunities for malicious actors to prey on unsuspecting victims who are ignorant of their fraudulent methods.
Data findings by CNBC, a blockchain analytics firm Chainalysis, revealed that scammers around the world took home a record $14 billion in cryptocurrency in 2021, thanks in large part to the rise of DeFi. It was also established that there was a cryptocurrency theft increase of 516% from 2020 to $3.2 billion worth of cryptocurrency.
This widespread misuse raises concerns about fraud, money laundering, and hacking. To better avoid falling victim to these crypto vices, here are the most common cryptocurrency scams to avoid in 2023:
- NFT Mint Scams
According to CoinGecko, over $100 million has been lost as a result of NFT scams in the first half of 2022, ranging from price manipulation and NFT piracy to fake platforms and phishing attacks. The figure continues to rise as more NFT scams are reported daily.
Fake NFT mints remain one of the most common scams that exploit the use of fake website playbooks to carry out fraudulent acts. Fraudsters may create a real-looking website and social media accounts to hype an upcoming mint, complete with a visual preview of what the 10,000 NFT collection will look like.
They may as well impersonate popular collectors, NFT project team members, or even community support teams just so they gain access to unsuspecting victims. Through this means, they demand important private details from community members or request certain actions (like transferring NFTs or cryptocurrencies) that would eventually drain the victim’s wallet. After a successful attack, it is common for fake NFT collectors to delete their website, as well as all social media profiles like Twitter and Discord.
One way to avoid falling victim to this attack is not responding to direct messages from anyone who claims to be a founder, celebrity, or influencer. Professional and reputable NFT staff would never DM you first unless you send them a message first or you come to a specific agreement in a public Twitter thread or Discord channel. Also, try as much as possible to only click links from verified project accounts and not some wannabes.
2 Credential Phishing
Cryptocurrency and NFT investors have a rich history of facing phishing scams. Serving as a major internet security threat, phishing attacks generally target credentials like usernames, IDs, passwords, or personal pins.
Credential phishing is where hackers attempt to steal your credentials or vital security information by pretending to be a trusted party in an email that leads to malicious fake websites or other communication channels.
Here’s a tip on how to avoid this.
Do not use links, pop-ups or your email to enter your information when creating a hardware backup of your crypto wallet or when recovering your wallet. It is much safer to go directly to the verified website for any crypto transactions. It is also advisable to write down your seed phrase on paper, and never reveal it to anyone!
3 . Wallet Hacks
Wallet hacks are one of the most dreadful experiences you could ever encounter as a budding investor in the space. This occurs when a hacker steals the private seed phrases of users in order to acquire their funds via backdoored imposter wallets. They often use phishing attacks or bugs to get personal information from wallet holders. In 2022, hackers successfully drained Solana-based wallets due to a bug in the Slope wallet. It’s estimated that investors lost Solana tokens worth around $8 million in this exploit.
To better safeguard your wallet and the funds in it, here are protective tips to watch out for:
- Entrepreneurs must set up multisig wallets for storing funds and avoid centralized control over the wallets. Such measures, when implemented across the system, reflect a greater decentralization and insulation from orchestrated attacks.
- Do not accept friend requests in your DM from anyone you don’t know or anyone offering sweet benefits. There is every likelihood it’s a scam. It’s better to be safe than sorry.
4 Rugpulls
Crypto rug pulls are a most common trend in the web3 space. This occurs when crypto and NFT investors invest their hard-earned money into a new crypto/NFT project and the founders of the project run away with the funds which drop the price of their own token to zero. On the part of the scammers, a lot of effort goes into convincing investors of the legitimacy and credibility of their projects just so they make tons of money from their investment.
These deceptive means are achieved through the creation of fake attractive websites, pasting of fake employer’s names, partners, and advisors, and presenting a roadmap that positions the project as one with long-term goals and a sustainable future. Cryptocurrency investments can be a great opportunity, but no one can guarantee instant returns. Those that make such promises are not to be trusted. To protect yourself from this malicious scam, do not be carried away with huge and far-fetched promises of returns. Also, try to research every aspect of the project starting with verifying the team members and their backgrounds. This is very important no matter how eloquent and well-experienced they look on the surface. Dig deeper!
5 Deceptive Social Media Giveaways
Not every web3 related giveaway on social media is real. Most times than often, it’s a very attractive technique to draw people in and scam them without much fuss. Social media platforms like Twitter serve as the most effective medium to reach the crypto community. As a result, fraudsters make a habit of hacking verified accounts on the app to promote scams. One of which is fake giveaways. Through this means, users are asked to connect their wallets to claim their free rewards which in turn gives free access for hackers to drain their wallets
Bottom line is, to be wary of offers that seem too good to be true. Don’t rush by clicking unverified links before validating such information. It doesn’t end well.
Conclusion
With crypto-based scams becoming increasingly more sophisticated, it’s easier than ever to fall for them. Hackers are becoming more and more creative when engineering attacks to take advantage of cryptocurrency users. Therefore, it’s your responsibility to guard your private data and wallet to avoid falling victim or having a recurrence.
Putting into consideration that people are at different stages of the self-education journey in Web3, we have provided you with the best insight to prevent scam attacks in any Web3, Defi, or crypto platform. These tips will guide and protect you if well implemented.
Beware and stay safe!
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