Dubai: Cryptocurrency scams are nothing new and scammers are constantly finding new ways to fool investors. With the recent rise of Artificial Intelligence (AI), scammers have started using the trending technology to steal cryptocurrencies. Know how to protect yourself.
Meta (formerly Facebook) recently warned that hackers around the world appeared to be taking advantage of ChatGPT, OpenAI's AI-powered interactive tool, and reported blocking more than 1,000 malicious links masquerading as ChatGPT extensions in March and April alone.
โInvestors and new buyers tend to trust cryptocurrencies with a larger and more loyal online following, assuming others have done enough research before investing. However, the use of AI may challenge this assumption,โ said Brian Deshell, a cryptocurrency trader and analyst based in the United Arab Emirates.
Additionally, when searching for the keywords 'ChatGPT' or 'OpenAI' on DEXTools, a crypto trading platform that tracks tokens, over 700 tokens mention either keyword, indicating that scammers are taking advantage of the hype in around the AI โโtool for creating tokens, given that OpenAI has I haven't made any crypto entries yet.
โNow, just because something has thousands of likes and comments that seem genuine doesn't necessarily mean it's a legitimate project. This is just one attack vector and AI will lead to many others. However, there are ways to protect yourself and your investments,โ Deshell added.
How scammers attack cryptocurrency users' digital wallets
In cryptocurrency scams, scammers primarily look for an investor's crypto wallet information. Unlike traditional scams that target any other personal information or multiple variations of a password, as users only get a single private key for digital wallets, that is the main goal.
Deshell agreed that scammers often resort to social engineering, which involves getting cryptocurrency users to reveal their private keys. Other attacks only require knowing the cryptocurrency user's wallet address, which is often the only way to steal cryptocurrency.
โReports and surveys indicate that many of the attacks targeting cryptocurrencies are social engineering attacks; in which users are asked to access a website, a website asks them to connect their wallet, or a transaction appears. When a crypto user approves it, his money disappears,โ Deshell added.
How do you spot cryptocurrency scams before they happen?
There are certain warning signs that you should pay attention to when deciding whether or not to pursue plans to invest in a certain cryptocurrency and protect your investments from being scammed.
1. When the 'white paper' of a cryptocurrency does not exist
Every cryptocurrency must have a whitepaper, as this is one of the most critical aspects of an initial coin offering, which is a type of crowdfunding through which funds are raised for a new cryptocurrency company. But what is the 'white paper' of a cryptocurrency?
โThe 'white paper' should explain how the cryptocurrency has been designed and how it will work. If the whitepaper doesn't make sense โ or worse, doesn't exist โ then you have to tread carefully,โ said Brody Dunn, an investment manager at an asset advisory firm based in the United Arab Emirates.
2. Lack of relevant information about a cryptocurrency
In most investment firms it should be possible to find out who the key people behind them are. This typically means easy-to-find biographies of the people leading the investment, plus an active social media presence.
โIf you can't find out who runs a cryptocurrency, be careful. Also, keep in mind that no investment can guarantee future returns because investments can go up as well as down. โAny cryptocurrency offering that promises you will definitely make money is a red flag,โ Dunn added.
With over 420 million cryptocurrency users worldwide, crypto wallets are becoming increasingly popular among cryptocurrency enthusiasts to store their private keys securely.
How can you protect your crypto wallet from scammers?
With over 420 million cryptocurrency users worldwide, crypto wallets are becoming increasingly popular among cryptocurrency enthusiasts to store their private keys securely. But how would you go about keeping your cryptocurrencies safe in your wallet?
"If a company asks you to share your passwords to participate in an investment opportunity, it is very likely a scam," Deshell warned. โKeep your wallet keys private. Additionally, scammers often use high-pressure tactics to get you to invest your money quickly.โ
โIt's about promising discounts if you participate immediately, with the aim of reaching as many people as possible in the shortest time possible, to raise money quickly. If you think the marketing for a cryptocurrency offering seems clunky or makes claims without backing them up, investigate further.โ
Tips to protect your cryptocurrencies from scammers
While the best way to protect yourself from a targeted attack on your cryptocurrencies is to be aware of the risks and take steps to protect your wallet, there are some quick tips that will help you stay safe when trading cryptocurrencies:
1. Use a secure wallet: Protect yourself from these types of attacks by using a secure, encrypted wallet. A hardware wallet is the most secure as it stores your private keys offline.
2. Do not share your wallet address: Avoid sharing your wallet address with anyone as this could lead to investors becoming potential victims of fraudulent crypto transactions.
3. Use two-factor authentication: Setting up two-factor authentication for your wallet will make it harder for hackers to access your funds, even if they could.
Bottom line?
On a more positive note, AI also has the potential to automate aspects of cryptocurrency development and act as a great tool for those using the technology that runs cryptocurrencies. However, given the risk of it being used as a tool to defraud investors, it is necessary to keep your cryptocurrencies safe.
โAs hackers and scammers become more and more industrious, it is important to always pay attention to the addresses your wallet interacts with. Ideally, wallets should have built-in security features such as two-factor authentication, and many of them do, so use those that do,โ added Dunn.
Deshell added that certain crypto software has also begun using AI to combat such hacking attempts, with detection robots and machine learning models used to monitor transactions in real time and look for specific red flags in a new cryptocurrency's algorithm.
Both experts also recommended that novice crypto investors use offline crypto storages as it is widely considered to be the safest option and is used by both individuals and exchange platforms to protect their digital assets.
