How to Avoid Web3 Scams and Social Engineering Attacks
Web3 is the hot new thing in tech, promising a more democratic internet. It sounds cool, and there are ways to make money with it. But before you jump in, be careful! Just like with any new tech, there are people out to scam you.
This article will explain how these scams work and how to protect yourself from losing your money.
Let’s dive in and see the first trick scammers use!
Rug Pulls
Web3, which involves combining the internet with cryptocurrency, is likely to face similar issues as the crypto world itself. Right now, one of the biggest scam in crypto is called a “rug pull.” These scams are sneaky because they seem real at first. People create fake crypto projects that look good, but then they suddenly steal all the invested money and disappear.
Here’s how it works: someone creates a new crypto project. They make it look exciting online and convince people to invest. Then, once enough people put in their money, the developers of the project suddenly disappear with all the invested money! The people who invested are left with nothing but worthless tokens.
It’s kind of like another crypto trick called a “pump and dump” where someone tries to drive the price of a crypto token way up really fast, then they sell theirs quickly and leave everyone else holding the bag when the price crashes.
Some social media celebrities on X and Instagram can trick you into buying these tokens. They’ll make it seem popular and valuable, so people buy in. But then, once the price goes up, these celebrities secretly sell all their tokens and disappear! The price crashes, and everyone who bought it loses a lot of money. This happens a lot with new crypto projects, where people promise you crazy high returns but it’s all a scam.
The problem with these scams is they don’t make real money. They just use money from new investors to pay back the people who bought in earlier. It’s like a pyramid scheme. Eventually, they run out of new people to trick, and the whole thing crashes. Some really big scams like this have happened before, like OneCoin and Thodax, and they stole billions of dollars from people all over the world.
Fake NFTs and Marketplace Scams
Fake NFTs are another big scam in the hot new world of digital collectibles (NFTs) and Web3. Scammers might steal famous artwork or just copy someone else’s ideas. They create fake websites or social media accounts to sell these worthless NFTs. They also trick you into buying them with flashy ads. Be careful! Don’t trust everything you see online.
Another scam involves fake NFT marketplaces. These look real, just like the ones where people buy and sell real NFTs. But they’re designed to steal your money. Scammers might try to get your login information or trick you into sending them cryptocurrency for something that doesn’t even exist. Remember, if something seems too good to be true, it probably is. Don’t get tricked by fancy websites or popular characters.
Supply Chain Attacks
Supply chain attacks target the tools and libraries developers rely on to build Web3 projects. Hackers exploit vulnerabilities and inject malicious code into projects during development. This code can lie dormant until the project is deployed, at which point compromises user funds.
Moreover, these fraudsters might target popular development tools for building Web3 projects. They can inject malicious code snippets that developers unknowingly embed into projects. These scammers can target Third-party libraries and introduce hidden vulnerabilities which makes it hidden from the start and can be hard to find.
When developers unknowingly integrate these compromised libraries, the malicious code becomes part of the final project. A single successful supply chain attack can have a cascading effect; if developers use a compromised tool or library, it affects multiple Web3 projects.
Social Engineering — The Art of Deception
Social engineering forms the backbone of most Web3 scams, so we must consider what it is all about. Scammers leverage psychological manipulation to trick victims into revealing sensitive information or taking actions that compromise their assets.
Here are common social engineering tactics to watch out for:
(1) Phishing
Phishing emails or messages, the most popular social engineering tactics, often impersonate legitimate platforms or influencers. They typically contain enticing offers or urgent warnings, tricking victims into clicking malicious links that lead to fake login pages. However, these pages have designs capable of stealing private keys or seed phrases that are, in turn, used to defraud you.
(2) Impersonation through Social Media
Impersonation through social media has become a prevalent weapon in scammer’s arsenal. These scammers create fake social media accounts that closely resemble those of legitimate individuals or projects.
They might steal profile pictures, logos, and even content from real accounts, creating a mask of authenticity. They might even purchase verified account badges on specific platforms to enhance their believability further. Once the facade of legitimacy works, scammers use the impersonated accounts to spread misinformation and promote malicious activities.
5 Easy Ways to Protect Yourself from Web3 Scams and Social Engineering
Cybercriminals constantly evolve tactics in our increasingly digital world, where information and access are coveted resources. While robust security systems play a crucial role in safeguarding data, a significant vulnerability persists in human psychology. Social engineering exploits this vulnerability, employing manipulation and deception to trick individuals into revealing sensitive information, granting unauthorized access, or performing actions compromising security.
In the last section of this article, we will consider practical steps to fortify your defenses against these scams and enjoy the innovations of web3.
1. Guarding Your Seed Phrase
Consider your seed phrase the key to your crypto kingdom. Never share it with anyone under any circumstance. Legitimate platforms will never ask for your seed phrase. Think of it like the combination of your bank vault — if someone gets a hold of it, your assets are at risk. Consider storing your seed phrase offline on a physical piece of paper or hardware in a secure location.
2. Scrutinize Websites and Apps
Always double-check website URLs before logging in, and avoid clicking links from unknown sources. Only work with websites that have security certificates (indicated by a lock symbol) to ensure a secure connection. Be bold and bookmark legitimate websites to avoid accidentally navigating to a spoofed version.
Don’t rely solely on information from social media or online communities, which can be breeding grounds for misinformation and hype. Conduct independent research using trusted sources like established Web3 news outlets and review platforms. Moreover, discover independent project audits and reviews from reputable sources.
3. Beware of Unrealistic Promises
Don’t get carried away by the interesting offers or rewards available on the internet, especially when it comes to crypto. Scammers usually try to put out rewards that exceed all other offers, but diligent research and an understanding of the project’s purpose, roadmap, and team help you determine if the promises are unrealistic.
4. Be Wary of Unsolicited Requests
Legitimate institutions (banks, credit card companies, etc.) rarely initiate contact through unsolicited emails, texts, or phone calls to request sensitive information like passwords or account details. Therefore, when you receive a request, treat it with suspicion. It’s better to err on caution and verify its legitimacy before taking action.
5. Report Suspicious Activity
Never download attachments from unknown senders, as attachments can contain malware that can steal your information or compromise your system. Nevertheless, if you encounter a suspected social engineering attempt, report it to the relevant authorities or organization. Reporting helps track trends and allows organizations to take action against scammers.
Conclusion
In this article, we have discussed the prominent Web3 scams and provided ways to avoid them. If you follow these strategies and remain vigilant, you can significantly reduce your risk of falling prey to these scams and social engineering attacks. As we anticipate the full utilization of Web3, remember that caution can go a long way in protecting you.
