By Nick Rokke, analyst, The Palm Beach Daily
If you took Palm Beach Letter editor Teeka Tiwari’s advice and bought bitcoin and Ethereum on April 18, 2016, you’d be sitting on massive gains.
Bitcoin is up 2,272%. Ethereum is up 9,506%.
If you’d put $500 into each for an initial investment of just $1,000, you’d be sitting on $59,850 today.
For some subscribers, these crypto gains have changed their lives.
Now, imagine waking up and realizing all of your gains are completely wiped out. And there’s nothing you can do about it.
For thousands of people, this was a scary reality. They weren’t careful—and lost everything in a matter of minutes.
You see, making huge gains in cryptos doesn’t mean anything if you don’t protect them.
Once your coins are gone, they’re gone for good. There is no recourse in getting your coins back—even if they were stolen.
That’s why today’s Daily is so important.
Below, I’m going to tell you more about this recent scam that duped so many people. More importantly, I’ll show you how to make sure this kind of thing never happens to you.
The $50 Million Scam
What I was referring to above is a $50 million, three-year-old bitcoin scam that recently came to light with the help of internet giant Cisco and Ukranian cyber police.
This specific scam was a “phishing” scam. A phishing scam is when the perpetrators try to get you to click on a link that looks like a trusted service (like a bank). Once there, the bad guys hope to trick you into unveiling sensitive information, like your login credentials.
In this case, the scammers imitated the popular website Blockchain.info. This is a popular website in the crypto community… and more importantly for this scam, a very popular wallet for storing bitcoins.
The scammers set up sites virtually identical to Blockchain.info. The only difference was the web address. They used web addresses like blokchien.info, block-clain.info, and blokchien.info/wallet.
They then bought ads on Google so they would show up as the top searches on a Google search. It looked like this:
After someone searched for Blockchain.info (or Blockchain.com—they’re the same site), the fake sites would appear to be at the top because of the paid ads. This is where unsuspecting people went wrong. They clicked on the ads for the fake sites.
The fake sites look exactly the same as the real site. So unless the person saw the website address was different, they would proceed like nothing is wrong.
Then they would set up a wallet at the fake site. The wallet address where they send their coins would not be for a valid wallet. It would be for the wallet owned by the fraudsters.
And like we said above, once you send your bitcoins, they are gone for good.
How to Protect Yourself
There are a few critical things you can do to protect yourself.
1. Make sure the web address is the real one. Not a fake one. You also might be better off carefully typing in the address yourself.
If you’re not sure, we put together a free PDF for you that shows the best ways to store cryptos, including our recommended exchanges and wallets. Click here to view it.
If you don’t see the wallet or exchange you want to use on our list, it could still be fine. You’ll just have to verify that the web address is the correct one before you set anything up.
Make sure you know what the web address is and how to spell it. And verify the web address before entering any personal information.
If the web address looks funny, it probably is. A little common sense goes a long way here.
2. The next thing—and one thing I always do when sending cryptos to a new address—is to send a small amount to yourself. I’ll send just a few dollars’ worth of bitcoin and verify it showed up before sending more.
That way if your bitcoin doesn’t show up, you know you’re either part of a scam or made a typo. Either way, you only lost a small amount.
3. Always double check send and receive addresses. Another sneaky scam involves a virus lurking on your computer. And it only affects bitcoin wallet transactions.
What happens is, because these bitcoin wallet addresses are so long, almost everyone just copies and pastes them before sending.
The creators of this virus know this… and whenever you paste something that could be a bitcoin address, it will change whatever you copied with their bitcoin address. And those bitcoins are gone forever.
So always make sure to double check your addresses very closely before sending. Don’t rely on copying and pasting.
Cryptocurrencies are extremely profitable, and will continue to be. But there are additional risks. We need to be careful to avoid these scams.
Remember these key guidelines. Print them out and keep them handy. You’ll keep your crypto gains safe and avoid future scams.
Nick Rokke, CFA
Analyst, The Palm Beach Daily
P.S. We’ve recently renovated the entire Palm Beach Letter Crypto Corner. If you have questions about cryptocurrencies, chances are you’ll find the answers there. There, you can access our research and step-by-step videos on web-based wallets, hardware wallets, and other cryptocurrency services. You’ll also find three simple steps to buy and store cryptocurrencies. Palm Beach Letter subscribers can access the Crypto Corner right here.
If you’re not a subscriber, and want to learn how to safely and profitably trade cryptocurrencies, you can sign up for The Palm Beach Letter right here…
The Market Rebounds
Just three weeks ago, people were scared.
The market was in the middle of an 11% fall.
This was the biggest fall since the end of 2015. And it happened quickly, in less than two weeks. The renewed volatility scared a lot of investors. Some people even called for the end of the bull market.
But we didn’t break a sweat over here. We had a plan and we stuck with it.
And we hope you did, too. As you can see in the chart below, the SPDR S&P 500 ETF has already recovered over two-thirds of its losses.
Some stocks, like longtime Palm Beach Letter holding Nvidia (NVDA), have even reached new highs.
Remember to have an investing plan before taking any positions. This way, if the market turns, you’ll know exactly what to do… which in this case was to sit tight.