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Easy, untraceable and “guaranteed” profits. This is the promise of criminals who try to convince people to bet on fraudulent schemes. Several recent cases have drawn attention for the amounts involved (as in the case of G.A.S Consultoria or Minerworld, an alleged financial pyramid that offered users bitcoin mining power).

Such frauds are already the target of a bill, authored by Senator Eduardo Braga (MDB-AM), which establishes penalties of four to eight years in prison, in addition to a fine for offenders. Moreover, crimes defined as a financial pyramid, among others involving cryptoassets, may be framed in the new legislation if approved.

However, while this is not yet a reality, irregularities continue to occur. For example, in the last six years, the movement of companies allegedly involved in financial pyramids showed billionaire figures – about R$ 2 billion -, according to Money Times.

But for those entering this market now, how to know if an investment is reliable or not? The topic was the discussion target during ABFintechs, in the panel “Care and security in the crypto world”, conducted by bitcoin and security expert, NykNyc.

Check for hard data

“I think it’s important always to have a certain degree of skepticism when talking about money or business relationships. It is crucial to check the evidence that what your interlocutor is promising is something feasible. So, the main tip is to never trust a third party before checking all the details”, he said.

The expert pointed out that the problem is not unique to the crypto market, as it can occur in any financial transaction. “It is important always to evaluate whether the promises are real, with news and hard data, checking all the details, in any type of transaction”, he warned.

According to him, caution needs to be constant, whether with physical or digital money. The advantage of cash is that it does not require the internet or devices to be used. However, in the case of a digital transaction, there is a need for a third agent involved (an intermediary institution), resulting in higher costs and low privacy.

During his presentation, he cited the possibilities of the metaverse and the prospects for technology growth, warning of its importance and the risks involved. “The metaverse shows that our life today is extremely digital. There are examples of how to securely store data or concrete items such as vaults, banks, surveillance, and everything else in the real world. But in the metaverse, how is it possible to do that?”, he asked.

Financial education is essential to ensure security

Most people don’t understand how money works, or the financial system, much less technology. For this reason, they get confused and are more easily deceived.

Many scammers use cryptocurrencies for illicit actions, using news released by the market in general. “Everyone has heard about the rise in the value of bitcoin and other cryptos, but didn’t have further knowledge of this universe details. As a result, the risk of falling for promises of easy profits is higher”, he said.

According to the expert, research is essential. “Do your own research and check all the details of the currency you are interested in. However, some efforts are unnecessary. For example, those who place low values in an online game don’t need to check the game’s source code; on the other hand, those who are going to invest a larger capital in a startup or in DeFi, should be more cautious in evaluating the offered product”, he oriented.

In addition, regardless of the amount invested, he advises analyzing the project’s reputation. “We already have more than ten years in the crypto market, which means that there are safe investments and companies in the sector. So the tip is to seek recommendations from trusted people and know the company’s background and its proposal”, he said.

“Miracles don’t exist”

Keep in mind that the market is volatile and that “miracles” do not exist.

Besides researching the opportunities, the following is critical to increase security:

  • use password managers because human beings are known to be terrible at this and are more vulnerable;
  • adopt applications with second-factor authentication;
  • it is worth considering to have two cell phones, one to be used only at home and another one when you go out – the cell phone for home use would keep all your personal information, with no risk of loss;
  • regarding cryptocurrencies, the most relevant thing is to invest in knowledge;
  • backup private keys and avoid leaving a lot of money in the exchanges;