As the blockchain and crypto markets increase in valuation, your holding will also increase in value. As a result, thousands of new users are entering the market daily, and as the number of agents in an economy increases, so do the scammers. This statement is true especially for the crypto markets because of a lack of awareness and regulation. Thus it is vital to educate yourself and your peers about how to keep yourself away from scammers and prevent them from draining your wallets. Hence, in this article, we will talk about DApp scams that are common in the crypto sphere and how we can be safe from them.
The evolving and pragmatic blockchain world fixes its own problems. As a new technology, there is always more room for improvement and growth. DApps are decentralized applications built on top of blockchain with the help of smart contracts. Think of them as an application on your mobile phone. DApps made blockchain accessible to everyone and hence triggering mass adoption.
Thus DApps, while one of the most attractive blockchain applications are still vulnerable to hackers. Hence a few precautions should be taken before these issues are also solved. After all, prevention is better than cure.
You need to download or buy DAapp compatible soft wallet or hard wallet. While most software wallets support all DApps, some hardware wallets do not support live DApps.Try to select a wallet that is trusted by you and your peers.
To use the wallet and DApps up to their full capacity, always keep some spare utility tokens of the blockchain your DApps and investment are built on. To open a DApp, you can search it on the explore bar and if you are opening an external link. Make sure that the link is sent by a trusted entity (admins of the community). After opening the DApp, you just have to click on the connect wallet option and select the blockchain.
1) Never open an external link sent by an imposter or someone who can't be trusted
2) Never share your private key
3) Always look for typos and grammatical mistakes in the domain and websites. If found any, there is a high chance that they are fake.
4) Never click on apps for crypto-based services; always manually open the website
5) Use 2FA whenever possible; apps like google authenticator are free to use
As mentioned above, DApps are still new, and the nature of the code is open source. While this makes the concept of DApps attractive, the same strengths can also pose several challenges.
Most of the popular DAaps are new. The codes might contain private information of both the users and the underlying protocol. If in case, the open-sourced code contains such information, they might be vulnerable to DApps. Hence, as a rule, DApps try to record information as low as possible.
This exposed vulnerability can be quite common since the whole space is both young and inexperienced. However, security smart contract audits can help eliminate such issues. DApp protocols periodically hold bounty programs for hundreds of thousands of dollars, sometimes millions, to counter the issues mentioned earlier.
One of the biggest reasons why the Web3 culture is promoted is because it helps users 'own' their data. But the current DApp scenario is quite different; user and collected data are stored in centralized data storage solutions. This increases the charge for data breaches.
Since blockchain is free for all and an open-sourced technology, there are many DApp and smart contracts that impersonate popular protocols luring users into trojan and phishing traps. That is why DApp users need to keep an eye out for fraudulent blockchain applications and links. Almost every popular token and DApp has fraudulent doppelgangers. The community needs to figure out a way to solve these issues.
As mentioned above, hackers can replicate fake apps to fool users. This is quite a common practice, and we can clearly see this happening with just a simple google search. Sometimes, even the ads you see on google are fake DApps impersonating the real ones. So never connect your wallet or even open such links even out of curiosity.
Opening and doing transactions into fraudulent DApps, the ones that are mentioned above, can open multiple possibilities for scams. And one such scam is clipboard hijacking. Here, when the user copies and pastes the wallet address of the receiver during transactions, the address is taken as input by the DApp is the fraudster's address. Essentially, you are sending your crypto to them, no matter what address you put. As a practice of further improvisation, scammers can also make these DApp as exchanges, and users will do transactions in exchange for either fake or no cryptocurrencies.
This one is one of the most common tricks in a hacker's playbook; most of us have got these emails. Phishing Emails are fraudulent links disguised as the real ones trying to take on crucial user information from users when users click on the link and behave as they do while browsing through a regular website. In crypto phishing, all hackers need to do is make user connect their wallets through those DApp links. Hackers usually use fake good news like you won a lottery or lucky draw to instinctively make users connect their wallets without giving it much thought.
Apart from the points mentioned above, there are a few things that can be done to make sure you don't fall for such scams.
Using hardware wallets to interact with DApp is highly recommended since they are not connected to the internet when you are not using them. Most of the security issues are resolved on their own.
Most of our wallet codes are lengthy (12-24 words) and can't be remembered. We usually store our keys in a digital diary or in our google cloud. Avoid this at any cost since no matter how secure the blockchain infrastructure becomes, a single breach in the account you stored your keys in, your funds are as good as gone.
Phishing and other shady links always work when users are not paying enough attention to detail. One of the most effective ways of doing this is creating message traps that are either very exciting or fear-inducing. For example, exciting messages could be about winning Bitcoin or unrealistic airdrops; these messages tap into your greed and exploit you.
Blockchain tech, while alluring, has various shortcomings. The space has a steep learning curve, and in the near future, we will see that these problems will be solved.
