Paul Abercrombie and James Burtt can’t decide if scammers stealing your crypto is more painful than losing it yourself. They’ve had both happen - within days of each other! - and now are sharing the £500 lessons they learned so you don’t make the same mistakes. This episode of Understanding Crypto will teach you how to recognise and avoid common scams and how to protect your digital assets.

How to Get Scammed

Paul and James recently minted their own social token on the Polygon network and are in the process of building out corresponding assets including a Discord server. They chose Polygon, an Ethereum side chain, for its faster processing and lower gas fees. Paul says he needed to make some adjustments to the project on Polygon, and this usually requires you to connect your wallet. Since he was using a new computer, the Polygon wallet URL wasn’t saved in his browsing history so he searched Google to find the web address. “Without looking and paying too much due diligence,” he relates ruefully, “ I just clicked on the first link that came up on Google and the page popped up and it looked exactly like Polygon.” He connected his wallet and saw an error message which he dismissed as inconsequential. I’ll just check it again tomorrow, he told himself. The next morning he logged in and realised that all the ETH in his wallet was gone! £150 worth! 

Further investigation revealed that his crypto was moved to another wallet. He also realised where he went wrong: the ‘Polygon’ site he connected his wallet to was fake. “The actual web address for Polygon’s wallet is wallet.polygon.technology. …The one that I had clicked on - which turns out was actually a Google ad that had popped up at the top of Google - …was wallet but instead of two Ls it was W-A-I-L-E-T…” [Listen from 2:29]

How to Scam Yourself

Realising that they had been scammed sent Paul into risk management mode. He kept thinking about the million social tokens sitting in the wallet and how to protect them. The best recourse, he thought, was to move them to a new, clean wallet. They also had about £350 worth of wrapped Ethereum on the Polygon network that he wanted to secure. He created a new account in MetaMask and sent the crypto there. Then, to protect himself - or so he thought - he deleted the original MetaMask Chrome extension and reinstalled it. He entered his seed phrase to get into the original account, but the new account had disappeared! Instead of creating a sub-account, he had created an entirely new main account, which needs its own seed phrase to access. Since he didn’t have that seed phrase, he can never access that new account and neither can anyone else. “So basically I then scammed myself by sending the remaining £350 of value that we had sitting there … from the account - where it was probably perfectly safe - to a new account that I've created, which we haven't got the passcode for,” Paul tells listeners wryly. [Listen from 9:52]

£500 Lessons

Paul and James know that some of you may enter into the world of crypto because of this podcast, so they feel duty-bound to educate you about the pitfalls and scams you can fall prey to if you’re not careful (and even if you are!). Here’s what they want you to learn from their painful experience: 

1. There are numerous scam sites that look exactly like the real thing, so pay close attention to the URL you’re visiting. 
2. Don’t click on an ad if you do a Google search for a crypto wallet. Use the verified search results instead.
3. Bookmark the correct URL address of the crypto sites you transact with.
4. Although you can look up where your stolen crypto went on the blockchain, all you would see is the thief’s wallet address, not their name or any other information that can identify them. Furthermore, scammers ritually swap wallet addresses within days, so it’s virtually impossible to track them down.
5. There’s no central authority you can report your lost or stolen crypto to. Once it’s gone, it’s gone for good.
6. Once you create a new main account on your wallet, make sure to safely store the seed phrase so you can always access your cryptocurrency.
7. Anyone can get scammed!
8. Smarter, more secure wallet solutions are sure to come out in the future. 

[Listen from 13:25]

Decentralisation has its Downsides

This podcast has extolled the benefits of decentralisation for good reason. Like everything else, however, decentralisation has its downsides. That there’s no helpline to call when you have crypto issues is a big one, Paul and James agree. Throughout history there have been cycles where centralisation and decentralisation have been favoured, but the ideal scenario is most likely a balance of the two. Paul says he is all for decentralisation, but wallet providers need to be better onboarding to help their clients protect their digital assets. [Listen from 20:37]

Key Takeaways

• Be on the lookout for scams. 
• Store your access keys securely.

Resources

James Burtt on Twitter | LinkedIn | Instagram | Clubhouse

Paul Abercrombie on Website | Twitter | LinkedIn | Instagram 

Episode 3 - What is a Digital Wallet