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How to avoid crypto scams

Here at Rainbow, one of our goals is to make exploring the new world of Ethereum fun, friendly, and safe. You know what's not any of those things? Scams. They're mean, and no one likes them. We want to help you avoid them, so we wrote this brief guide to help you do exactly that!

One of the best parts of having a Rainbow wallet is that you are in total control of your money. Unlike a bank account or crypto exchange, we don't hold your assets on your behalf. Rather, we give you a beautiful and powerful interface through which you can easily navigate the world of crypto while managing your own money thanks to the power of cryptography.

Because of this, it's extremely important for you to be on guard as you're exploring the world of Ethereum. Just like in the traditional world of finance, there are sometimes bad actors and scammers looking to steal your stuff.

The good news is that it's not hard to stay safe. Here's how to do it...

1. Guard your secret phrase:

Your secret phrase (sometimes called recovery phrase or seed phrase) is a unique set of words that controls your entire wallet. Whoever has a wallet's secret phrase can take anything contained within it.

You should never give this phrase to anyone, just like you wouldn't give away your login information to a traditional bank account.

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2. Practice stranger danger:

This mindset is not just for kids! If someone you don't know sends you a private message or replies to one of your tweets asking you for information about your wallet, be extremely careful.

More often than not, it's a bot or a person trying to steal your assets. They'll often attempt to impersonate a community moderator or customer support person. Here are a few examples of what this might look like:

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3. Slow down and review:

One of the most common ways people make mistakes is when they are in a hurry and don't pay close attention. Trying to move fast is a temptation in the crypto world because things can happen quickly, but doing so will increase your odds of slipping up.

Scammers and bad actors rely upon the fact that people are in a hurry. Whenever possible, take a moment to pause and check your surroundings. Are you actually on the right website? Is the app or person you are interacting with actually trustworthy?

We have several prompts and features within the Rainbow app to help you in this area:

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4. Beware of "guarantees", giveaways, and "gifts":

Another common way scammers steal peoples' money is by offering amazing deals or by making incredible sounding promises. They'll tell you that if you send money to an address, they'll send back double. Or they'll claim to deliver a 500% return in a week.

Legitimate and trustworthy crypto projects know that there are no guarantees in this world, and they don't give people a false sense of security:

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As a reminder, Rainbow will never ask you for your private key or secret phrase, and we won't reach out to you first. If you've reached out to our official customer support, we might ask you for your public wallet address, but we will never ask for anything that could compromise your wallet.

Additional Readings:

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How to protect your Ethereum & Web3 wallet