Wednesday, April 10, 2024

How Scammers Use Seed Phrases As Bait

Scammers Use Seed Phrases As Bait

If you are active in the cryptocurrency world, you have probably heard talk of “rotten seed phrases” more recently. The name alone sounds like a nightmare. These rotten seed phrases are the latest scam targeting crypto users. Here is how scammers use seed phrases as bait and what you can do to protect yourself. 

What is a Seed Phrase? 

You may be scratching your head when you read the words “seed phrase.” The pros over at Coinbase explain it best, “Think of the wallet as being like a password manager for crypto, and the seed phrase as being the master password.” How a seed phrase differs from traditional passwords is that it is a series of 12 to 24 words instead of something like “Bingo4321!”

Anyone with access to your seed phrase can access your crypto. If there is some kind of mistake where your wallet is deleted and your seed phrase isn’t saved, you will also lose access to your digital coin. Essentially, without your seed phrase, you wouldn’t be able to do anything with your crypto holdings at all. So, it is extremely important to keep your seed phrase safe. 

How Scammers Use Seed Phrases As Bait

On Reddit, some cryptocurrency holders started talking about a common trend. People on the internet have been exposing their seed phrases “accidentally” online. Other users will be tempted to enter the seed phrase into their own digital wallet to take the funds. Instead, what happens is as soon as the crypto hits your wallet, it is withdrawn with the rest of your digital coins as well. 

Another way scammers are using seed phrases to scam crypto holders is by gaining access to your seed phrase. Generally, this is done by disguising themselves as an online merchant or other crypto checkout platform. It is important to know how your crypto wallet works and whether or not this information is required for purchases. No third-party site or person should have access to your phrase.

Ways to Protect Yourself

Now that you know how scammers use seed phrases as bait, here are some ways you can protect yourself and your crypto. 

  1. Keep your seed phrase in a safe location. Many people jot down their seed phrase someone and simply keep it safe. 
  2. Using platforms like Coinbase may give you additional protection on your seed phrase. There is a cloud feature that stores an encrypted version of your seed phrase.
  3. Some people find it easier not to store their seed phrases themselves. You may want to rely on the services of a hosted wallet. This can make things a little easier, especially if you aren’t holding a large number of digital tokens.
  4. Don’t ever enter a seed phrase that isn’t yours into your wallet. As mentioned above, this is how scammers use seed phrases as bait. 

As always, beware of who you are interacting with and sharing information with online. Scammers are constantly coming up with new ways to get access to private information and seriously mess up your plans. Don’t share any account information or other details outside of trusted platforms.  

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