Fake software wallets: how the scam works and how to protect yourself (CryptoScam #1)

A software wallet (an app on your phone or computer) is convenient but risky for larger amounts: scammers spread fake apps and websites that look like well-known wallets, and their goal is to get your recovery phrase (seed). Whoever knows it will steal all your coins. For long-term storage, we therefore recommend a hardware wallet and holding mainly Bitcoin. We show it all in the first episode of our CryptoScam video series (in Czech).

Summary

• The recovery phrase (12 or 24 words) is the key to your money. Never share it with anyone or enter it on a website.
• Fake wallets spread via search engine ads, app stores and social media.
• A hardware wallet keeps the keys away from your computer and phone – it is significantly safer.
• Lesser-known “shitcoins” are more often linked to scams than Bitcoin.

Why software wallets are a target for scams

Many newcomers think their coins are safe in an app. But a software wallet runs on a device that is connected to the internet, on which you install other apps and open links. One mistake is enough for an attacker to get into the wallet.

The most common scenarios people encounter:

• Fake app – a copy of a well-known wallet in an app store or for download from an unofficial website. Once you enter your recovery phrase, it sends it to the scammer.
• Fraudulent website from an ad – when searching for a wallet, the first result is a paid link to a page that merely imitates the original.
• Fake “support” – on social media or in a chat, a “technician” approaches you to help with a problem. Sooner or later they want your recovery phrase or remote access to your computer.
• Someone else's wallet with money – someone “accidentally” sends you the recovery phrase for a wallet with a balance. But withdrawal is blocked until you send a fee – and that ends up with the scammer.
• Malware – a program on your computer swaps the address when you copy it, so you send the payment somewhere other than intended.

Why a hardware wallet

A hardware wallet is a small device that stores private keys separately from your computer and phone. You have to physically confirm a transaction on the device, so even a compromised computer won't send your coins by itself. It is the simplest way to keep Bitcoin safe and out of scammers' reach.

We also recommend holding mainly Bitcoin and avoiding little-known tokens (“shitcoins”), around which scams revolve much more often. What a cryptocurrency is and how it works is explained in our article What is a cryptocurrency.

How to protect yourself

1. Only download a wallet from the manufacturer's official website; check the address manually – don't click on ads.
2. Write your recovery phrase on paper and store it offline. Never photograph it, save it to the cloud or enter it anywhere.
3. No genuine support team will ever ask you for your recovery phrase.
4. Before sending a payment, check the recipient's address – at least the beginning and end.
5. Keep larger amounts on a hardware wallet, and only what you need for everyday payments in an app.

What next

• Why to avoid cloud mining – another episode of the CryptoScam series.
• How a “pump and dump” works – price manipulation of lesser-known tokens.
• What is Bitcoin – a complete guide to the best-known cryptocurrency.