Is 1inch (1Inch) Safe?

Last Updated February 3rd 2022
6 Min Read

1Inch is, by and large, a considerably safe investment. It was not only developed by two highly experienced and reputable programmers but is also backed by one of the most promising technologies in the DeFi ecosystem - the 1Inch aggregation protocol.

However, like any other cryptocurrency, 1Inch falls in the high-risk investments category if we were to go with the traditional standards. It keels over into this category because of its volatile price action, in part, but majorly due to the level of risk, an investor is exposed to when they interact with the crypto industry. Key among these is the risk of losing the investment to hackers and other cybercriminals.

Between October 2020 and May 2021, for instance, the Federal Trade Commission (FTC) reported that Americans lost more than $80 Million to hacks and other frauds, with the average trader losing about $1,900. This year, CipherTrace reports that investors across the globe lost more than $681 Million to crypto criminals in the first half of 2021.

The CipherTrace report is important to 1Inch, and the larger DeFi ecosystem, investors because it indicates that DeFi related crimes are on the rise. In what this report termed as an “alarming new trend,” the report indicated that DeFi-related hacks accounted for more than 60% of the half-year loot.

Most recently, a yield farming program - Badger DAO - suffered a $120 million breach on 2nd December 2021, as reported by PeckShield - a blockchain data and security analytics company.

1Inch has been around for the last 12 months, and none of its affiliated products has suffered a critical breach or lost client investments. While this is commendable, it is no reason to let your guard down when interacting with the platform.

In this guide, we will be helping you understand the different risks associated with 1Inch and how to keep your investment safe.

We start by looking at everything you need to consider when buying 1Inch tokens.

What To Consider Before Buying 1inch (1Inch) Tokens?

There are three key factors that you need to understand before you purchase your first or consider stacking 1Inch tokens:

First, you need to learn that 1Inch is a massively volatile crypto asset. It is not surprising for the token prices to gain or lose double-digit percentage values in a relatively short period. Take this for example, in the two weeks leading to 5th February 2021, 1Inch token price appreciated by more than 400%. It would then shed more than 75% of its value in the two weeks leading to 23rd May 2021.

Secondly, you need to understand that 1Inch is not immune to the many ills facing the crypto industry, especially the threat of hacks and crypto scams. And the fact that it operates within the DeFi ecosystem that has now become the hunting ground for hackers and scammers doesn’t help the situation hence the need to be more vigilant.

Thirdly, remember to only invest what you can afford and willing to lose.

Read Also: What Might Happen If You Invest $100 In 1Inch (1INCH) Today?

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

What Are The Risks Associated With 1inch (1Inch)?

At the very least, you need to appreciate the volatility and risk of loss that comes with 1Inch investments.

By volatility, we mean that 1Inch token prices are constantly fluctuating, which translates to equal value changes for your 1Inch investment. The good thing about this loss is that it is impermanent and will be recovered when the altcoin prices rise again. You only lose if you sell after the altcoin price dips.

The loss of 1Inch tokens to hackers, on the other hand, is permanent, and there is little you can do to recover lost tokens. To lose to hackers, they will either have to hack your personal wallet or smart contracts in a DAO where you have locked your 1Inch tokens.

There is also the threat of government regulation hanging over the crypto-verse. After witnessing the impact that China’s ban of cryptocurrencies has had on the crypto market, we can only speculate on the impact that a US ban or negative regulation would have on the 1Inch and the entire industry.

Other Types of Scams to Look out for

Pump and dump schemes

Classic crypto pump and dump schemes are characterized by one or a group of individuals who present themselves to the crypto investment community as expert analysts specializing 1Inch. They start by providing informative reviews and solid praise or criticism. But after gaining the confidence of 1Inch investors/traders, they use misinformation and outright biased news to manipulate the token prices in a certain direction.

They typically buy or significant positions and use their influence to manipulate the market into breaking into a rally, but as soon as the rally peaks or prices dip, they close their position and leave everyone else holding the bag.

Fake websites and social media promotions

Fake websites for crypto exchanges, digital wallets, and even decentralized protocols have in the past been used in phishing. So has fake social media promotions and emails with malicious links. In this case, the hackers are trying to trick you into providing them with your wallet/exchange account credentials.

Crypto MLM schemes

By crypto MLM schemes, we allude to the family of crypto scams that involves the promise of higher than average returns on investments. These include Ponzi and pyramid schemes, as well as rug pull cams that promise to pay you insanely high interest/rewards if you lock your 1Inch tokens in typically new liquidity pools or investment-based programs. But as soon as you deposit your funds, the promoters pull down the program, cease communication, and run away with your 1Inch investment.

Check Out: 1inch Price Predictions

How To Keep Your 1inch (1Inch) Safe?

Well, there are multiple measures that you can take to safeguard your 1Inch investment from loss. A recent investigative report by Verizon concluded that as much as 80% of all hacks are a result of weak passwords. You will, therefore, want to start by fixing the password by using a strong and unique multi-character password for your wallet and exchange accounts.

We also advise you to embrace multi-factor authentication for logins and crypto transfers. Where possible, invest in a reliable hardware wallet that stores private keys for altcoins offline and hoard your 1Inch tokens there - especially if you are a long-term HODLer.

Most of the other risks, especially the online scams, can be avoided by practising due diligence and ridding your mind of the get-rich-quick mentality. Vet the investment program and its promoters thoroughly before trusting them with your crypto assets. Further, whitelist crypto exchanges and wallet emails and bookmark their websites to avoid falling victim to phishing attacks.

Don't Miss: The 5 Best Ways To Buy 1inch (1INCH)

1inch (1Inch) Security Vs. Privacy

Before we conclude, we would like to mention that there is a world of difference between 1Inch security and privacy.

Throughout this post, we have been discussing 1inch security, which revolves around keeping your crypto assets safe. It involves exploring the different ways through which your investment is exposed to risks and coming up with solutions on how to seal the loopholes or eliminate them altogether.

Going through different 1Inch and crypto security guides online, you will probably notice that a few tend to use the terms security and privacy interchangeably.

But as the “Cryptocurrency Investing for Dummies” author - Kiana Danial - so rightly puts it, “security and privacy are two separate topics.” If we were discussing 1Inch privacy here, we would have discussed the level of anonymity your personal data is accorded.

We would have started by asking the amount of personal information collected by 1Inch network and exchanges or wallets where the token is traded, we then would have queried how they store this data, checked who has access to this data, and how it is shared with third parties if ever.

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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

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