Is Fantom (FTM) Safe?

Last Updated February 1st 2022

7 Min Read

Is Fantom a safe investment?

Well, the answer to this question is relative and mostly dependent on whether you are asking about the safety of the Fantom blockchain or the Fantom investments. But we will answer both, and to put it simply, Fantom is both a rather safe investment option and even safer blockchain technology.

The FTM altcoins have performed exemplarily well in the past and are expected to sustain this trend in the years to come. More importantly, the Fantom network uses the highly innovative form of Asynchronous Byzantine Fault Tolerant (ABFT), referred to as Lachesis.

However, despite standing out as a rather safe crypto investment, Fantom operates in one of the most insecure investment markets. It finds itself in an industry where levels of cybercrime in the form of hacking, ransomware, fraud, and other forms of misappropriation are on the rise.

According to CipherTrace, for instance, crypto investors lost more than $681 million to hackers and frauds in the first seven months of 2021. Of concern is the fact that the amount of crypto lost to DeFi (one of Fantom’s key areas of competence) hacks had shot from 3% of the millions lost to hackers in 2020 to 54% in 2021.

But as we have said, these are industry-wide security risks facing the industry.

In this post, though, we will be highlighting the specific safety concerns affecting Fantom. We will be telling you the different risks to FTM investing and how to keep your Fantom safe. But first, we look at everything you need to know before investing in Fantom.

What To Consider Before Buying Fantom (FTM)

Before buying Fantom, understand that you and not the FTM blockchain or other industry operators have the biggest role to play when it comes to keeping your FTM investments safe. That such investment decisions as the choice of a trading exchange, crypto wallet, staking platform, and investment strategy play a key role in determining the safety of your crypto investment.

You also need to know that more individuals and groups of individuals are turning to crypto hacking as a career. These have dedicated their time to scheming new ways of exploiting crypto security systems of different exchanges and wallets and stealing investor funds. You, therefore, need to keep abreast with crypto-security news to learn of new ways criminals are using to steal client funds and how to avoid them.

You also need to know that Fantom is a rather new and incredibly volatile crypto investment. That, unlike Bitcoin that has been around for a decade, Fantom has only been around for 3 years. This volatility is evidenced by the fact it can easily gain or lose double-digit percentage value in a day.

Between Jan and May 2021, for instance, FTM token price rallied up by more than 5000% (from $0.017 to $0.92) but lost close to 85% of this peak price (dropping to $0.15) by mid-July.

Even more importantly, you need to be honest with yourself and vet your motivation to invest. Are you driven by FOMO, or do you have a solid investment plan? Does Fantom and its projected future growth fit your overall investment plan, and what are your investment goals?

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 Fantom (FTM)?

There are two primary factors associated with Fantom investments; volatility and hacks.

Fantom token prices are hugely volatile, and their future price action is unpredictable. For instance, two years into its launch, the FTM token was still circling below its market entry price of $0.024. Currently, Fantom prices are up by more than 8,650% in an uptrend that was characterized by double-digit percentage gains and dips in a matter of hours.

This is to say that you can lose your FTM investment in a volatile market. However, this loss is mostly impermanent, given that a future price rally will almost certainly get you back to profitability. You can only lose money to volatility if you sell FTM after a value drop.

Loss of FTM tokens to hackers and other cybercriminals is less infrequent than the loss to price volatility. But unlike losses to volatility, which are impermanent, losses to hackers are permanent, with slim to zero chances of ever recovering such investments. In most cases, these criminals target crypto exchanges, both individuals and enterprise crypto wallets, and in a rising trend, DeFi platforms, especially liquidity pools and other staking platforms.

However, unlike volatility that you have no control over, you can limit the exposure of your crypto portfolio to hackers by investing in a hardware wallet for the offline storage of FTM tokens. You should also come up with an ultra-strong and unique password for your crypto exchange and wallet accounts.

Other Types of Scams to Look Out For

In addition to volatility and the threat of hackers, here are the other types of scams you need to look out for when investing in Fantom.

1. Investment scams - Ponzi and Pyramid schemes

Fraudulent crypto investments in the form of pyramid and Ponzi schemes are on the rise. These are mainly targeted at naive, and newbie FTM investors and often involve luring them with the promise of above industry average returns on investment and other rewards. All they have to do is lock their FTM coins in an investment program for a period of time. Later on, these perpetrators take down the investment program, cease communication, and run away with investor funds.

2. Rug pull scams

In their cybercrime report for the first half of 2021, Ciphertrace notes that of the millions lost to scammers and fraudsters in the first half of 2021, more than 74% of these were targeted at the DeFi niche. Much of these, we believe, can be traced back to rug pulls. Like Ponzi schemes, rug pulls involve the creation of crypto dapps often dedicated to investing. Their developers will, however, either pull down the app and run away with the funds or use a backdoor to the apps to steal investors' funds while blaming it on hackers.

3. Crypto pump and dump

Traditionally, crypto pumps and dumps would be executed by monied investors who bought enough of crypto to create a fake rally before dumping all their holdings when the value of this altcoin peaks. Today, you have to be even warier of supposed Fantom and other cryptos 'experts.' These seek to manipulate a crypto’s prices through wrongful analysis, misinformation, and blatantly wrong future forecasts with the aim of inciting a bear or bull run with the hope of riding the ensuing chaos to maximal profitability.

How To Keep Your Fantom (FTM) Safe

There are numerous measures that you can take to protect your Fantom investment from all these and more risks. For starters, and particularly for long-term investors, you could start by investing in the more reliable hardware wallet that stores your coins offline.

Researchers from Verizon recently concluded that more than 80% of hacks are preventable. And you achieve this by using a strong and unique password for your crypto exchange and wallet accounts. Additionally, virtually all crypto wallets and crypto exchange accounts now have the two/multi-factor authentication feature. You need to embrace it.

We must also add that in addition to multi-factor authentication and cold storage, the safety of your crypto assets starts with your choice of an exchange or wallet. Vet these platforms thoroughly before trusting them with your personal information and crypto assets to ensure that you only trade with the most reputable and most reliable exchanges and wallets.

Check Out: How to Make (or Lose) Money With Fantom (FTM)

Fantom Security Vs Privacy

There is a world of difference between crypto security and crypto privacy. The majority of blockchain technologies in existence today, Fantom included, are quite secure but do not guarantee privacy.

Throughout this post, we have been discussing the security of deposits which revolves around the measures you and the crypto exchanges and wallets you use have taken or can take to prevent the loss of your crypto investments. And we have said that the most effective method of making your Fantom tokens safe is by storing them in a cold offline wallet.

Crypto privacy, on the other hand, relates to the anonymity of your crypto transactions on the blockchain. It also touches on how the crypto wallets and exchanges with your personal information collect, store and share this information.

Note that while Fantom transactions are harder to trace than credit cards or other conventional payments, they aren't wholly anonymous. According to Ollie Leech, the editor for CoinDesk's Learn program, each Fantom transaction you make is allocated a hash code that is unique to you. By downloading the Fantom blockchain, therefore, one might view all your FTM transactions.

But as Kiana Danial, the author of “Cryptocurrency Investing for Dummies”, puts it, the amount of computing power required and download the blockchain rules out the possibility of the average Joe ever unmasking your identity or your transactions.