When there are complex financial products involved, there’s a fraud. As cryptocurrencies have become mainstream, many people have become aware that there’s a lot of money to be made in it. However, most people aren’t experts, and fraudsters/scammers know this. Thus, people fall into crypto scams and lose their hard-earned money. As you get more involved with this new monetary mechanism, cryptocurrency, it doesn’t take time to realize the risks it brings. And no, we are not talking about its volatility. Scams are ubiquitous and it hasn’t spared cryptocurrency.
If you are looking for cryptocurrency companies and startups, you should check if they are decentralized. Also, it is important to check if they have business plans to solve if any problem arises. Needless to say, people get scammed every now and then and lose a huge amount of their money. Now, let us check some common crypto scams:
Common Crypto Scams & How to Avoid Them?
Scams have plagued the cryptocurrency space which is why people are skeptical to invest in it. Let us see some common crypto scams:
The Internet brings a lot of viruses, malware, and other unwanted things into the world. This often leads to scammers making money a lot easier with dangerous downloads. Thus, the value, anonymity and entire digital nature of cryptocurrency become a subject of compromise. To avoid falling for this, you should not click on unknown email attachments or potentially dangerous links.
Also, another thing you should be aware of is bitcoin baiting. For instance, a post on a website saying you can mine bitcoin by downloading a program or a link is a strict no-no. You can have access to safe, legitimate and secure cryptocurrency exchanges, however, you won’t get them through these links.
In the case that you still get malware, you can do two things. Firstly, use two-factor authentication every time. Secondly, use a cold offline wallet. It is usually a good practice if you have multiple physical cold wallets in separate locations. This is how exchanges, traders and other people secure the most valuable wallets.
Fake ICOs, Ponzi Schemes, and Other Rich-Quick Scams
The fake ICOs are the way to lure people to get in on a new coin that’s going to take off and be the next big thing. The scammer takes the leverage of the benefit of the doubt as creators themselves might not even know that they’re peddling junk. To avoid such scams do thorough research before investing in any coin and decide for yourself if the coin has the potential to take off. In the case that you don’t have the accurate knowledge to make a judgment, you should probably avoid all ICOs.
Ponzi schemes can be nefarious in the cryptocurrency world. Many people are unknown about details regarding cryptocurrencies, other than that it’s making millionaires. This lack of information makes selling big promises easier than ever.
For example, someone or some company offers an opportunity of promising an incredible return on their money. Many people fall to this and buy it, and then someone runs off with all their money. Initially, it might look like its working. However, when you try to get the funds back you will find the customer service doesn’t respond, or that there are technical issues, or that the money will be returned soon or a number of other excuses. Later the company just disappears and the money is never seen again. Therefore stay cautious and do not let these schemes fool you.
Fake and Limitation Wallets and Exchanges
There are a number of fake cryptocurrency exchanges that tries to attract people/investors by impersonating some authentic crypto exchanges. These fake exchanges/wallets trick people into logging on. This is the point at which they take the account details and use that to try accessing your real account. Initially, it was a banking scam but it has now affected crypto space too.
The primary way to avoid these types of scammers should be to stay on the well-trodden path and use only the biggest and best-known services. If you’re looking at a wallet or a bitcoin exchange, the safest practice might be to avoid the new one. You should let the early adopters take the risk and stay away from it until you can be sure it’s legitimate.
You can use the most popular exchange/wallet as they are safest to use. Always use two-factor authentication. This process can be a hassle but offers significant protection. Also, check the URL before signing in. If nothing else, get in the habit of scanning the URL bar to look for the HTTPS and “secure” lock symbol and checking that the URL is correct.
These were a few common crypto scams and ways to avoid them. Stay safe out there! It’s the 21st Century.