Cryptocurrency is becoming a common form of investment in today’s era. But it comes with its fair share of risks. As this investment medium becomes more common, the chances of your accounts becoming compromised become greater.
“Despite its growing popularity and acceptance, the volatile nature and lack of regulation of cryptocurrencies have left many investors vulnerable to fraudulent practices and losses,” says Silver Miller, a cryptocurrency lawyer free consultation firm. So, does that mean that you have more chances of getting scammed? Not really. Here are ten common cryptocurrency scams and ways to detect them so that your digital investment stays secure. Take a look.
Cryptocurrency Ponzi Schemes
This is perhaps the most common yet the hardest-to-spot scam. In this scam, the scammer promises you a high return with little to no risk, which is unrealistic. Their advertisements have attractive terms such as ‘secret trading formula’ that they never disclose. They usually have many people backing their claims who appear to have achieved success through them. Whereas in reality, these reviewers might not even exist. They will also ask you to recruit more investors and promise you a cut, which is a dead giveaway of a Ponzi scheme. If you spot any of these terms, avoid investing in them.
ICO Scams
ICO, or Initial Coin Offering, is a fund-raising method used by many startups or small businesses to raise funds by issuing tokens such as bitcoins against the investment. The investors can enjoy profits from these businesses. However, the scammers will never give you any profit and will scam you out of large sums of money and disappear. They usually advertise their products as unique and groundbreaking and offer you an unrealistic profit margin. They also lack a solid existence – online or offline – so researching them can tell you if you should avoid investing in their company.
Phishing
You have to work with your account, cryptocurrency exchanges, or wallet providers, and phishing attempts made by scammers can trick you into giving up sensitive information, such as account login details and passwords, or even private keys. As a result, your account will be compromised, and you’ll lose money. To detect them, check their website carefully. Are they impersonating legitimate organizations by using their name or lookalike logos? Are they asking for sensitive information that they shouldn’t? Are they using fear or greed to make you give up that information? Stay away if any of this seems to be the case.
Fake Wallets
You have to use digital wallets if you invest in cryptocurrency. Scammers impersonate original wallets or even create fake ones to collect sensitive information and withdraw money from your account. They usually create a fake “Account Setup” interface and ask you to enter your account details. Once you enter the information, they access your cryptocurrency fund and whisk it away. To avoid them, only use wallets from authentic sources and download the wallet from the developer’s website. Check the wallet reputation and app permission before allowing it access to your device.
Fake Exchanges
This scam is similar to a fake wallet in which scammers create a system that looks like a genuine exchange platform and convince you to deposit the amount. Once you complete this step, your funds become unavailable, and the scammers transfer it to their account. To identify this scam, check the website’s reputation by a quick online search before investing. Make sure their website has security enabled. If not, stay away from it. If possible, only use reputable and established exchanges to prevent getting scammed.
Malware and Ransomware
Malware and ransomware have always been a threat in the digital space. With the growth of cryptocurrency, it’s become an even bigger problem. These are small, malicious programs installed into your system through email attachments, phishing links, or website downloads. Some of these programs specifically target cryptocurrency wallets on your website and steal the information. Ransomware also encrypts files in your device and then asks you to pay in Bitcoin if you want them decrypted. To prevent these, use antivirus software on your device. Don’t open suspicious links or download anything from questionable websites. Always backup your data and keep them safe to access them if the other copy gets compromised.
Social Media Giveaway Scam
Scammers target this type of scam toward the masses, and more people can fall for it if they don’t know about it. The scammers usually impersonate a celebrity or a legitimate brand by creating fake accounts. Then they announce a false promise of a giveaway with unrealistic promises, often asking you to send them free cryptocurrency that they will double or triple before returning. They can also redirect you to a registration link where they’ll ask you to enter your sensitive information. The scammers will then use the information to access your account and steal your cryptocurrency.
So, how to prevent this? Check the authenticity of the social media account hosting the giveaway. Read the giveaway conditions carefully to identify unrealistic promises. Check the celebrity’s official page or inquire about the giveaway to learn if it’s legit.
Navigating the cryptocurrency landscape can seem a bit daunting, especially if you’re not well-educated on the matter and security concerns. There’s indeed a risk of getting scammed, but if you stay alert, this can be a pleasant and profitable experience for you.