As the popularity of digital currencies tends to increase and evolve all over the world, more & more people continue to join the cryptocurrency bandwagon; it becomes easy to scam cryptocurrency users as the number increases. Although it is never possible to be able100% safe from hackers and scammers but there are various precautions which you can take to reduce and minimize the risk of getting scammed.
With these tips which you get in this article, you will be able to protect yourself and to lower the risk of getting scammed significantly.
How to Protect Yourself From Crypto Scams
One key principle which you must uphold when using the internet is to be able to protect yourself, your details, your privacy, and your information. The reason is that there can be a breach of information and your confidential details would be exposed to the public, this is why you should protect yourself and in order to be secured on the internet.
A key factor which people do not know is that all crypto scams look different but they are actually similar in essence. Newbie cryptocurrency users always fall gullible to scams and this has retraced their steps towards acquiring crypto coins.
With the use of common sense, it is possible to avoid most of these scams. At times, you can get skeptical and critical when analyzing cryptocurrency offers for investments, also, you should prepare your mind because certain scams will surely appear as you show more interest cryptocurrencies.
One simple rule which you should have on your mind is that; “If the offer sounds too good to be true, it probably is a scam.” This is the same quote we used in our article on the tips you must follow before selling or buying a home with cryptocurrency. Without mincing words, here are some of the most commons scams which every cryptocurrency enthusiast should be aware of.
Top 5 Cryptocurrency Scam Which You Should Avoid
Most crypto investors are not aware of frauds in the crypto industry because of the rewards which were promises to them. Here are the top 4 crypto scams which every cryptocurrency trader and investor must avoid.
#1: Cloud Mining Services
Cloud mining scam websites are always on the lookout to defraud crypto mining community members of which the vulnerable amateurs fall for. If you are in the camp of people who prefer cloud mining to the hardware mining, you’ll need to be extra vigilant and careful because this is the easiest way of getting scammed.
There are several tricks which cybercriminals and scammers would do to get potential victims and cover their tracks. One of such tricks is by keeping their domain and WHOis information hidden.
Another trick they use to get victims is by registering their crypto cloud mining company in reputable places like New York, Georgia, Washington, London but all there are all foreign residents who wouldn’t register it in their country to avoid being caught.
Bitcoin and MLM (multi-level marketing) schemes also make use of the aspect of network marketing (which is popularly referred to as referring or direct selling), through this, they make bitcoin and other cryptocurrencies to sound like a scam.
Multi-Level Marketing schemes make promises and exaggerated claims that makes the user feel fulfilled that he can make his money quickly and make profits from his invested capital.
Just as mentioned, these schemes can easily be identified very quickly because they all have something in common. They are not actually selling any service or product, instead, they invite you to join a complex group with other users; you’ll be required to make some payments and fees; after that, you will be promised to move from a particular level to another. After the end of everything, you will get scammed in the pyramid scheme.
#3: Bitcoin Investment Packages (BIPs)
Bitcoin investment packages (BIPs) is another type of scam in the Bitcoin (BTC) and cryptocurrency sphere. The Bitcoin investment schemes are not really different from the cloud mining scams.
In a real sense, they promise a return on investments and they would pay out in small or in daily returns until all payment activities would stop and they abscond with the investment funds of users. Bitcoin investment scams are different from Ponzi schemes.
Usually, these “investments” seem extremely profitable and lucrative at the first instance because the very first set of people to register to get the benefits as they get paid, then as testify and tell people of their gains, more users tend to join and invest to get profits from the scheme, but these users begin to face problems when they tend to withdraw their earnings, in essence, the money invested disappears.
#4: Identifying Fake ICOs
Identifying fake ICOs gets harder because the industry is getting more sophisticated; which makes it difficult to identify the genuine ones from the scammers. An Initial Coin Offering (ICO) which looks to sells coin must have a piece of detailed information which is clear and comprehensible.
An established and reputable company will not be able to scam you if it is bound by the government regulations of a country and if it compromises such license, it would be apprehended and unlikely to be able to run far. In addition to this, a good ICO must have a good presence on social media, through this method you can search for genuine and honest reviews.
Pump and Dump schemes is another type of scam which you must avoid. Pump and Dump scheme is all about inflating the prices of less popular crypto coins by spreading false information about that coin in a bid to get the interest and enthusiasm of crypto users to actually invest their capital in it.
The culprits (scammers) in these schemes are people who are known as the “pumpers.” They are the market players that “pump” a token (most often, the system is to make use of a cryptocurrency which is not popular or known by people).
These players make purchases of significant amounts of these coins and make attempts to ‘pump’ them and hype them across numerous channels such as the social media platforms like Facebook, YouTube & Instagram to get users who would fall for it. Once the token’s worth has artificially risen, they would dump this token in the hands of unsuspecting investors and depart, hence, the tokens become useless.
To avoid this type of scam, you can simply check the market caps of coins if they are low, but if the coin has a high price and sudden random surge, you should know that it was artificially done by fraudsters to get victims.
Zara is a business consultant, life coach, content creator and a media entrepreneur. On this blog, I share various tips as I inspire my readers and provide business ideas that would generate revenue for them. Feel free to read and share my posts with your friends.