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6 Cryptocurrency Scams and How to Avoid Them

6 Cryptocurrency Scams and How to Avoid Them

22 Nov 2020

Reading Time: 3-4 minutes

Cryptocurrency is on the rise -- there is no denying that. By 2030, Bitcoin will be worth almost $400,000. Even mainstream companies like Paypal want in on the share of the profit. With the surge of interest comes an influx of newcomers, who, against the practical advice of more seasoned owners and traders, might fall victim to malicious scammers waiting to prey on their naivete. 

Regardless of how long one has been into cryptocurrency, scams are a perpetual threat. After all, the only thing worse than losing one’s hard-earned coins is losing it to a scammer.

Common Cryptocurrency Scams

1. Fake Wallet Scam 

Fake wallet apps and sites are some of the most ubiquitous cryptocurrency scams out there -- people sign up for these wallets and deposit coins that they will never get to access again. Fake wallets are prevalent they even appear in Google searches.To avoid falling victim to this racket, make sure to get wallets only from official sites. Still deciding which wallet is best? Refer only to lists and articles from trustworthy review sites.  

2. Fake Exchanges Scam

Nothing good ever comes easy, and fake exchanges scams are an example of this -- this scam features an exchange that promises high returns, only for it to disappear after a few months, along with the entirety of the funds. To avoid fake exchanges, make it a point to buy and sell cryptocurrency only in reputable exchanges.

3. ICO Scams

Cryptocurrency is, at its core, a place of endless innovation. While Initial Coin Offering (ICO) is one of the most effective ways for entrepreneurs to raise capital for their cutting-edge projects, it is also a convenient avenue for fraudsters to scam investors. By creating a seemingly-legitimate website that looks like an actual ICO, scammers can trick people into depositing coins. Sometimes, as is in the case of Centra Tech Inc., ICO scams can be so intricate that it involves celebrities, a phoney team, and an imaginary product. When investing, remember: the key is the whitepaper. Read, analyze, and research.

4. Phishing Scams

Phishing has probably existed for as long as the internet’s been around. In cryptocurrency, phishing takes the form of emails, and fake websites. To dodge this bullet, don’t trust emails that ask for private information, never install software from untrusted sources, and always check for HTTPS. This advice sounds like a no-brainer, but remember; scammers are getting more and more sophisticated -- emails and websites look exactly like the real thing. 

5. Cryptocurrency Ponzi Schemes

Cryptocurrency Ponzi schemes are just like the real-life ones -- offering people high returns for deposits. The more you deposit, the more they claim you’ll earn. People receive commissions from recruiting, or selling to others. OneCoin is probably one of the most high-profile examples of such cryptocurrency ponzi scams. To avoid, do not participate.

6. Social Media Cryptocurrency Scams

Yes, social media is a great place to learn more about cryptocurrency and to stay-up-to-date with the latest cryptocurrency trends, but it’s also a hotbed of scams and schemes. Scammers have hijacked well-known channels such as SpaceX and FrontpageTech, and promoted Bitcoin giveaways. It’s best to steer clear of these giveaways, regardless of who’s broadcasting it.

Cryptocurrency Scams: Spotting the Red Flags

Scammers are cunning, but it’s possible to always be one step ahead. Some of the most common flags that cryptocurrency owners and traders need to look out for are sites/exchanges that:

  • Offer temptingly high returns,

  • Have scam reports in forums,

  • Offer incentives for inviting new users, and

  • Are asking for private keys and personal information.

Remember the golden rule: if it’s too good to be true, it probably is. Protect yourself, and protect the community by reporting malicious sites and companies.

Have you, or anyone you know, been a victim of a cryptocurrency scam? Share your experiences in the comments section below.

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