Cryptocurrency Scams: How to Protect Yourself

Cryptocurrency can be a lucrative endeavour, but it's also full of scams. When engaging in the new digital currency mechanisms known as cryptocurrencies, it's important to be aware of the risks involved. Scams are everywhere online, and cryptocurrency exchanges are no different. To protect yourself, it's important to do your research and be aware of the common scams.

When looking for digital cryptocurrency companies and firms, experts recommend that you confirm that they are blockchain-powered, meaning that they track detailed transaction data. Also, check that they have solid business plans that solve real problems. Companies should specify the liquidity of their digital currency and the rules of the ICO. There should be real people behind the company.

If the startup you are researching lacks some of these characteristics, think about your decision more carefully. You may be following sound advice from someone with a lot of experience and still become a victim by accidentally visiting a fake website. There are a surprising number of websites that have been created to look like genuine and valid companies. If there is no small padlock icon indicating security near the URL bar and no https in the site address, think twice.

Another common way scammers trick cryptocurrency investors is through fake apps available for download through Google Play and Apple's App Store. If someone on these platforms asks you for even a small amount of your cryptocurrency, you will likely never be able to get it back. Just because others respond to the offer, don't assume they are not bots either. You have to be very careful.

Unfortunately, there are many ways in which some internet users take advantage of insecure computer systems to mine or steal cryptocurrencies. Since some celebrities and public figures talk about cryptocurrencies quite often on their social media accounts, scammers organise fake sweepstakes using their names and likenesses to get money from people. These types of cryptocurrency scams can be likened to multi-level marketing or Ponzi schemes. A scammer then directs someone to an investment opportunity in bitcoin or cryptoassets, or in forex trading.

Sometimes, a scam company will launch a new coin or cryptocurrency token, claiming that it solves some critical unmet need in the market. Arguably, young people tend to be more susceptible to cryptocurrency scams because they are more risk-prone and are more active and fluent with online banking and apps such as Venmo and Cash App. During COVID-19, ASIC has seen an increase in reports of consumers losing money in cryptoasset (or cryptocurrency) scams. When one of these trusted connections demands cryptocurrencies for any reason, it can often be a sign of a scam. Thanks to the anonymity of the internet, scammers blend into the cryptocurrency scene with claims that may seem plausible. A sure sign of a scam is anyone who tells you that you have to pay with cryptocurrencies. In fact, anyone who tells you that you have to pay by bank transfer, gift card or cryptocurrency is a scammer.

Of course, if you pay, there is almost no way to get that money back. Which is what the scammers are counting on. Here are some cryptocurrency scams to watch out for: fraudulent websites; fake apps; celebrity impersonation; multi-level marketing schemes; fake coins; phishing; gift scams; and investment scams. Rather than tightening the reins on cryptocurrencies themselves, a more tactical solution might be to better educate the public about the growing cases of cryptocurrency-related scams. If you suspect you may be the target of a cryptocurrency scam, reporting it can keep cryptocurrency exchanges safe for all users.

Faisal Abdul
Faisal Abdul

Extreme internet specialist. Wannabe twitter junkie. Friendly zombie geek. Freelance twitter buff. Professional student. Passionate tv evangelist.

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