There is no denying that cryptocurrency is among the hottest investment products today. But the rise of cryptocurrencies has also made it a hot commodity for scammers. This fact is why avoiding a cryptocurrency scam is so essential.
What Is a Cryptocurrency Scam?
Now, there are more than 43 million users on Coinbase. But despite the hype surrounding their platform, millions of people are still unsure what cryptocurrencies are. If you have invested in cryptocurrency, you need to protect your wallet from scammers looking for ways to steal your Bitcoin, Ethereum, or other cryptocurrencies.
Usually, people get scammed online by people who pretend to be agents that will introduce them to cryptocurrencies, but they have lost hundreds or thousands of hard-earned dollars before they know it.
Types of Cryptocurrency Scams
Cryptocurrency is not a scam. However, be very careful with fraudulent transactions that prey on people’s lack of knowledge and experience in this field. Here are some common frauds you should avoid at all costs.
Fake Cryptocurrencies
One of the most common scams people use is presenting a new kind of app or cryptocurrency that is an alternative to popular cryptocurrencies such as Bitcoin. Victims are usually lured into believing that it’s too late to invest in established cryptocurrencies and that they should bank on something new. You will be told that your money will be transferred to your e-wallet when in fact, it will be directly transferred into the agent’s bank account.
Ponzi Schemes
It is common for pyramid schemes to claim that cryptocurrencies are backing their operations. Investors will usually be promised 30 percent profit in only two weeks for a minimum amount of capital. Because of this, a lot of people invest millions. To protect your money, it is best not to use an app that is not registered with government agencies in charge of cryptocurrency.
Scam Websites
Websites like Bitcoin Revolution usually solicit investments from people and use fake endorsements from celebrities and other well-known people to entice investors. Usually, these websites offer automated trading with a success rate of 80 to 99 percent. The reality is that these websites do nothing more than swindle users of their funds.
Giveaways
In 2020, hackers took over the accounts of Barack Obama, Bill Gates, and Elon Musk in an effort to scam people out of Bitcoin. This fraud happens when scammers use the verified accounts of personalities and encourage people to send them Bitcoin. They are promised that they will get double their money back.
This scam is usually done by fooling people that personalities just want to give back to their followers, but the fraudsters actually collect all the money. This type of scam also happens when an impostor account makes it seem like they are the real person that’s saying it. When you see giveaway tweets or posts, always question who posted these messages. As much as possible, avoid acting on the post until you know whether it’s legitimate.
Avoiding a Cryptocurrency Scam
Here are effective ways on how to spot and avoid a cryptocurrency scam.
Do Not Fall for Get-Rich-Quick Promises
Cryptocurrencies are extremely volatile. If you do not want to fall for a Bitcoin scam, do not invest in getting-rich-quick scams. When you invest in any cryptocurrency, there is a chance you will lose your money. So if an agent guarantees that you will get your initial investment in weeks or months, they are very likely lying. This tip can be applied to cryptocurrency scams and applies to most other investment opportunities as well.
Only Buy From Licensed Exchanges
There are clear regulations on platforms in which you can buy cryptocurrencies. So if you really want to be sure that you are putting your money in a safe place, only buy from accredited e-wallet providers.
There Is Recruitment Required
Bitcoin and other digital currencies need to be bought and stored in a digital exchange or wallet with the intention of selling it in the future at a higher price. Considering this fact, there is no need to invite your friends and other people to invest in it so you can build a network of people “under” you.
If someone offers you this type of scheme and tells you it is a cryptocurrency investment, they will probably swindle money from you.
