While bitcoin started back in 2009 as a mysterious and cryptic new form of currency, today, crypto exchange markets have grown in popularity, seeing newfound popularity among mainstream investors. Analysts at the renowned financial company Bloomberg estimate that bitcoin will increase in value to a price of $400,000 during the last quarter of 2021.
The pandemic has weakened traditional markets, forcing many large investors to invest heavily in bitcoin as a safer option for a potential investment payout. As with any entirely digitized, internet-dependent platform, bitcoin scams evolve at the same rate as technological advancements. We offer an overview of cryptocurrency scams that you should look out for as a new or seasoned investor.
Beware of These Four Cryptocurrency Scams
Because cryptocurrency exchanges are outside the scope of government regulation, they offer an exciting and financially liberating investment venture. On the other side of the coin, bitcoin scams are rampant, so here we’ve provided four common cryptocurrency scams to watch out for.
Fake Cryptocurrencies and Cryptocurrency Exchanges
While bitcoin may be the first (and still one of the most popular) cryptocurrencies, it is now one of more than 7,000 being exchanged today. Additionally, Forbes documents over 200 operating cryptocurrency exchanges to date.
Therefore, a common scam that has become even easier to pull off is the creation of fake cryptocurrencies and cryptocurrency exchanges. Scammers will try to draw you in by advertising promising new cryptocurrencies that will surely surpass the value of bitcoin or other real cryptocurrencies.
They might also create an entire exchange platform that appears real, so you will invest without investigating the site’s legitimacy. A good rule of thumb for both cryptocurrencies and cryptocurrency exchanges is to invest with the most popular exchanges, using the most well-known cryptocurrencies.
Phishing Scam Emails
In the age of technology, we rely heavily on emails for communicating with our jobs, accessing and checking our bank accounts, and many other personal activities. Therefore, phishing scams are among the most popular and effective methods to trick you into losing your money.
Phishing scams come in various forms.
For bitcoin scams, they are emails containing official-looking links asking for personal information like your bank account or, for cryptocurrencies, your online crypto wallet. If you are a wallet holder, you may receive emails from hackers asking for your wallet key. Once they have that key, they are free to take all the bitcoin or other cryptocurrencies you store there.
Another email scam is when hackers send blackmail threats, stating they have sensitive information on you that they will reveal publicly if you don’t give them your wallet key. To avoid these phishing scams, make sure the links lead to an encrypted and secure site, which means it does not start with HTTP. You can also verify that the email’s sender is indeed who they say they are by calling or investigating the email syntax.
Hackers create malware that invades your computer, personal files, and will leave you completely exposed to robbery and identity theft. In the case of cryptocurrency scams, hackers use a form of malware known as Trojans in which they present a promising new bitcoin mining program or application that you can download through an insecure link.
Clicking on the program to download will infect your device or expose your bitcoin wallet, thereby giving hackers free access to any cryptocurrency therein. Just like with phishing emails, the best way to avoid this scam is to avoid clicking on links you aren’t familiar with.
Social Media Scams
Social media is the most popular and widespread phenomenon on earth. You’d be hard-pressed to find someone who doesn’t have a Facebook or Twitter account or doesn’t use YouTube for music, tutorials, or streaming.
Since we are on social media every day, we are constantly bombarded by advertisements and news announcements. Scammers utilize social media to entice large populations of social media users to invest or send money to a seemingly legitimate cause.
Hackers create fake social media accounts to ask for bitcoin investments. They will also hack into famous people’s accounts and post bitcoin investment requests to their thousands of followers. Hackers also make scam videos on YouTube promising bitcoin freebees with malware links under the video.
The most recent example of this scheme was with Twitter in July 2020, where hackers accessed numerous famous tech giants, professional sports players, and well-known companies’ accounts to plead with followers to transfer money to a blockchain address. Within minutes of these posts, hackers received hundreds of different transfers.
Beware of the latest Cryptocurrency Scams
Cryptocurrency scams will increase in correspondence with cryptocurrency exchanges’ growing popularity. The best way to ensure that you maintain a stronghold over your investments is to be vigilant for the various cryptocurrency scams we’ve mentioned above.