Cryptocurrencies have elevated the world to a newer dimension with their digital and technological transition. After Bitcoin’s unexpected blow-up, everyone wanted to trade in cryptocurrencies and be part of the drive. There’s no lying that many raised their millions with their crypto investments. But it wasn’t too late until the Cryptocurrency scams started deceiving people and banking on their money.
In fact, the elderly citizens, minors, and inexperienced traders who leaped into the Crypto market without prior knowledge became easy targets for such frauds. It clarifies one thing: understanding the market is key to a secure stance – whether it is about the risks related to trading or fraud.
Addressing the need of the hour, let us focus on the predominant types of Cryptocurrency scams and absorb how to prevent them;
Table of Contents
1. Phishing Scam
It’s a scam you can discover within each domain. Phishing scams are frequently recurring, yet it gets tricky for a person to identify them because of how blindingly interesting the scammer makes it. They may send you an email claiming to be your trading platform, highlighting an issue with your e-wallet or investment. Further, they may suggest you log in from the link sent via email. However, once you tap on the URL and attempt to log in, they store your data and gain an entry into your account. Other Cryptocurrency swindlers may act as government officials or other esteemed authorities. Some may allure investors with a free giveaway offer, rewards, or other offers that seem too fancy and challenging to miss.
2. Tentative ICOs and NFTs
Let us just say that cryptocurrencies weren’t the only ones to catch the attention of a mammoth of investors. It was followed by ICOs and NFTs that attained, if not more, the same amount of engrossment. But, it came with a baggage of fraudulent operators too. Although ICOs and NFTs promised a commendable opportunity to the creators and investors, a lack of supervision made room for the deceitful participants.
For instance, ICOs fraud occurs with con artists representing a fake ICO and misleading investors into transferring money to hacked accounts. Some may crop up with ICOs that vanish after gathering funds from clueless investors. These scammers often depend on marketing campaigns, fake ads, and promotions to attract the audience they need to raise their cheating funds.
3. Free Cryptocurrency Giveaway
After giveaways became a fuss for the online space, scammers noticed how the audience engaged and shared details of the giveaway with their friends and families. As a result, they accessed giveaways as a means to draw innocent crypto investors and steal their money. Generally, a fraudulent cryptocurrency giveaway promises to reward an investor with free cryptocurrencies. However, they are asked to pay a small fee in cryptos to qualify for the win. Once the target makes the payment, the scheme’s operator starts ignoring them or disappears with the money.
4. Cloud Mining Scams
Mining is a crucial area that verifies the transactions and adds new cryptocurrencies to the blockchain. Many hoax platforms propose investors and trades to fund their mining practice and acquire enticing rewards. In reality, these scammers do not possess the hash rate or setup they boast of; earning rewards through them is an unworkable concept. This does not imply that all cloud mining firms are a scam. We recommend that investors run a quick check on a firm before investing in them.
Ways to Avoid these Cryptocurrency Scams
Listed above are four extensively executed crypto frauds that show how unfavorable and risky the market has turned towards the funders. Here are some bits of advice and clear red flags that market participants can preview before getting their finances involved;
- It’s a bad idea to invest in an opportunity that is beyond your understanding.
- It is okay to take your time to conduct your market research before initiating your trade.
- Prevent brokers or platforms who push you to a dead-end while trying to make a decision.
- Verify URL and senders before you go ahead and explore the link.
- Secure your cryptocurrency wallet with two-factor authentication.
- Be careful with ads and promos that seem catchy yet unrealistic.
- Don’t send your cryptocurrencies or funds to any unknown sources.
- Cold callers that aggressively sell their services are the ones you should avoid at all costs.
- Enhance the security of your trading account with a strong password.
- Offers that appear all exciting aren’t always real.
- If a giveaway scheme requires you to pay a fee to avail of the free reward, it is a fraud.
The Cryptocurrency market reveals a trader to an immeasurable amount of risk. But despite the volatility and Cryptocurrency scams, traders continue to disregard it for potential profits and growth. It is the practical step to take if the trader inculcates wariness. A trader shouldn’t have to fret or change their ways to avoid falling for scams. Instead, we believe in empowering investors with the shield of knowledge. Learn how these frauds work, and you’ll surely see them coming. If you accidentally turn a victim to a scam, you can seek fund recovery services to get your money back or report the swindler