Did you know that every year people lost billions of dollars due to cryptocurrency scams? That may sound crazy, but actually, it is likely to be just the tip of the iceberg.
You want to try to steer clear of all these scams and not fall victim to them. The best way to do that is by knowing the five most common scams that are out there:
Fake cryptocurrency exchanges
Cryptocurrency exchanges are platforms that allow people to trade cryptocurrencies or even buy bitcoin with credit card. However, as the popularity of cryptocurrencies has grown, there is an increasing number of ‘fake’ exchanges out there that are designed to trick people and take their money.
On the surface, these fake exchanges will resemble the real thing, and it is difficult to tell them apart. That is why you should always check up on them and try only to use reliable and well-established cryptocurrency exchanges.
Fake investment schemes
Some swindlers peddle various types of fake investment schemes – including variants of Ponzi schemes. In general, these schemes promise hefty returns to convince people to invest. As you can imagine, the gains never materialize, and eventually, the person behind the project skips out with the cash they’ve collected.
Being skeptical will help you to avoid most fake investment schemes. Don’t be greedy, especially if a program claims to offer ‘guaranteed’ results or returns that are too impressive.
Fraudulent Initial Coin Offerings (ICO)
Over the years, ICOs have frequently been misused to execute fraudulent ‘pump and dump’ schemes. In these schemes, the scammer will make lots of claims and promises about the value of the ICO to drum up interest and increase its value. However, once the coin price is driven up, they’ll immediately dump the stock and make a quick profit.
It should be noted that ICOs are always going to be risky, but not all are outright fraudulent. To avoid the ones that are scams, you should do your homework and research the ICO thoroughly before investing.
Classic email and phone scams
Many cryptocurrency scams nowadays take the form of ‘classic’ email and phone scams. For example, someone may email or call you claiming that the IRS needs you to pay your taxes, or pose as a friend stuck in a foreign country and ask for money.
As a rule, it is always best to be skeptical of any email or call that requests you to transfer cryptocurrency. If you want, you could verify the origin of each call or email; however, it is worth noting that most legitimate authorities wouldn’t request payment in cryptocurrencies.
Malware
Over the last few years, it has become clear that malware is a massive threat to cryptocurrency investors. Hackers can use malware to gain access to cryptocurrency wallets and drain their funds.
To ensure you don’t end up falling victim to malware, you need to protect yourself. The best way to do that is to download a reliable malware scanner and make it a point to scan your devices regularly.
Knowing and being able to recognize these five common scams will make them far more comfortable to avoid. However, don’t let that lull you into a false sense of security, as there are other types of cryptocurrency scams out there.
All said and made your best bet is always to take it slow, double-check everything, and try not to be too greedy. Remember that if something sounds too good to be true, odds are it probably is not valid in the first place.