Cryptocurrency is quite an interesting topic now and people are investing more in these cryptocurrencies and there are many nations that are looking forward to accepting digital currency along with fiat currency. But what makes digital currency different from a cash or other payment methods? Why should you invest in cryptocurrency? What are the crypto scams associated with it? Let us discuss all these topics before you start to invest in cryptocurrency.
What Is Cryptocurrency?
Before delving further, let’s start from the base. To start with, cryptocurrencies are digital currencies that can be bought, invested, and maintained digitally. There is no use of hard cash. These are also like any normal currencies issued by the central bank. In cryptocurrencies, there are special digital credentials provided that the user has to use to operate. They work on something called “blockchain”, where every transaction made is recorded in a digital ledger by using encryption.
People use digital currency for fast payment and to avoid transaction fees. Others use it for cryptocurrency investment as holding crypto increases its value.
To buy digital currency there are various online exchanges where the user can buy the crypto they wish for and then for the storage, they will have to get hold of a wallet. A hardware wallet acts best when it comes to storing cryptos as they are much more safer than online wallets.
In this whole process of buying and investing digital currencies, there can be various cryptocurrency scams and there have been many. So let us have a look at how that can be prevented.
Types Of Crypto Scams & How To Avoid Them
Scammers and hackers will always find new channels to steal your money with the help of cryptocurrency. One sure sign of a crypto scam is anyone who says that the payment can be only made with digital currency. In fact, anyone who tells you to pay by wire transfer, gift card, or crypto is a scammer. Of course, if you pay them through these options, there’s almost no way you can get that money back. Which is what the scammers count on. Here are some cryptocurrency scams to watch out for.
Business opportunity and investment scams
- There are certain organizations that promise you to earn lots of money in a short time and you can also achieve financial freedom.
- Some scammers ask you to pay in digital currency for the right to appoint others into a program. If you do, they say, you’ll get paybacks and rewards that will be paid to you in cryptocurrency. The more crypto you pay, the more money they promise you’ll make. But these are all fake promises and false guarantees.
- Some scammers start with unsought offers from supposed “investment managers.” These scammers assert that they can help investors grow their money if the investors give them the cryptocurrency they’ve bought. But once the victim log in to the “investment account” they opened, they cannot withdraw the money without paying.
- Some malicious players list scam jobs on job websites. They promise you a job (for a fee) but end up taking your crypto or personal data.
Often emails are sent by the scammers that say they have all your personal information. Then, they threaten to make them public unless you pay them in digital currency the amount they demand. Beware of that. This is blackmail and an attempt of criminal extortion. Report it to the FBI immediately.
There are many instances where the scammers announce ICOs that are fake and in turn, they find a way to steal all your cryptos. So do not fall into this trap. Since nothing is private on the internet and cryptocurrency solely deals with the internet there are many loopholes that the scammer uses and steals the cryptos of the investors.
Social media scams
While reading an email, tweet, text, if you get a message on social media that asks you to send crypto, it’s a scam. That remains true even if the message came from people you know, or was posted by a celebrity you follow. Their social media accounts might have been hacked. Report the scam immediately, and then tell the FTC.
Fake mobile applications
Another common technique through which scammers prey on investors for cryptocurrencies is through fake applications that one can download in Google Play. There are provisions for stakeholders to identify these fake applications and abolish them but that does not imply that the apps are not affecting many bottom lines. According to Bitcoin news, there are thousands of people who have already downloaded these fake applications and have been victims of these apps as well.
While these apps are a greater risk for android users, every investor should be knowledgeable about the possibilities. They should look for spelling errors in the name of the apps, their logo design, and the premiums of these applications. First, take notes and then consider downloading.
How To Report Crypto Scams?
Here is a list of organizations where you can report crypto scams and frauds:
- the FTC at ReportFraud.ftc.gov
- the “Commodity Futures Trading Commission” (CFTC) at CFTC.gov/complaint
- the “U.S. Securities and Exchange Commission” (SEC) at sec.gov/tcr
- The crypto exchange that you used to buy your cryptos.
Largest Crypto Scams List 2021
The concept of cryptocurrency can be new but the techniques are similar to that of the classic cons. Let us have a look at some of the cryptocurrency scammer list 2021. Other than that there have been many cryptocurrency frauds in India as well. Let us get started:
Scam 1: Social Media con artist
Hacking passwords and getting access to all the accounts is a common and traditional way used by most scammers. One such scam was witnessed in January 2021, where the scammers posed as Elon Musk and posted links to some Bitcoin wallets that offered to double any Bitcoin that was deposited in that wallet.
Scam 2: DeFi rug pulls
DeFi stands for decentralized finance. While some DeFi platforms have noble intentions some turn out to be scams. Here the investors are tricked into locking their digital currency with renowned DeFi platforms like Burn Vault Finance and are promised to receive excellent rewards.
Crypto scams have become just as common as any other scam. The hidden web is all operated and run by these stolen cryptos and since crypto exchanges maintain complete anonymity, revealing the scammer becomes difficult. So everything is on the users. They should deal and invest in crypto with their eyes and ears open and make a proper evaluation before taking any steps.