Scams In The Cryptocurrency World And How to Avoid Them

Whether you are an experienced user or a complete newbie in the world of cryptocurrencies, you need to be aware of a number of different scams in this field. Once you know what they are, you will have a better chance of never running into one. Let us go over the main types of crypto scams and how to avoid them.

Fraudulent ICOs & Pyramids

A vast majority of all tokens ever launched have been proven to be scams. This may discourage some people from investing in any kind of a token sale, but scams definitely do not represent the industry as a whole. If you decide to participate in an ICO or anything similar, you need to make sure you are investing in a trustworthy project with a solid foundation, a team of real people actively working to achieve their objectives, and that it’s not a pyramid scheme.

Bitconnect is the most well-known example of a cryptocurrency pyramid scheme. It had achieved great popularity while providing enormous payouts to its users, but when the tide turned the coin quickly lost its value. It has taught investors an important lesson about the ICO market, and we suggest you avoid projects like that, too.

Scambots & Cryptocurrency Generators

Another type of scam commonly found on social media platforms like Twitter or Instagram is a scambot. Accounts pretending to be the likes of Elon Musk, Vitalik Buterin, or other famous media personalities approach followers and offer them a seemingly lucrative deal. In return for some amount of coins or tokens, they promise to give back much more shortly.

Moreover, there are other bots such as Bitcoin generators that ask users to lend them some coins to earn interest. However simple these generators may be, many people get tricked into losing their funds this way, as well. Do not share your private keys with anyone, and beware that coins cannot be returned once transferred.

Phishing Sites & Fake Wallets

As with all other kinds of online technology, cryptocurrency users are vulnerable to phishing attacks. In this scam, malicious actors masquerading as trustworthy services and entities steal the user’s data by deceiving them into sharing their passwords, keys, and credit card information with a familiar interface. They can appear anywhere on the web or in your mailbox, so always double-check the URL and other credentials of the service before submitting any personal information.

Among cryptocurrency projects, fake wallets are some of the popular phishing sites around. Once a user submits their private keys to a fake wallet, they can lose their assets immediately. Thus, you should always verify whether the wallet you are using is legitimate by carefully investigating its public records and reaching out to the community.

Exit Scams

And finally, sometimes an established cryptocurrency exchange or a wallet simply disappears with the users’ money, which is called an exit scam. To avoid such situations it is vital to always keep your assets in secure wallet and never share your private keys. As long as no one has access to your keys, nothing can happen to your assets.

Constant Vigilance!

As you may have noticed, cryptocurrency scams are intertwined in such a way that makes it difficult to classify them. But it doesn’t change the fact that the market is currently moving out of its infancy, and there is still a lot of work ahead both in development and education. Stay positive but always keep a clear head when managing your crypto. A little extra caution will go a long way.