It doesn’t take long once you get involved in the new digital monetary systems known as cryptocurrency to realise that these transactions are risky. And we’re not talking about the market’s volatility. Scams abound on the internet, and bitcoin exchanges are no exception. Be aware of the risks of losing your bitcoin investments when you consider investing in various startups and exchange platforms. When studying digital bitcoin organisations and startups, experts recommend making sure they’re blockchain-powered, which means they track transaction data. Examine their business strategies to see if they are genuine and address real-world issues.
Here’s a look at some of the most common cryptocurrency scams and how to avoid becoming a victim as you explore bitcoin’s exciting future.
5 common crypto scams you need to know
Even if you are following a good recommendation from someone with a lot of experience, you can still become a victim by accidentally accessing a bogus website. Surprisingly, a large number of websites have been created to appear to be legitimate startup companies. If there isn’t a small lock icon near the URL bar indicating security and the site address doesn’t begin with “https,” be wary.
Even if the site appears to be the same as the one you expected to visit, you may be directed to a different payment platform. Assume you click on a link that appears to be from a legitimate website, but the attackers have created a bogus URL with a zero instead of a ‘o’. Of course, that platform will not be used for the bitcoin investment you’ve already considered. To avoid this, type the URL exactly as it appears in your browser. Additionally, double-check it.
Fake Mobile Apps
To deceive cryptocurrency investors, scammers also use phoney apps available for download on Google Play and the Apple App Store. Although stakeholders can typically immediately identify and delete bogus apps, this doesn’t imply the apps aren’t having an influence on many businesses. According to CNBC, tens of thousands of individuals have already downloaded fraudulent bitcoin apps.
While Android users are more vulnerable, every investor should be aware of the risks. Is there any obvious misspellings in the copy, including the name of the app? Is there an unauthentic look to the branding, such as an unusual colour or an incorrect logo? Take note of this and reconsider downloading.
Even if the email appears to be from a reputable cryptocurrency organisation, proceed with caution before investing your digital funds. Is the email identical, as well as the logo and branding? Can you verify that the email address belongs to the company? The ability to check on this is one of the reasons it is critical to choose a company with real people working for it. If you have any concerns about an email, speak with someone who works there. In addition, never visit a website by clicking on a link in an email.
Scammers frequently use ICOs, or initial coin offerings, to steal large sums of money. Don’t be taken in by phoney email or website offers. Take your time and examine every detail.
Unfortunately, some Internet users can mine or steal cryptocurrency using insecure computing platforms in a variety of ways. Learn more about how to stay safe and secure in this new market before you begin investing in cryptocurrencies.
Theft by Hacking
Cryptocurrency should, in theory, be a risk-free investment. All transactions must pass through a blockchain, which sends them across numerous computers and compares them to a database on each of them. A criminal would have to break into the majority of the computers in the chain to hack the system.
In reality, though, nothing is completely safe. Hackers have regularly identified ways to gain access to various sectors of the cryptocurrency economy, including exchanges, coin-mining firms, and digital wallets where consumers store their coins. Because crypto accounts aren’t insured by the Federal Deposit Insurance Corporation (FDIC), once the coins are gone, there’s usually no way to get them back.
There isn’t much you can do to defend yourself from such an attack. The most basic precaution you can take applies to all investments: don’t put all of your eggs in one basket. You can’t put your entire life’s money in one exchange or account, and you can’t lose it all in one day to hackers.
The giveaway scam is another popular variation. Fraudsters impersonate celebrities or well-known cryptocurrency investors, claiming to be able to assist small investors. They claim that if you send them your cryptocurrency, they will add some of their own to help you multiply your money.
Any money you send them actually goes straight into the scammer’s wallets. According to the FTC, scammers posing as Elon Musk defrauded investors out of more than $2 million in cryptocurrency over a six-month period.
What Should You Do If You’re a Victim of a Crypto Scam?
Be cautious if you notice any of these warning symptoms. Before you invest, at the very least, do some research about the company and the cryptocurrency. To learn about other people’s experiences, try searching for the company’s name plus words like “scam,” “complaint,” or “review.”
If you’ve already lost money to a cryptocurrency scam, there’s a low chance you’ll be able to reclaim it. However, by reporting the crime, you can help prevent the scammers from harming anyone else.
It’s a Catch-22 when it comes to decentralized finance. On the one hand, the absence of a single governing body allows for community-wide decisions and can lead to new opportunities. Bad actors, on the other hand, can perpetrate fraud and deceive naive investors in a number of ways if there is no uniform oversight.
Crypto investors, like those in traditional asset markets, can reduce their risk of falling victim to market manipulation by being aware of these scams and taking proactive precautions. Using reputable exchanges and conducting thorough research before making any investment decisions are examples of this.