What are Cryptocurrency Scams & how to avoid these Crypto Scams?

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What is a Crypto Scam?

First, let’s define what is meant by the crypto scam. In general, the concept of fraud has come into use with the increase in cases of deception and the growth of fake investment projects on the Internet. Attracting gullible novice investors and promising quick, simple and high earnings is the simplest fraud scheme. According to Forbes data, about 80 thousand crimes were registered in the United States alone. Cryptocurrency scams differ from conventional financial fraud only in the scope and methods used to deceive.

woman holding Bitcoin

1 – Fake exchanges, wallets and projects

This is one of the most straightforward types of fraud. Criminals offer a product or service designed to trick people into money. In recent years, there have been quite a few fraudulent exchanges, fake wallets and coins that cost nothing. Sometimes they look like a well-known, recognizable company.

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Very often you may be offered to repeat the behaviour of successful traders using crypto copy trading. We advise you to trust only respectful companies, for example, https://zignaly.com/crypto-copy-trading. This way you can be sure of the safety of your investments. Others are just trying to look professional in order to gain trust. In any case, if hackers receive the money, there is a little chance you will hear anything from them again.

The best way to keep yourself safe from these scams is to take your time and check everything thoroughly. Follow only trusted links you know, listen to community comments and what other people have to say about these services. If you are just confused by something, you better trust your instinct. Fraudsters often copy the account of a famous person and promise to transfer money to those who sign up for the program.

 

2 – Malicious software

There are a huge number of virus programs on the Internet that are developed specifically to steal personal data. The methods of stealing data can be completely different, for example, various utilities that write off the data entered by the user. This is how logins and passwords are disclosed. There are also special programs that scan the clipboard. The principle of their work is as follows: when the address of your crypto wallet is entered into the required field, the malware scans it and changes it to the address of the hacker’s wallet.

 

3 – Financial pyramids

The pyramid is a common type of scam that is popular not only in the cryptocurrency field. The point of pyramids is that they require a regular inflow of investments. Incoming investors usually make an initial investment upon request. Newcomers are promised incredibly large profits, but only the very first investors who are engaged in attracting new members to a fraudulent scheme receive income.

At the top of the pyramid is its creator, to whom the main income comes. As soon as the required amount is collected, the creator of the pyramid disappears without a trace. And everyone who was at the foot of this chain remains not only without the promised profit but also lose their investments. An example of such a pyramid scheme is the well-known Bitconnect project. Billions of dollars were collected from platform investors, but as a result, they were left with nothing.

 

4 – Pump and dump

Another type of scam is creating a buzz around little-known and unprofitable coins. People with authority start buying such coins and then attract other investors, creating a buzz. After all, if everyone buys, then it is profitable! All this leads to an increase in the price of little-known coins, creating a fear of missing out on a good opportunity to earn money. An increasing number of investors are trying not to miss this attractive opportunity.

Upon reaching the peak of this promotion, the founders of the scheme discard their coins, that is, they sell them at a higher price than they were original. In order not to fall under the influence of such a scheme, we advise you not to pay attention to the massive excitement around little-known coins. It is important for a crypto investor to remain calm and judicious, not succumbing to dubious investment proposals, but to carefully study the market.

 

How to avoid Crypto scams?

It often happens that you are following the trusted guidance of someone with a lot of experience, you can still fall victim to accidentally visiting a fake site. Many websites have emerged that resemble the original and active companies.

One of the most common scenarios is following the leadership of someone with presumably a lot of experience. There are many twin sites on the internet that you shouldn’t trust. The first signals to pay attention to are the absence of HTTPS in the site address and the absence of a locker in front of the page address. First of all, pay attention to these two signals when going to any site where you plan to leave your personal data.

Another trick of scammers is using a fake URL. It may look the same as the real one, but not be so at all. Most often, fake addresses are made by replacing the number 0 with a letter. A fake platform will not lead you to make money on investments. There is a great risk of losing your investment.

 

The bottom line

This guide covers the most common forms of cryptocurrency scams. However, criminals are very smart and are always looking for new ways to fool unsuspecting investors. The best advice in this situation is not to rush, read reviews and never invest money in emotions. By following these rules, you will avoid most of the dangers.

 

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