Blockchain technology and virtual currencies are attracting more and more attention, and unfortunately this is luring bad actors who want to take advantage of this fast growing industry.

One of the unfortunate side effects of the cryptocurrency growth include cryptocurrency scams, which expose naive investors to loss of money and emotional heartache.

In order not to be affected by these scams, It’s essential to empower yourself with information and vigilance on how to safeguard your investments and hard-earned money.

To this end, I’ll explain what cryptocurrency scams are, their types, and possible ways you can avoid being scammed.

What Are Crypto Scams?

Cryptocurrency scams are dishonest plans intended to rob unwary people of their hard-earned money or bitcoin assets. These frauds come in various ways, and they frequently rely on people’s desire for fast money.

Common Types of Cryptocurrency Scams

There are different types of cryptocurrency scams, however some are more prevalent than others. These include:

1. Ponzi schemes

These scams promise big returns but need new investors to pay off old ones. Eventually, it fails, leaving many people with losses.

2. Phishing scams

Phishing scammers fool people with fake websites or emails to get private information. They usually request that you input your private key on these websites or emails. Once you do this, they will steal your cryptocurrency.

3. Fake Exchanges and Wallets

Scammers develop fake exchange platforms and wallets that look real but are actually made with the intention of stealing your money.

4. Initial Coin Offering (ICO) Scams

False ICOs advertise ground-breaking businesses but vanish after raising a sizable sum of money.

5. Social engineering

Scammers pretend to be powerful people such as the government, colleagues, friends, or tech agencies. These scammers take their time to build trust with the victims. This is to lure them into sending crypto currencies, or sharing their private keys.

6. Fake Cryptocurrencies

To lure naive investors, scammers develop their own cryptocurrencies with names that resemble popular coins.

It is vital for you to educate yourself because it is difficult to find and prosecute scammers due to the decentralised and pseudonymous nature of cryptocurrency.

How to know cryptocurrency scams

Recognising the warning indicators and red flags that frequently precede a crypto scam is crucial if you want to protect your investments and hard-earned money. We’ll explore the red flags that should make you sceptical in this part.

1. Making unrealistic promises

Making promises that sound too good to be true is one of the tricks crypto scammers use the most. Keep in mind that an investment opportunity is probably a scam if it promises exorbitant profits with little to no risk. Like any investment, cryptocurrencies have inherent dangers, so anyone who guarantees profits is probably trying to trick you.

2. Transparency Issues

Genuine cryptocurrency initiatives typically disclose information about their personnel, technology, and objectives. On the other hand, con artists frequently work in secret. Proceed with caution if you can’t uncover precise and verified information on the project’s developers, technology, or business plan. Projects that are legitimate have nothing to conceal.

3. High-Pressure Sales Techniques

Crypto scammers are notorious for applying intense pressure to force you into making a choice. They can assert that the offer is only valid for a short period of time or that failing to take action right away would result in significant losses. Avoid being duped by this urgency. Spend some time carefully researching and assessing any investment opportunity.

4. A lack of licencing and regulation

Regulations and licences are crucial safety nets in the realm of traditional finance. In the field of cryptography, the same idea holds true. Reputable exchanges and platforms frequently hold licences from or are registered with appropriate agencies. Always verify that a platform has the required authorization before using it. To escape detection, scammers frequently work on unregulated platforms.

5. Uncertain or Variable Fees

To mislead users, scammers may conceal high costs or frequently alter fee schedules. Read the fee structure of each exchange or service in detail before investing. Platforms that are opaque regarding their costs should be avoided since they may deplete your savings.

6. Pump and Dump Schemes

In pump and dump operations, the price of a cryptocurrency is artificially boosted to entice naïve investors, who then sell their holdings at the inflated price and collapse the market. Watch out for unexpected price increases and too pushy advertising on social media. Before diving in, do your study and take the basics into account.

7. Unwanted offers and phishing

Be wary of unsolicited offers you get via email, social media, or even text messages. Phishing techniques are frequently used by scammers to steal your personal information or money. Never click on dubious links or download unknown attachments; instead, always confirm the legitimacy of any contact.

8. A lack of public trust

Check out community forums and social media for user reviews and comments before making a cryptocurrency investment. If there are a lot of complaints about scams, technical problems, or unresolved difficulties, it’s a red flag that the platform or project might not be reliable.

How To Avoid Cryptocurrency Scams

Security is critical in the fast-paced world of bitcoin. Cryptocurrencies’ decentralised and fake nature makes them appealing targets for scammers and hackers. It is critical to adopt these security recommended practises to secure your money and personal information:

1. Enable Two-Factor Authentication (2FA)

Two-factor authentication increases the security of your accounts. When activated, you will be required to enter not only your password but also a temporary code from a trusted device (typically given to your phone) in order to access your account. Most reputable bitcoin exchanges and wallets support two-factor authentication. Allow it without reservation.

2. Use Strong and Distinctive Passwords

Your first line of defence is your password. Make complicated passwords by combining uppercase and lowercase letters, numbers, and special characters. Avoid using information that is easily guessed, such as birthdays or common phrases. Use a unique password for each of your accounts to avoid a compromise in one account exposing others.

3. Think of a Hardware Wallet

If you have a large amount of cryptocurrency, a hardware wallet is one of the most secure solutions for storage. These physical gadgets keep your private keys offline, making them resistant to online hacking. Ledger Nano S, Ledger Nano X, and Trezor are a few examples.

4. Avoid Phishing Attempts

Scammers frequently employ phishing to deceive you into exposing your login credentials or private keys. Check website URLs and email senders twice to guarantee they are real. Clicking on dodgy websites or downloading data from unknown sources should be avoided.

5. Keep Personal Information Private

Never give sensitive information with anyone, no matter how plausible their narrative is, such as your private keys or recovery phrases. To obtain access to your assets, scammers frequently mimic support employees or friends.

7. Keep Your Software Up to Date

Cryptocurrency wallets and software require updates to address security flaws. To protect against known attacks, keep your crypto-related apps and software up to date.

8. Avoid Fake Apps and Wallets

Scammers would occasionally construct fake bitcoin apps and wallets that look just like popular ones. Always download programmes and wallets from official sources and double-check their legitimacy.

Conclusion

Choosing a trustworthy cryptocurrency platform is the cornerstone of safeguarding your financial assets. You may drastically lower your chance of becoming a victim of a cryptocurrency scam by completing rigorous research, reading user reviews, putting security first, and aiming for transparency.

Keep in mind that the cryptocurrency industry is always changing, so protecting your money requires being aware and on the lookout.