Since its beginning, crypto has attracted a great deal of interest. It’s a great place to put your money, but you should be aware of the risks of fraud and scams. In light of its rising profile, the FTC has found that con artists and hackers have made off with approximately $1 billion (FTC).
Pump-and-dump schemes and pig butchering are just two examples of the many types of cryptocurrency frauds out there. To be continued… Blockchain, the technology powering cryptocurrencies, is decentralised and hence vulnerable to hacking by criminals seeking to steal from investors.
Let’s take a quick look at some of the most popular Crypto scams before best coin to buy and diving into how to avoid falling for one.
When it comes to the more conventional side of finance, pump-and-dump schemes are commonplace. This fraud, however, is also beginning to make headway in the cryptocurrency world.
The goal of a pump-and-dump scam is to artificially inflate the price of a cryptocurrency by the dissemination of false or misleading information on social media and other forms of advertising. As a consequence, the cost goes up. After a cryptocurrency’s price has reached its “peak,” the early investors often sell off their holdings at a significant profit. Because of the widespread panic, other investors often make the costly decision to quickly sell their securities, compounding their losses.
Therefore, before picking up a piece of news about any asset from social media and acting on it, it is crucial to conduct research. Financial decisions shouldn’t be relied on social media posts from random users.
- Sacrificing a pig
Pig butchering is a form of social engineering in which the fraudster gains the victim’s trust in the hopes of duping them into sending large amounts of cryptocurrency to fake online wallets or websites.
The scammer “pig butchers” his or her victims by making extravagant promises of wealth and love on social media or dating apps, only to disappear after receiving payment. It’s the equivalent of stuffing a pig with food just before butchering it.
Scammers typically send a message through Whatsapp, text, or dating apps like Tinder, pretending to be someone else and using an enticing profile image to persuade victims to contact them.
So, now you know about some common frauds and scams to watch out for before putting your money into them. You can learn the dos and don’ts of avoiding these scams by visiting this link.
Ignoring such Crypto frauds is easy if you know how.
- Precautions to take to prevent being a victim of a bitcoin scam: Find out things on your own.
Understand the underlying technology, the people behind the project, and the potential downsides before putting your money into any cryptocurrency. Some examples of this kind of research are reading whitepapers, keeping up with the project’s development, and searching for any bad reports or press that may have been written about it. You’ll be better able to evaluate the investment’s possibilities and make a choice if you do so.
- Make sure you’re getting your information from reputable sources.
Keep an eye out for any crypto offers or promotions that come out of the blue, especially if they promised a huge return. Investors in fraud schemes are frequently pressured or given false hope by the con artists who promote them. Before investing any money, it is important to confirm the information source and perform some background reading.
- Make sure the site is legit
Make sure the cryptocurrency exchange you choose is trustworthy and uses a safe connection before making any purchases (HTTPS). Your privacy and financial data will be better secured in this way. Similarly, you should stay away from shady or newly launched websites.
- Deal with a reliable market
Pick a reputable and trusted cryptocurrency exchange with a solid track record. You can rest certain that your assets are safe with a reputable exchange thanks to safety features like two-factor verification. They will also have an open method for addressing conflicts and other problems that may arise.
- Protect your personal keys.
To access your crypto, you must keep your private keys safe. Do not store them in an centralized financial system file or online where they could be easily stolen. The alternative is to use a hardware wallet, which is a piece of hardware used to store private keys away from the cloud.
- Do not give in to freebies
You should be careful of crypto giveaways that ask for nothing more than transmitting a little amount of coin to a specified address. Most of the time, these are scams aimed to steal your cryptocurrency. Do not enter any giveaways that you have not organised or that you are not directly affiliated with.
Something that seems too wonderful to be true usually is. Investing in cryptocurrency requires vigilance and thorough research. If you follow these guidelines, you can lessen the likelihood of falling for a crypto scam and increase the quality of your investment choices.