In recent times, cryptocurrency is gaining increasing popularity among the computer-savvy generation. We now live in a digital world, so using a digital currency for transactions sounds cool and progressive. However, the reason for its increasing popularity has more to do with how it can turn a few thousand bucks to a million bucks than its reflection of the digital inclination of this age.
Although the first cryptocurrency (Bitcoin) was created in 2009, it didn’t gain much attention until 2017, when it made millionaires of a few smart investors. Since then, it has continued to gain worldwide acceptance due to its decentralized control and the rewarding nature of the crypto market. With the creation of other alternative coins to Bitcoin (Altcoins), more opportunities have been created in the cryptocurrency space, increasing its relevance than ever before.
Albeit, the fact that it is decentralized makes it an easy target for con artists and scammers. Investing in cryptocurrency is risky enough, so it is important to avoid other risks in form of scams or frauds.
Below is a list of possible cryptocurrency scams you could encounter from time to time.
Social media scams:
Social media has grown to become a powerful tool in this digital age. It has created a community where millions of people from different races and continents can interact. The rise of social media coincides with cryptocurrency increased visibility on mainstream media. Therefore, hackers and con artists are using this platform to perpetuate their vices.
They hack accounts of popular individuals and solicit for funds that would be donated to charity. For instance, during a recent SNL weekend that hosted Elon Musk, many verified Twitter accounts were hacked and used to solicit funds to be donated to specific cryptocurrency wallets. And of course, many fell victim to the scam and lost their fortunes. There have also been reports of such scams being done on video apps like YouTube. In the past, several individuals have filed lawsuits against YouTube for being duped by cryptocurrency scam videos.
Initial Coin Offering (ICO) scams:
As a cryptocurrency enthusiast, this is one particular scam I fell for. In 2017, when the cryptocurrency rave grew wings after the stellar rise of Bitcoin, ICOs became a thing and scammed several investors of their money.
ICOs offered prospective investors a chance to invest their money in an enterprise that promised exponential returns. For the unsuspecting investor, this is a pie from heaven and a means to quickly amass wealth. Unfortunately, many lost their bucks to ICOs. This is 2021 and ICO scams haven’t changed much. Be on the lookout. An industry that offers you the chance to invest a certain amount of money, with a promise of exponential returns within a short period is most likely a scam.
Fake exchanges and wallet hacks:
In 2017, South Korean financial authorities and the local Bitcoin community exposed an illegitimate exchange called BitKRX. It presented itself as part of the largest trading platform in the country and scammed people of their money.
These days, hackers directly target exchanges and wallets by breaching security and moving people’s money. One popular hacking incident happened in June 2020. Hackers stole 1 million customer email addresses by breaching the email and marketing databases for Ledger, a France-based cryptocurrency wallet company. It’s suggested crypto users seek out reputable exchanges to avoid these kinds of scams.
This is a scam called phishing. Hackers send target emails with links to websites soliciting important information from their targets. Information could include bank details, wallet address, and so on. It is a psychological manipulation you should look out for.
In the crypto space, hackers target passkeys to wallets. They send emails to cryptocurrency holders with links leading to a website that asks for the pass key to their wallets. With knowledge of the target’s passkey, they can steal money from their victims’ crypto wallets.
The best way to avoid a phishing scam is to not click on links in this kind of email or you could call the said company to verify the legitimacy of the email and the sender.
DeFi Rug Pulls:
What ICO was to crypto in 2017, is what DeFi is to crypto in 2021. DeFi rug pulls are the latest scams to hit the crypto space. DeFi ( Decentralized finance) seeks to decentralize finance by removing gatekeepers for financial transactions. It is an innovative concept that has surfaced in the crypto market recently. With crypto investors seeking to maximize profits, criminal elements are using the avenue to scam people of their money. This scam is called a Rug Pull.
Smart contracts that lock in money for a specified period are the most popular method for scammers to steal money. Once the contract expires or reaches a previously set threshold limit, scammers use programming functions to steal your coins from the platform.
Mobile apps scam:
With each passing day, scammers and hackers are introducing more clever ways to defraud people of their funds. A novel way is that these scammers create an exchange app that looks legit. Upon downloading the app, all the funds in your Trust Wallet will be moved.
The app is a phishing tool that allows hackers to gain access to your wallet when you download it. One of these apps is UniPro Exchange. Many crypto investors have lost their fortunes in the wake of this unique scam. Experienced traders advise you to stick to popular and verified exchanges and apps when dealing in the crypto market. Businesses looking for cryptocurrency payment processing services should only seek out the most reputable and reliable companies to provide these services.
In conclusion, the cryptocurrency market is filled with many opportunities to create wealth. It has made many wealthy and will still make much more wealthy. On the flip side, many have gone bankrupt by dealing in the market. Greed has always been the major cause. Most of these scam platforms present juicy terms that are almost irresistible.
Therefore, you should deal with caution in the market. Get the necessary education about the market. Stay updated on news about the crypto market so you don’t miss out on opportunities. Trade responsibly.