It’s no secret that Cryptocurrency is probably 1 of the hottest trends out there right now. Just in the past 6 to 8 months, it has been changing peoples lives and making lots of people a millionaire in a very short amount of time.
However, whenever there is the potential to make lots of money, it seems like the scammers, and con artists start coming out of the woodwork in droves.
In the following post, I’ll be showing you the top 10 crypto scams to avoid and how to stay safe in the crypto world while avoiding becoming the next victim to one of the many scams I’m about to share with you guys today.
Are you guys ready?
What Is Cryptocurrency?
If you have not heard of cryptocurrency or at least Bitcoin, you can only be forgiven if you live under a rock. It all started in 2009, when the first digital currency, Bitcoin was created.
For those of you who aren’t up to date with what exactly this is, let me fill you in on the details.
According to Wikipedia, we are told that this is a digital form of currency that’s designed to work as a medium of exchange that uses cryptography to secure its transactions.
Don’t worry, I’m not exactly up on the whole crypto craze myself and I find this whole thing to be quite baffling.
The cryptocurrency craze reached its peak in 2017 and it seems to continue to rise in 2018, with more coins being introduced in the market every day.
Top 10 Cryptocurrency Scams To Avoid
Cryptocurrency in itself is not a scam. Investors, some of whom are well-known celebrities, are making a lot of money. Now, almost everyone is curious and eager (maybe too eager) to get a piece of the cake.
That is where the problem comes in. Scammers can smell the curiosity and desperation from whatever hole they are hiding in.
According to Bitcoin News, $9.1 million is lost to cryptocurrency scams every day—imagine that!
So, what are the top cryptocurrency scams in 2018 and how can you avoid being a victim?
Read on for all the juicy details!!
1) ICO Fraud
ICOs (Initial Coin Offering) work pretty much like IPOs. ICOs are created by cryptocurrency startups to raise money from investors.
ICOs become a scam when a startup overestimates the value of their coin or when a scammer comes up with a questionable ICO to steal funds from investors.
The Securities and Exchange Commission knows about ICOs and the high risks involved.
However, there is very little they can do to regulate them because altcoins are always mushrooming left, right and center.
Protecting yourself from ICO fraud is not easy.
If you are interested in a particular ICO, try to find out everything about it and ensure that it is legitimate.
2) Hardware Wallet Theft
A hardware wallet is a small physical gadget with your private key.
Cryptocurrency investors prefer them because they are an offline method of protecting their coins.
This is the best way to keep your holdings safe but it is not scam-proof!
It has been discovered that some of these keys are susceptible to hackers who may end up taking all your coins.
To make matters even worse, scammers are taking it even further by selling hardware wallets configured for interference by hackers.
Just to be on the safe side, make a habit of getting wallets from trusted sources.
3) Anonymous Coin Creators and Non-Existent Coins
There is no face associated with Satoshi Nakamoto, the creator of Bitcoin.
Scammers are using this to their advantage!
If you are interested in an altcoin and you know nothing about the creator or team members, run for the hills.
A lot of people have been getting cold calls trying to get them to invest in an altcoin.
To be quite honest, the offers are irresistible sometimes and many people have fallen victim to this trick only to find out that there is no coin.
No real ICO will cold-call you and ask you to invest in their coin.
4) Fake Wallets and Shady Exchanges
In the cryptocurrency world, virtual wallets are almost unavoidable.
It is where an online currency is kept for investors to check it out. A good number of them are legit but other likes My Bitcoin Gold Wallet are well-known scams.
Always opt for wallets recommended by the cryptocurrency platform or hardware wallets.
Exchanges seek to reap transaction fees. Most of them are not entirely scams but they charge outrageous fees and sadly, investors comply.
The complete scam exchanges disappear with all your holdings. Use trusted exchanges like Coinbase to avoid being a victim.
5) Crypto MLMs and Ponzi Schemes
Charles Ponzi’s legacy lives on… Someone once said that “if it is too good to be true, it is too good to be true.” Ponzi schemes and MLMs are very enticing, promising high returns for your investments and encouraging you to invest more.
Earlier investors are paid with later investors’ money which makes the scheme look real. One such scheme is OneCoin who was offering a “no risk investment on Bitcoin”.
Yet people fell for it!!
You do not really need a broker in cryptocurrency investment.
Moreover, let no one deceive you with the promise of guaranteed returns.
Investing in digital currency is just as risky as any other investment.
You can lose money or gain profit.
6) Cloud Mining Scheme
Cloud mining is the only way to acquire digital coins without exchanging or buying. The process is extremely resource intensive and you need a lot of processing power and electricity.
There are companies that offer cloud mining services at a fee to help people earn coins without learning much about the technology involved.
Cloud mining is not a scam but some companies use deception to make clients buy these services.
Sometimes they do not deliver because the mining process is difficult and cryptocurrency prices are highly volatile.
Clients end up getting almost nothing for their money, so just be very careful.
7) Pump & Dump
Pump and Dump is a classic fraudulent practice in finance where someone uses false promises and information to encourage people to buy shares.
This person goes on and artificially inflates the price and sells their shares when the price is still high.
After dumping the shares, the prices go down again and investors lose their money.
Established coins like Bitcoin and Ethereum may not be prone to manipulation but smaller ones are.
Apparently, groups of big players in the cryptocurrency market meet and vote to decide on an altcoin to manipulate.
This is simply cell phone identity. A scammer deceives your mobile provider and gains control over your account.
This gives them the power to take over your digital wallet by resetting the password.
Cryptocurrency transactions are irreversible and you can never get your coins back.
9) Coin Stealing Malware
It is not uncommon for computers to be infected with malware and sometimes people take this issue lightly.
Criminals have developed a special type of malware that is purposely designed to steal bitcoins and other online coins.
The scammer can either interfere with a transaction, steal your wallet or your log-in credentials.
10) Phishing Scams
This is another popular scam where the swindler poses as the real cryptocurrency company.
They use a copycat website, email address or social media page and invite you to invest.
When you visit the site or page, you are redirected to the phishing site where you pay for the crypto only to realize later that you have lost your money.
Cryptocurrency is not a scam but scammers have realized how easy it is to get victims who desire to invest. Ensure that your wallets are well protected and acquired from credible sources.
Be vigilant, ask where you do not understand and do not be in a rush.
Remember, you can never be too careful!!
My Closing Thoughts
Bitcoin and many other coins have really taken off over the past year and there have been many people who jumped on the cryptocurrency wagon.
Just a few months back, I put some serious thought into investing in this myself but quickly changed my mind after a buddy of mine lost a good deal of coins to 1 of the scams that I’ve listed above.
However, I still believe that there is lots of money to be made in the cryptocurrency industry if you know what you’re doing and know the best places to invest your money for the best possible ROI.
If you’re the type of person who has a great deal of money to invest but you’re not really digging the whole bitcoin scene, then perhaps you should look into trading binary options instead.
While there are still risks involved, you won’t encounter quite as many as you would in the crypto world.
Other than that, I really hope this post has given you the vital information needed for you to avoid being the next victim of a cryptocurrency scam.
Have you guys fallen for any of the scams that I’ve listed above?
Share your experience with others so that they don’t also fall victim to these con artists and lose any of their hard earned money.
Feel free to leave any comments, questions, or experience in the comments section below.
I look forward to hearing from you guys!!