Bitcoin has been becoming a superstar of our world today.
Bitcoin — Crypto — Bitcoin — Crypto.
Yes.. All of us know what it is by today..
But knowing doesn’t guarantee we understand it. This understanding gap is used by some of bad guys to lure and trick people via numerous scams until now.
Following the increasing price of crypto assets, the number of scams, frauds, and reports of retail investors losing their coins to shady ventures are also skyrocketing year by year. From ICO scandals to stealing wallets and bribery, everyday customers will quickly fall victim to criminality.
It may feel like it’s the Wild West for buyers, but it doesn’t have to be that way. Although there are dangers on the market, the rewards can be overwhelming to others.
However, being vigilant is still a priority, and there are obvious signs of scams that investors should watch for. By avoiding these pits, consumers can increase their odds of success and protect their savings.
These are some of the most popular recent crypto scams and how to avoid them.
Biggest Crypto Scams
Who doesn’t remember about One Coin?
OneCoin claims to be a blockchain-based digital money scheme and is sponsored by OneCoin Limited, a multinational company with offices in Europe, Hong Kong, and the UAE.
OneCoin has been released by a Bulgarian national named Ruja Ignatova. OneCoin claims to work like any other normal cryptocurrency whose crypto coins can be generated by mining and can be used to make payments worldwide. It comes with its e-wallet, and a total of 120 billion coins are made available on the OneCoin network.
However, OneCoin is often claimed to be a multi-level marketing (MLM) scheme or a Ponzi scheme. Although there is little clarification on a functioning blockchain model or OneCoin payment method, it is known to offer numerous instructional materials, like promotional and discounted combination packs, to participants. These courses deal with bitcoin, investing, finance, and related topics such as financial analysis and wealth management.
Users are expected to pay for these services. Also, referral incentives enable participants to bring in more participants, which suits the MLM system. Several stories are claiming that OneCoin is a Ponzi scheme and that local authorities are taking action against it in various countries, including Bulgaria, the home country of OneCoin, and the United Kingdom and India.
Crypto ICO Scams
One of the strongest outcomes of the blockchain bubble was the emergence of the original coin offering as a way for businesses to collect money. With thousands of innovative blockchain-based startups joining the market with creative innovations and groundbreaking ventures, consumers can now conveniently back their favorite enterprises.
However, this huge influx in prospects for ICO has undoubtedly increased the specter of fraud.
There are many ways that scammers can detach investors from their cryptocurrency. One common approach is to build fake ICO-like websites and direct users to deposit coins into a broken wallet. Most times, the ICOs are at fault.
For example, Centra Tech has been sued in the US for a blockchain company sponsored by many celebrities. The organization is accused of depicting false staff members, manipulating customers, and bragging about their products. One of proven way to prevent getting lured by these scams is to read thoroughly their white paper, review of the venture team, mainboard members, and investors before you make any purchase. Get to know the business as much as possible to prevent surprises (mostly bad).
Crypto Wallet Scams
For users concerned about protection and privacy, a hardware wallet — a physical gadget that holds their private keys — is an increasingly common alternative. Usually, as small as USB keychain drives, these wallets provide an offline way to help crypto investors secure their bitcoin much more. However, there have been rumors that some of them have built-in vulnerabilities that expose them to hackers that could quickly steal all the user’s holdings.
One scam includes supplying hardware wallets to customers with a ‘pre-configured’ seed phrase concealed under a scratch card. The new user is told to scratch the card. And put the wallet in place with the corrupted seed.
It creates a loophole that helps hackers to drain funds until the wallet is enabled. These scams are becoming more common but can easily be avoided by accepting wallets from trustworthy sources.
Crypto Exchange Scams
Until today, most cryptocurrencies are still purchased and traded in exchanges (a lot of them are centralized). Although this makes it easier to locate the capital investors want, there is no regulatory agency regulating these markets in many countries. As a result, many buyers were left destitute because of the markets they signed up to turn out to pit. Several South Korean exchanges were revealed in December 2017, leading to assurances of tighter oversight by the country’s authorities.
These scams are not hard to detect, but they can be expensive if they are not stopped. One of the greatest red flags of the future is the prospect of unsustainable costs. Exchanges who offer substantial discounts on bitcoin use this tactic to draw unsuspecting victims.
Also, users can search for URLs for exchanges. Site addresses should always start with HTTPS, an indication that traffic is encrypted. Visiting unsecured websites is a terrible movie, but alerting investors will stop wasting thousands by watching for the right signals.
Crypto Mining Scams
Mining is the only way to mine fresh bitcoins without purchasing or selling them, but it’s becoming an extremely resource-intensive operation.
Due to the complexity of executing crypto mining, which is complicated, requiring much power and energy, and including big upfront capital, several businesses see the demand and open a business by renting any cloud space to mine crypto coins at a fixed cost.
Yes, it’s called cloud mining.
Any businesses offer “lifetime arrangements” that hold prices the same and are expected to offer outstanding returns. However, as the complexity of mining grows, the same investment yields smaller sums each time.
In comparison, some businesses make bold promises on their returns without being clear about the real costs and reducing returns. Others include Ponzi schemes that can lead to huge losses. It is vital to look at prospects and consider the dangers and costs of mining in the past.
Tips on How to Avoid Crypto Scams
- Check out all of their website, reddit, twitter, and other social proof
- Read the wallpaper (you can scan through it and check if it does make sense)
- Check the founders and their reputation
- How long the company has been in the market
- If it sounds too good to be true, it probably is!
- When you decide to invest, always START SMALL!!!