Cryptocurrencies are still a relatively new technology, and that is why cryptocurrency scams have become quite common. These scams can make you lose a lot of money, especially since their prices typically surge within very short periods. If you have a strong fear of missing out, you can easily fall into these forms of fraud. As a cryptocurrency trader or investor, it is important to learn how you can identify cryptocurrency scams.
The Promise of Huge Returns in Short Periods
Lots of people have made very high returns in short periods by investing in cryptocurrencies. Still, if a company or individual promises overnight windfalls, you should be wary of their services. This is because such profits are not common, and in most cases, they are based on pure luck. In a famous case reported by the BBC, a Twitter account claiming to be associated with Elon Musk contacted a man called Sebastian with news about a Bitcoin giveaway. The account claimed that the company would double Sebastian’s Bitcoins within 24 hours. Once the countdown ended, the man had lost a total of £407,000.
Impersonating Government Officials, Celebrities, or Public Figures
This is a common tactic used by scammers to create trust among their targets. In some cases, scammers claiming to be government officials will tell you to clear certain bills by sending cryptocurrencies. Others will pretend to be famous investors or business people like Elon Musk and influence you to send cryptocurrency payments. They may also promote various pyramid schemes using fake social media accounts.
Asking for Upfront Fees
Scammers will usually ask for upfront fees as the investments will not yield any real returns. Since these payments are sent as cryptocurrencies, you will usually have a hard time tracking the scammers to get your money back.
Check the Website URL Keenly
To avoid phishing scams, you should always check the URL of the websites. In many cases, the scammers will create fake websites that resemble legitimate investment sites. You can determine whether the sites are fake by checking the exact spellings of the URL. Make sure none of the letters has been switched or left out, and also ensure that numbers have not been included. To avoid any confusion, you should consider searching for the websites on Google instead of clicking links on your email or social media accounts. Phishing scams usually try to get the keys to your crypto wallet, and this can lead to the entire loss of your investment.
How to Keep Your Bitcoins Safe
As you avoid cryptocurrency scams, it is essential to keep your Bitcoins safe. Here are some steps you can take to protect your investment:
- You should enable two-factor authentication (2FA) on your crypto wallet or exchange.
- Avoid sharing your private keys or seed phrase of your wallet with anyone online, and you should only store this information offline.
- Since cryptocurrency wallets and exchanges can get hacked, you should consider getting a cold wallet to store your Bitcoin.
- You should store your cryptocurrencies in multiple wallets as this will minimize your risk.
- Avoid connecting to public internet services, and you should consider using a VPN to protect your investment.
- You should also change your password regularly and avoid codes that can easily be guessed.
Conclusion
Cryptocurrency scams are fairly common, but you can identify them by checking for certain signs. Some signs of cryptocurrency scams are promises of high returns, the impersonation of influential figures, and asking for upfront fees. Also, you have to check the website URL to determine whether it is an attempt at phishing.
Sources:
• https://cisomag.eccouncil.org/cryptocurrency-wallet-security/
• https://www.bbc.com/news/technology-56402378
• https://www.pcmag.com/how-to/how-to-avoid-cryptocurrency-scams
• https://www.inverse.com/innovation/bitcoin-fraud-tactics-to-save-yourself-from-the-fake-elon-musks-wip
• https://www.livemint.com/market/cryptocurrency/how-to-spot-and-avoid-crypto-scams-11637390629838.html
