Cryptocurrency has taken the world by a storm revolutionising financial institutions and payment systems. However, Cryptocurrencies have also become the target of fraudulent characters who target crypto users. There are different ways these fraudsters dupe crypto users of their money. It is, however, imperative that you know what these scams are and protect yourself from them
Signs You are about to Fall for a Heist
There are telltale signs that you are about to be the victim of a crypto scam. You can identify these signs by looking out for the following;
- Is the website secure? You have to ensure that any crypto website you log into particularly for payment has an address that starts with “https” instead of “HTTP”. If this is not the case then the website is not secure and any data you send to the website will be compromised.
- Sometimes, scammers duplicate a website or crypto product and you might be on a scam website. You have to ensure that the website’s URL is free from spelling and grammatical errors as this can be a sign that it is a scam.
- What does the website say? Most often scam websites do not have an “About us” page and details about the people behind the company can be shady. For instance, when you check for the names of the company’s founder, you might not find him anywhere on the internet or find out he is associated with shady dealings. That is a sign that you shouldn’t invest in whatever the product is about. Legitimate cryptocurrency projects are usually transparent about their founders, investors and people involved in the project
Sometimes scammers take the time to ensure they cover their tracks properly. Times like these, you just have to trust your instincts and check out for any red flags.
Crypto Pitfalls to Avoid
Now that you know how to check for cryptocurrency scam alerts, you need to know the common crypto scams and how to avoid them.
Ponzi, pyramid and MLM Schemes
A Ponzi scheme promises investors huge returns. But the truth is that Ponzi schemes pay older investors from the investment of newer instors. It is a typical example of robbing Peter to pay Paul. So long as there are new investors a Ponzi scheme will pay its investors. Convinced that the scheme is legit, investors who have received their payouts will convince newel investors in. These investors will pump in their money into the scheme and sooner or later, the scheme collapses and the founder is nowhere to be found.
On the other hand, multilevel marketing (MLM) schemes claim to sell a product but to earn from the scheme you have to bring in more people. You earn from your downlines. So you might end up advertising a product to your family and friends who might earn nothing from the so-called product.
To save yourself from falling into the hands of fraudsters, always ensure that you avoid schemes that promise outrageous returns. Also, be on the lookout for cryptocurrency projects that promise to give you profits for introducing new investors to enjoy bigger profits.
Fake Wallets and Exchanges
So many exchanges exists and a newbie in the cryptosphere can easily fall prey to fake exchanges and wallets. These exchanges bear all the markings of a real and legitimate exchange but they are out to cause harm to unsuspecting users. Most of these exchanges have even been found on Google play store making them look like legitimate apps. A typical example is Poloniex which had duplicated apps hoping to swindle unsuspecting users. They almost succeeded as they had gotten 5,500 downloads before it was flagged down by Google.
Once you download these fake exchanges and wallets, they can steal important account details or restrain you from retrieving your money. To be on the safe side, read reviews about wallets and exchanges before downloading them. Also, do not download random crypto apps from Google Play. Ensure that the apps are well known, trusted and have real people behind them and not shady characters.
A more familiar scam is Phishing. Scammers send you unsolicited emails that look like they were sent from you bank and a click will take you to a site that once you input your account details they can log into your real account and cause devastating damages. To avoid phishing scams, you have to ensure to double check URLs before proceeding to click the link. Protect your private key and never disclose it not even to someone who claims to be from the exchange.
While this is not a full checklist of crypto-related scams they are very common. You have to ensure that you protect your self from falling a victim. A lot of persons have fallen prey to scam crypto projects. In April 2018, more than 300,000 investors lost a total of $660 million to an MLM scam called Pincoin and iFan ICOs. Equally, in January 2018 Bitconnectwas criticised for being a Ponzi scheme and promising investors 40% returns.