The idea of doubling and tripling your money is pretty exciting, especially when the scope of growth is up to 100 times. Bitcoin started out with just a few dollars and is now worth thousands of dollars. And hence, everyone wants in on the crypto game, making the field pretty vulnerable to bad actors.
Scammers try to entice you into investing in a golden opportunity to make your money grow without explaining how your money would grow or where your money is going to be invested.
How to identify cryptocurrency scams?
If you have been approached by a genuine investment opportunity, then the person proposing the deal to you won’t hesitate to share all the details regarding it. But if they are not, they are very well adept at creating unique tactics to entice you into investing in an apparent scam.
While some rely on age-old scams, others try new methods to steal money from their victims with the latest technology. We will look at some of the practices employed by scammers so that you can avoid being a victim of a cryptocurrency scam.
- Scammers demand that you pay through cryptocurrency. A legit business would never ask you to send payment in cryptocurrency in advance, either to buy something or to protect your funds. It is a sure sign of a scam, so beware of it.
- There is no business in this world that is risk averse. If anyone promises quick and easy money without any risk, it is a sure sign that someone is pulling a fast one. Especially someone promising huge returns in the crypto market with risk is a scammer.
- Do not get free cryptocurrency advice on a dating app, especially when you have recently met. Someone requesting you to send cryptocurrency on a dating app is surely trying to rip you off.
Other quick common red flags to spot cryptocurrency scams are,
- Guarantee of large gains or doubling the investment
- Only accepting payments in cryptocurrency
- Contractual limitations
- Spelling and grammatical errors in emails, social media posts, or any form of communication.
- Manipulation tricks like extortion or blackmail.
- Free money giveaways
- Fake influencers or celebrity endorsements that appear improper.
- Lack of details about money movement and the investment.
- Numerous transactions in a day.
How to avoid cryptocurrency scams?
Cryptocurrency investments are quite averse to regulations, and there is not much security in place to protect consumers from scams. Moreover, inexperienced investors are largely unfamiliar with how cryptocurrency works. No bank or investment firm can identify fishy transactions, and there is no deposit insurance either.
But you can spot common crypto scams with some resources by taking simple steps to avoid them.
The FTC states that if they require you to pay for stuff in cryptocurrency in advance or to secure your money, it is a scam. Scammers often make promises of big returns in no time and with zero risk. And that is a red flag. Cryptocurrency is wildly volatile, and nobody can guarantee you profits.
Here are some tips to keep yourself safe.
Enable 2-factor authentication
If your crypto wallet or exchange has a 2-factor authentication feature, turn it on before you deposit any funds. It is the extra layer of account security you need to start with, and it is simple to set up.
Set up a cold wallet
A “hot” wallet stores information cryptocurrency online, and a cold one is held offline. So a physical cold wallet where you store your crypto offline is safer than an online wallet.
Go with established providers.
Do not trust new and untested platforms easily. Leave those to early adopters, and make sure not to get involved with an exchange or wallet until you are sure it is legitimate. Protect your PC from malware by updating your antivirus regularly.
Double check addresses
Scan the URL bar every time and look for the HTTPS and “secure” lock symbol. Also, do not forget to double-check the URL to ensure you are visiting the correct site.
Do not share your private keys with anyone.
Your private key is the password to your crypto holdings; hence, ensure that you never disclose it to any third party.
Protect your digital wallets from scammers with good digital security habits like strong passwords, using secure connections or VPNs, and safe storage. There are two wallet types: digital and hardware.
Digital wallets are online storage and are more susceptible to getting hacked.
Hardware wallets store information offline, like the cryptocurrency wallet and keys within a device.
Cryptocurrency is not Federal Deposit Insurance Corporation insured, so you need to take every step possible to keep it safe. Do not give wallet keys or access codes to anyone.
The wildly volatile cryptocurrency arena is rampant with scams. And, you need to know how these scams work to avoid them entirely. If you are able to keep away from Bitcoin scams, you can keep your crypto safe and sound.