In spite of the excitement and hype, the realm of cryptocurrencies has miserably become a hotspot for scams. The crypto space is quite complicated and confusing to new users and is lightly regulated. This makes the realm of cryptocurrency an ideal breeding ground for scammers.
There are possibilities that the real number of scams may be even higher as many attacks go unreported. Individuals may not comprehend the technology, but they are seduced by the success of savvy investors who turned a few thousand bucks into billions in the crypto sphere.
The reason behind the upsurge of scams in the crypto sphere
Scamming is on a meteoric rise in the crypto world, so it is imperative to understand the working mechanism of blockchain technology. A blockchain is a decentralized ledger that verifies and records all the transactions which take place in a network. If you send someone some bitcoins, all the details related to the transaction are apparent to the network, although no one can access your personal information.
If someone accesses your account, it is quite impossible to track because you can’t take back the transaction.
Hence, it’s quite simple to see why scams are so rampant in the crypto community. The transactions are irreparable, and there is no central authority to mediate.
Now, let’s have a look at a few of the popular crypto scams prevalent nowadays.
1. Fraudulent ICOs
Many consumers venture into the world of the crypto community looking for a great return on investment. Interestingly, if you want a greater return on investment, the easiest option for you is to buy tokens in an ICO (initial coin offering). The demand for new digital currencies is increasing with many new buyers having limited knowledge. This has turned out to be an excellent opportunity for scammers to utilize. There is a drastic upsurge of fake ICOs which can convince people to buy non-existent cryptocurrency.
Though phishing is not only limited to the realm of cryptocurrency, you should be aware of it. This type of scam occurs when you receive an unsolicited email which looks like it has been sent from your crypto wallet. A phishing email comprises a link that redirects you to a site that looks quite similar to the wallet provider’s page but is actually a scam site. Once you enter the account details on this fraudulent site, scammers have every detail they require to dupe you of your funds.
3. Phone porting
Phone porting is among the common scams used on high-profile people in the crypto community. It usually entails a call by an attacker to the target’s network provider. The attacker then ports the phone number of the victim to a SIM card they can control. Note that once the attacker has control over the phone number, they can reset passwords.
Since the rise of modern technology, malware has been a potent weapon in the arsenal of scammers. The technical nature of cryptocurrency is quite complicated and is not well understood by most individuals. This makes malware an even bigger threat. Rather than pilfering bank account details, malware related to the crypto sphere can get access to your wallet and drain your account. Moreover, you should also be aware of the fact that crypto-malware can monitor the clipboard and replace your wallet address with the scammer’s address.
5. Fake bitcoin exchanges
If you are active in the crypto community, keep an eye out for fake bitcoin exchanges. These bitcoin exchanges may seem credible, but they are merely a front to separate you from your hard-earned cash. Interestingly, these exchanges can also entice you with promotional offers which sound too good to be true. On the other hand, other fraudulent bitcoin exchanges exert pressure on users to create an account and deposit funds with the promise of a bonus. But once they have a user’s money, they can steal it all. According to the latest figures, almost 90 percent of cryptocurrency exchanges may be fraudulent.
6. Pyramid or Ponzi Schemes
Have you ever thought that a Ponzi scheme is a kind of fraudulent business model? It relies heavily on the earned money of its members and usually emphasizes investment over selling a product. This makes the model more unsustainable as it grows over time. Don’t be enticed to fall into the trap of the Ponzi scheme if it advises that you will get an incredibly high return on investment. Note that pyramid schemes are illegal in the crypto sphere. Moreover, there is no guarantee that the price of Bitcoin will remain the same. Hence, there is a high chance of being duped of your cryptocurrencies.
How to protect yourself from being scammed in the crypto community?
It sounds like a difficult task to protect your wallet, but note there is a myriad of things you can do to make yourself less attractive to scammers.
- Always use a password manager along with long-tail passwords
- Refrain from talking about crypto gains online
- Don’t display any personal data online because scammers can easily access them
- Always use two-factor authentication so that you can protect your interests in the crypto sphere
- Always surf on legitimate crypto sites for safe trading
- Avoid phishing attacks by not clicking on emails you don’t recognize
The crypto sphere can be quite intimidating if your account security is not top-notch. Some pretty smart hackers can extract all your funds and account details in a matter of a few seconds. But, with a little effort, you can secure, and be sure that, your crypto will always be yours.