Much of the popularity in the growth of Bitcoin can be attributed to accessibility. Trading used to be available only on a few online platforms, but it's a very different story now. Digital assets like Bitcoin are available to everyone around the clock, even those without access to traditional banking. Any investor can buy Bitcoin with debit card from popular exchanges or through brokers, which takes the confusion out of the buying (and selling) process. The more practical applications that can use blockchain technology, the more cryptocurrency will become popular. If you want exposure to the cryptocurrency market without directly owning Bitcoin, one point of entry is purchasing a crypto ETF.
With the increasing adoption of Bitcoin and other cryptocurrencies, there's been an alarming surge in the number of scams. Fraudsters are cunning and can adapt quickly to convince unsuspecting victims to part with their money. Regrettably, agile development, the constantly evolving regulatory structure, and the industry's complex nature attract many charlatans. Bitcoin itself isn't a scam, meaning its profit potential is real, and plenty of opportunities can be found. Nevertheless, its unsolved technological challenges attract those with malicious intent, so it's crucial to stay informed about crypto scams to protect yourself.
Be crypto-smart, and don't become the next victim. These are the top scams to watch out for.
Fake Trading Platforms or Fake Wallets
Cryptocurrency exchanges provide an important means to buy and sell Bitcoin and other digital assets, yet many remain unregulated and, of course, susceptible to scams. At times, fraudsters create fake websites that are very similar to the ones they're reproducing, making it difficult, if not impossible, to tell the two apart. They may look like trustworthy platforms, but all that glitters isn't gold. Exchanges may lure users with celebrity endorsements, unsolicited phone calls, or emails promising fabulous returns. It's imperative to check the name of the website you plan to register on for misspellings or slight variations. E.g., coinbaise.com instead of coinbase.com.
Phishing websites capture your personal information so that malicious actors can later log into your account and steal your funds. In the same way, fake wallets deceive users into thinking they're legitimate wallets, asking them to share their private keys, i.e., information that should never be shared. This is why you must download your app from a trusted website and check reviews and online comments. A fake version of the Trezor wallet in the Google Play store affected many users, putting their crypto investments into the hands of criminals.
Crypto Ponzi Schemes
A Ponzi scheme is a form of fraud that promises investors large profits at little to no risk. Existing investors are paid with the funds obtained from new investors, so the scheme requires a constant flow of money to survive. Similar to the traditional Ponzi scheme, a crypto Ponzi scheme fools investors into thinking their activities are fueling investment returns. Threat actors are attracted to using cryptocurrencies to perpetrate their frauds because they present greater privacy benefits and less regulatory oversight. Prospective investors either invest in the asset class and take part in the growth of blockchain technology or face a steep learning curve to safely do so.
Ponzi schemes have common characteristics, so don't ignore these signs:
- Very high returns with little or no risk
- Secretive and/or complex fee structures
- No investor requirements
- Difficulty receiving payments
- Respected leaders or prominent members are enlisted
If you've been targeted by scammers, don't invest any more money, report the incident, and warn your loved ones to stop them from becoming victims. Bitconnect is an example of a crypto Ponzi scheme. Users traded Bitcoin for the Bitconnect Coin, being promised returns of up to 40% per month. When the platform was revealed as a Ponzi scheme, administrators refunded users' investments after a 92% coin value crash.
Fraudulent Posts on Social Media
Some of the most widely used types of crypto scams involve social media platforms like Twitter, Instagram, and Facebook. Psychological manipulation is used to trick people into making security mistakes. A social engineering attack involves getting victims to divulge confidential information such as usernames, passwords, or private keys, which can be used to access the cryptocurrency. What you need to know is that no legitimate business will ever reach out to you on social media to ask for money, and, above all, there will be no demand to buy or pay with cryptocurrency. You should never click on links received via social media messages, even if they come from companies you know.
No company will ever attempt to contact you through social media and most certainly won't ask for sensitive information. It's surprising how many people don't think twice before giving out information such as usernames and passwords. Don't repeat the same mistake. Be suspicious of unsolicited messages from individuals asking about personal information. If you're unsure whether a request is legitimate, contact the company directly so it can be alert for any suspicious activity. Suppose your cryptocurrency account has been compromised. In that case, get in touch with the exchange immediately.
Cryptojacking
Commonly referred to as malicious crypto mining, cryptojacking involves embedding code on someone's computer, tablet, or phone to mine cryptocurrency, therefore avoiding energy and hardware costs. In case you didn't already know, proof-of-work mining is energy-intensive, requiring a vast amount of computational resources. Cryptojackers want to take advantage of cryptocurrency mining at no expense, leaving you with a device that consumes a lot of energy and operates poorly. You might notice a decrease in the gadget's performance or a sudden hike in your electricity bill, but that's all. The cryptojacking software doesn't give itself away.
Malicious actors convince you to download cryptojacking software via phishing-like tactics. More exactly, you receive an email with a clickable link that installs the program that runs in the background. Another method is to inject a script on a website; when you visit the platform, the script automatically executes; no code is stored on your computer. If you accidentally discover cryptojacking activity, kill the browser tab running the script, shut down infected instances, and use the experience to better understand how the attacker compromised your system.
