Cryptocurrency scams have always been an issue. Everyone wants to make money, but nobody wants to be scammed or lose their money. Fortunately, there are several ways you can avoid cryptocurrency scams and protect yourself against them. This article will focus on how to avoid cryptocurrency scams in your own life and when investing in cryptocurrencies as part of your retirement or investment portfolio.
How To Avoid Cryptocurrency Scams?
1) Types of Scams:
The first step is to be aware of the types of scams out there. There are many different ways that people have been scammed out of their money in the past, and it is important to be aware of these so that you can avoid them in the future. One common type of scam is called a Ponzi scheme.
- Ponzi scheme
This popular scam occurs when someone promises you a relatively high return on investment within a short period of time if you invest in their project. In reality pays existing investors with funds collected from new investors they will but they never actually do. They will just take your money and run.
Another common type of scam is called an ICO scam.
- ICO scam
This is where someone creates a fake ICO (Initial Coin Offering) and tries to get people to invest in it. They will often promise huge returns and just take the money and run. There are many other types of scams out there, so it is important to be aware of them and do your research before investing in anything.
2) Some Red Flags:
If a deal is too good to be true. If anyone wants your money and asks for your help moving money using cryptocurrency pay attention.
Moreover, if someone contacts you out of nowhere with promises of quick riches in a short period of time, be aware they are probably trying to scam you.
In addition, before considering investing in a crypto project run the opportunity by other people or do your own research and find out if the opportunity is legal.
Ways to Avoid Crypto Scams
This is by no means an exhaustive list but rather a contribution to the topic. It is a basic strategy that you can use as a primary strategy to protect your hard-earned finances against con artists and scammers.
a) Use An Exchange, Don’t Store Coins Online
If you’re planning on buying or investing in any cryptocurrency, use an exchange. If they get hacked, they’ll refund your money -and that’s true of most exchanges that aren’t listed here- but it won’t be a user problem. You can also keep your coins in a wallet (hardware or software) instead of trusting them to an exchange.
b) Don’t Panic If Your Password Gets Hacked
Whether a hacker has stolen your password or simply forgot it, you should change it ASAP. Unless your funds are tied up in a popular cryptocurrency wallet (e.g., Coinbase), there’s little risk of lost funds when changing passwords. Just bear in mind that some exchanges will require ID verification before they allow you to trade cryptocurrencies again, so if yours is one of them, be sure not to lose that document either!
c) Beware Of Fake Wallets
One of the first things a cryptocurrency scammer will do is create a fake wallet (usually via a Google or similar search). They’ll offer you some incentive to move your digital money into their wallet, like a bonus amount of crypto in your account. Once you do, they’ll have access to all of your funds and will likely empty your account.
d) Don’t Be Misled By Airdrops And Forks
Cryptocurrency airdrops are when a blockchain project gives away free tokens or coins to the community to raise awareness about their project. While this might sound like a good thing, it can actually be used as a way to scam people. For example, scammers will often create fake airdrops and forks to get people to send them money. So, be very careful about any airdrops or forks that you come across and only participate in ones you trust.
e) Be Careful With ICOs
Initial Coin Offering (ICO) is a way for blockchain projects to raise funds by selling tokens or coins. However, many ICOs have turned out to be scams. For example, there have been cases where the team behind an ICO has simply taken the money and run. There have also been cases where the project has become nothing more than a whitepaper and a website.
f) Don’t Be Fooled By Pump And Dump Schemes
Pump and dump schemes are when people buy a large amount of cryptocurrency. And then artificially pump up the price by spreading false information. They will then sell their coins at a higher price and “dump” the market, causing the price to crash. Telegram or other chat groups often orchestrate these schemes and can be very difficult to spot. However, if you see a sudden surge in price followed by a quick crash, a pump and dump have likely occurred.
g) Don’t Trust Anyone
This might sound like common sense, but it is important to remember that you should never trust anyone in the cryptocurrency world. Many scammers and con artists out there will try to take advantage of you. So, always be on your guard and only trust people you know and trust. Make sure to check the company’s profile to find out how they protect their customers and look for reviews from other investors
Protect your digital wallet
If you are serious about avoiding cryptocurrency scams, you should use a Virtual Private Network (VPN). This will protect your digital wallet from cybersecurity threats. VPN will encrypt your internet traffic and make it much harder for scammers to target you. Nevertheless, the market offers many different VPNs out there, so be sure to do your research and choose the right one for you.
These are just some things that you can do to avoid being scammed in the world of cryptocurrency. If something sounds too good to be true, it probably is. So, always be cautious and do your research before investing in any digital currency. I usually, stick with the largest cryptocurrencies.