It is possible for a good investor – or even a novice investor – to get rich through the cryptocurrency market, provided the right decisions are made at the right time and for the right reasons. However, we should not delude ourselves into the idea that everything is easy and safe – in addition to market volatility, we also need to beware of scams. Unfortunately, with the growth of the cryptocurrency market, there has also been an increase in cases of scams. In this article, we will cover the most common scams related to cryptocurrencies and present protective measures that can be adopted.
Ever heard the expression “All magic comes with a price”? I remember it when the main subject is the investment market, not only related to the stock exchange but to cryptocurrencies as well. We can increase our equity in large amounts overnight, but we also run the risk of losing the amount invested in the middle of a false step. Therefore, it is always necessary to be aware of new scams and how to protect your assets in the best possible ways. We will always be, in some way, predisposed to suffer a blow, so that we can make the journey to the other side as difficult as possible – especially in the cryptocurrency market, which, being decentralized, does not have protective measures from the government.
Phishing
The word phishing has been widely known on the internet and became even more popular after the birth of cryptocurrencies. I like to link phishing with the famous mother’s warning: “Don’t talk to strangers!”. Phishing is primarily aimed at extracting investor personal information and can sound extremely convincing at first glance. Scammers contact by various means of communication: telephone, email, SMS, chat applications, etc; with the premise of being qualified professionals from brokerage houses or similar. Sometimes, the victim receives proposals for gifts, promotions, etc; by the scammer and, among the false promises, scammers are able to create copies of sites that are extremely faithful to the original sites from which they want to apply the scam. There, commonly, the user has a field to enter login and password, and this is where many scams progress.
In addition, there is also the risk that the user will click on a malicious links sent by the scammer and malicious software will be installed on their device – which exposes not only the login and password data related to the target of the scam, but also other types of accesses that the user may have on the computer.
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Ponzi
Who never wanted to earn big interest earnings in a short period of time? Ponzi schemes promise quick, big and easy returns on initial investments – yes, just like a pyramid scheme. In the Ponzi scheme the investor provides an amount to the scammer, who promises to return twice as much or more to the investor based on the success of the investment.
The biggest problem with a Ponzi scheme is that the scammer uses an investor’s money to pay the other investor, which generates positive testimonials regarding the scam and brings more victims, given that there are several successful testimonials about the investment.
At a certain point, new investors become difficult to attract, it is at this point that the scammer disappears, and investors are left holding the bag.
Ideological falsehood
Since the beginning of the internet we have heard about crimes of ideological falsehood, it would not be different in the universe of cryptocurrency scams. The ideological falsehood scam, in parts, reminds me of the mixture of Phishing and Ponzi, as it involves user trust and providing personal information.
Commonly, fraudsters create profiles of relevant personalities and companies on social networks related to the cryptocurrency universe to deceive new investors.
An interesting (and worrying) point to be raised is that scams are becoming increasingly elaborate and difficult to distinguish, a good example is scams related to Elon Musk, current owner of Twitter.
In the video above, you can see Elon Musk claiming that he owns a trading platform and offers 30% returns on deposits made on the platform. The video, however, is 100% fake and was created by software.
How to avoid cryptocurrency scams
Today, we talk about the 3 most common forms of scams related to the cryptocurrency market. However, there are still many others and the trend is that, with the growth of the market, many other new forms of scams will also emerge.
When making transactions in the cryptocurrency market, always opt for the most popular wallets, stay informed and follow relevant market sources, talk to people close to you, participate in forums, learn through materials provided by exchanges and professionals in the field, and also activate as many authentications as possible for your wallet.
Also, click only on reliable links, don’t believe in stories of absurd earnings in a short period of time – it is possible for this to happen, but the chance is 1 in 1 million. Don’t risk all your assets in search of empty promises and soon, I’m sure your earnings will gradually increase.
Translation by Laura Bonci
