Have you ever been a victim of crypto scams?
One of the reasons people invest in Bitcoin and other cryptocurrencies is the huge returns it promises, making the industry a prime space for scammers looking for easy money. Sometimes, many crypto traders and enthusiasts are carried away with the activities in the market that they forget to protect their crypto wallets.
To keep your investment safe, beware of the following crypto scams:
A crypto Ponzi scheme takes the funds of a new investor to pay existing investors, and once there is a decline in new investments, the scheme crumbles as investors can no longer retrieve their money. Several countries have shut down alleged companies that lured investors with promises of big returns for investing in Bitcoin mining. Always be wary of investments presented as guaranteed high returns with low risk – that is a classic too-good-to-be-true scenario.
Consistent returns are also a red flag. Investments should naturally have fluctuating returns, especially in rapidly changing crypto markets. If an investment provides returns without that fluctuation, be suspicious.
The growth of the crypto industry has given rise to many fake exchanges. To avoid being a victim, beware of aggressive invitations to use an exchange, especially with promises of high returns or a guaranteed rate of return. No investment can offer that, least of all in the volatile crypto markets. Scam exchanges also offer mouthwatering incentives. Make thorough inquiries before using any exchange.
The crypto industry is an ever-growing one prone to changes at any point in time. Thousands of currencies exist, and new coins/altcoins are developed regularly.
To vet a new currency, start by assessing the team behind its development and enquire about its history and trustworthiness. You can also read the whitepaper created for the currency’s initial coin offering (ICO) to get more details. Do not rush into investing in any coin without having a proper understanding of how it works.
Pump and dump
We have experienced a lot of crypto pump-and-dump schemes in recent times. Sometimes, these schemes are created by a group of dubious investors who deliberately manipulate the market for their selfish interests. They incite demand for an asset—by convincing a lot of people to please order for it—thus increasing the value of that asset. And when the “big boys” sell their shares, while the price is high, the artificial value drops instantly, and everyone left holding the asset loses out.
Avoid Chain referral schemes.
People pay in cryptocurrency to join online programs because they believe that they will earn big rewards. The FTC reported two of these schemes in 2018, which had people pay to join using Bitcoin and Litecoin. Avoid chain schemes and other online crypto scams by deleting these emails as soon as you receive them. The complexity and relative newness of cryptocurrency investing make the space ideal for scammers taking advantage of new investors.
The best way to protect yourself from scams is to do your research before putting your money anywhere. Only use reputable cryptocurrency exchanges and understand the potential risks and rewards attached.