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Crypto security: Best Ways to Detect Bitcoin Scams

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Bitcoin scams are on the rise, with more investors falling prey to malicious hackers and losing their crypto assets. 

Bitcoin scams description

It is no news that the cryptocurrency industry is packed with a lot of opportunities to create wealth for everyday people, which makes it very attractive to investors. There are several testimonies of individuals who have been able to amass more wealth than they could ever have imagined possible from the crypto space.

However, as attractive as it is to investors, so too is the cryptocurrency industry attractive to hackers and scammers with malicious intent, conducting different forms of bitcoin scams to rip investors off their digital assets. 

In 2021, cryptocurrency crimes set a new high – according to research by blockchain data firm Chainalysis, fraudsters stole $14 billion worth of cryptocurrency that year. This figure is extremely high just to be lost to bitcoin scams, which shows us how important it is for every investor to be cybersecurity conscious and aware of some of these malicious techniques. 

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These scammers go through different means and approaches just to arrive at the end goal of ripping people off their bitcoin assets. This is why it has become extremely important for every bitcoin investor or user in the cryptocurrency space to be able to identify these bitcoin scams and learn how to avoid them to protect their digital assets. 

What is a Bitcoin Scam?

The terms “bitcoin scams” and “cryptocurrency scams” are used interchangeably throughout this article. A cryptocurrency scam is any fraudulent investment scheme that involves digital currencies. Cryptocurrency scams are often characterized by promises of guaranteed returns, anonymous developers, and a lack of transparency.

Today, cryptocurrency scams are more common than ever. This is because the opportunities for wealth are very vast in the crypto industry, therefore attracting a lot of investors, some of whom have no knowledge of cybersecurity or its importance. The ignorance of some of these crypto investors to the issue of cybersecurity can be seen as a loophole to be exploited by malicious hackers and bitcoin scammers. 

These bitcoin scammers are always on the lookout for new ways and techniques to take advantage of the ignorance of most crypto investors and traders to steal their money. There are different ways in which these bitcoin scams are conducted, some via phishing emails, dusting attacks, malicious airdrop websites, rug pulling, etc.

If you’re interested in cryptocurrency, it’s critical to understand the implications of cybersecurity and how to identify these bitcoin scams from a mile away. Since the blockchain supports anonymity, it becomes difficult to track down or even recover stolen funds, which is why It is extremely necessary for investors to know how to protect themselves from these fraudsters to avoid becoming victims also.

Types of Cryptocurrency Scams

Scammers use different methods to try to take advantage of unsuspecting investors. Cryptocurrency scams can take many forms, from promising guaranteed returns to anonymous developers to a lack of transparency. Some of the most common types of cryptocurrency scams include: 

  1. Fake website
  2. Phishing scam
  3. Pump and dump schemes
  4. Fake celebrity endorsements
  5. Giveaway scams
  6. Fake apps
  7. Fraudulent ICOs
  8. Cloud mining scam

How to Identify Bitcoin Scams

There are a few key ways to identify a cryptocurrency scam.

  1. Be careful of any investment that promises guaranteed returns. Usually, when cryptocurrency projects offer returns that look too good to be true, they might actually be too good to be true.
  1. Projects with doxxed developers or anonymous teams behind them are one way to raise a red flag. Investing in cryptocurrency assets requires investing money, and as with the majority of financial organizations, it should be possible to at least identify the teams behind the project.  Typically, this should include easily accessible biographies of the fund’s managers as well as an active social media presence. If you are unable to determine the true identity of the team behind the project, then that’s a red flag.
  1. Poor or nonexistent whitepaper: Each cryptocurrency project should have a whitepaper, as this is one of the most crucial components of an ICO. The whitepaper should detail the cryptocurrency’s architecture and operation. If the whitepaper makes no sense—or, worse, does not exist—proceed with caution.
  1. Excessive marketing: it is common practice for every firm or cryptocurrency project to promote itself. However, one strategy used by cryptocurrency fraudsters is to engage heavily in marketing—internet advertising, paid influencers, and offline promotion, for example.  The goal of this is to reach the greatest number of individuals in the shortest amount of time possible so as to generate more money quickly. If you notice that the marketing for a cryptocurrency offering is excessively aggressive or makes extravagant promises without supporting them, it is advisable to pause and conduct proper research before committing to anything.
  1. Don’t invest in anything you don’t fully understand. It is better to have your funds safe than to invest in projects you don’t understand which could turn out to be fraudulent projects.

Tips for Avoiding Cryptocurrency Scams

If you’re thinking about investing in cryptocurrency, there are a few things you can do to protect yourself from scams.

  1. Do your research and only invest what you can afford to lose.
  2. Avoid investments that promise guaranteed returns.
  3. Don’t invest in anything you don’t fully understand.
  4. Be wary of social media adverts
  5. Ensure to only download apps from official platforms
  6. Don’t rush into anything
  7. Protect your wallet

Conclusion

There are several cases of cryptocurrency scams, but the highest cases of bitcoin scams have proven to be recorded during the bull run. Scammers are always trying out various techniques to fulfill their malicious intent, but they are more common during the bull season than in bear seasons. This could probably be because the bull season is characterized by more projects. However, investors are still very much advised to be cybersecurity conscious and learn ways to detect bitcoin scams to avoid becoming victims themselves.

Investing in cryptocurrency while avoiding fraudulent ICOs and scandalous coins and tokens may seem daunting to a cryptocurrency investor. Even seasoned investors may have trouble keeping up in today’s rapidly evolving world of blockchain and cryptocurrency. Even if you cannot guarantee that any blockchain-related or cryptocurrency company is 100 percent authentic or successful, you can use the measures listed above to ensure that you are not a victim of fraud.

Also Read: WEB3 MARKETING: HOW BLOCKCHAIN FIRMS ARE DOING IT ALL WRONG

Bio Francis is a seasoned blockchain content writer with a unique interest for everything related to cryptocurrency, blockchain and marketing.

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