Cryptocurrency Scams: How to avoid them? IMPORTANT 2022

Cryptocurrency Scams and how to avoid them

The most common cryptocurrncy scams and how to avoid them – all important information about how to safe stame when trading crypto and using the blockchain.

Crypto scams: What are cryptocurrency scams?

The world of cryptocurrency is no stranger to scams. People are being scammed out of money on a daily basis, either through direct scamming or simply by investing in phantom projects that don’t exist. Without the proper knowledge and understanding, many people fall victim to these types of crimes.

How do people get scammed in defi?

Although cryptocurrency itself is not anonymous (most cryptocurrencies are pseudo-anonymous), it attracts criminals because transactions cannot be reversed once they have been completed. It is vital for you to know how to avoid becoming another statistic.

Cryptocurrency Scams: Categories

There are really mainly two kinds of scams with common characteristics within each category – this article will start by introducing them before delving into greater detail about each type, with advice on how to recognise one, avoid it and report it if it happens to you.

Cryptocurrency Scams: Crypto Ponzi Scheme 

The first type of scam is the ponzi scheme.

This is where new investors are promised high returns on their investment, with

the money coming from the investments of new investors

rather than from any legitimate business activity.

How does the cryptocurrency scam: ponzi scheme work?

In a classic ponzi scheme, the promoter will take money from new investors and use it to pay off old investors, making it look like the business is successful and legitimate. As soon as there are no more new investors to be found, the whole thing comes crashing down and everyone loses out.

Ponzi schemes are by far the most common scam in the cryptocurrency world. They can be difficult to spot, as the promoter will usually make it sound like a legitimate business opportunity. Some signs that you may be dealing with a ponzi scheme include:

– High returns on investment that seem too good to be true – remember, if it sounds too good to be true, it probably is!

– No information about who is behind the scheme or where the money is being invested

– Unclear or nonexistent business plan

– Requests for personal information such as your social security number

Crypto Scam: Pump and Dump

The second type of scam is the pump and dump.

This is where unscrupulous traders artificially inflate the price of a

cryptocurrency by spreading false information (pumping it up) before selling

their holdings at the inflated price (dumping it) to make a quick profit.

This is particularly easy for those with early access to information, as they can buy coins before the general public finds out about them and push up the price by buying it.

Ponzi schemes are far more common than pump and dumps, but both are equally damaging to inexperienced traders who don’t know any better.

How does the cryptocurrency scam – pump and dump work?

Scammers usually target people on social media or on forums, which tend to be places where new traders congregate.

It is easier for scammers to manipulate people who are less experienced at trading – for example, if you have just started investing in cryptocurrency your knowledge will naturally still be small compared to someone who has been through several market cycles. of the source before clicking on any links or providing any personal information.

How to recognize a pump and dump crypto scam?

  • You’ve been contacted on social media (DMs) or a forum
  • You have been invited to a Telegram group or Singnal Group
  • You can’t see who’s in the group, but there seems to be a lot of people
  • You can’t chat in the group, you can only see the messages
  • You’ve been sent step-by-step instructions how to buy the coin – this means that there are a lot of unexperienced traders in the group
  • You have NOT been sent a step-by-step huide how to sell the coin
  • You are invited to pump a coin that JUST has been created 
  • You can’t sell it

Important: Even if the first pump was successfull and you saw how people profit, the next most likely be unfortunate and you may loose your money!

Cryptocurrency scams: Mining schemes

Another common scam is cryptocurrency mining schemes. These scams usually involve the victim being promised very high returns for investing in a mining rig, which will supposedly mine large amounts of cryptocurrency for them.

However, after sending the money it turns out that there was never any

intention of mining anything – the victim is just left with a useless mining rig.

Cryptocurrency mining malware scam

Some scams also involve malware that takes over your computer and uses its resources to mine cryptocurrency for the scammer. This can cause your computer to overheat and potentially damage it, as well as slowing it down to the point where it is unusable.

Crypto Phishing

One of the most common scams in any industry is phishing. This is where

scammers send out fake emails or messages purporting to be from a reputable

company or individual, in an attempt to steal people’s login details or money.

Always be vigilant when receiving any kind of communication from a cryptocurrency exchange or wallet service, and check the legitimacy.

I can’t sell my crypto because cannot estimate gas: The classic Rug Pull Cryptocurrency Scam

In a rug pulled scam, the scammer convinces you to invest in a cryptocurrency that doesn’t exist or has just been created. They will often create a fake website or social media profile to make it look like the coin is legitimate. Once you have invested, the scammer will disappear with your money.

How do they scam you?

  • They invented the cryptocurrency and then, invited you to pump it 
  • They boost the gas fee so it’s impossible to sell the coin
  • They sell first

Crypto Fake Exchange Scam

These are websites that look like legitimate exchanges, but a cryptocurrency will go up or down in the future. They often are actuallyrequiring something that only you can know (for example, your password, secret phrase) to steal.

Cryptocurrency Scams and how to avoid them

How to avoid cryptocurrency scams?

The best way to avoid getting scammed in the cryptocurrency world is by being vigilant and knowing what to look out for. Here are some tips:

  • Don’t trust anyone who promises high returns on an investment – this is a common ploy of ponzi schemes
  • Don’t invest in anything you don’t understand – if you don’t how a coin works, or what it
  • Don’t trust scammers even if you have their social media profile
  • Be careful if you’re buying a new coin on Pancakeswap
  • Don’t trust random people on forums or Telegram who are promising to help you buy a coin
  • Always check the link – check where are you buying from!
  • Use two-factor authentication whenever possible – this increases security by requiring a second form of identification, such as a code sent to your phone, in order to log in

  • Keep your money in cold storage – this is a wallet that is not connected to the internet, making it harder for scammers to steal your funds

  • Don’t invest more than you can afford to lose – remember, cryptocurrencies are still very volatile and there is always risk involved.

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1 thoughts on “Cryptocurrency Scams: How to avoid them? IMPORTANT 2022

  1. John Smith says:

    This blog is like a virtual mentor, guiding me towards personal and professional growth Thank you for being a source of inspiration

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