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Ever since the use of the internet became popular among the general public in the 1990s, various forms of cybercrime specializing in the use of networks have emerged: cyberbullying, account hacking, scams... And the cryptocurrency market is not without its risks. Therefore, if you read our blog article: how to make money with cryptocurrencies and are now thinking of investing in them, you need to know the most common cryptocurrency scams and how to avoid them.
Cryptocurrency scams refer to activities designed to acquire cryptocurrencies through deception or manipulation. These scams have become very frequent in recent years. In 2019 alone, for example, almost $10 billion in cryptocurrencies was stolen through scams.
Most cryptocurrency scams are adaptations of scams also used offline or in other online activities. In other words, scammers looking to steal cryptocurrencies use systems already tested in other areas, but in this case, they take advantage of the benefits offered by the internet (hacking, social media influence, anonymity, etc.).
The worst thing about cryptocurrency scams is that once a transaction is made, it's practically impossible to trace the funds and recover the money, so prevention is crucial.
Cryptocurrency scams are quite varied in terms of approach and execution, but they usually rely on manipulating the investor through social engineering techniques to get them to hand over their cryptocurrencies or provide the necessary keys to access them.
The most common cryptocurrency scams are:
This is a classic scam that involves deceptively selling a non-existent or worthless cryptocurrency, promising very high returns in a short time. As more people fall into the trap, the scammer uses the money invested by the most recent buyers to pay off earlier investors, until the system collapses.
A fake exchange platform is created that launches a fake Initial Coin Offering (ICO) to encourage people to invest. Once the funds have been collected, it disappears. A very similar scheme involves creating fake cryptocurrency apps.
This is more of a data theft than a scam. The scammer sends an email or other type of message to someone who has already invested in cryptocurrencies. This message is designed to appear as if it was sent from a known account and requests data from the investor. When the investor sends them, the scammer uses them to access their wallets and steal the cryptocurrencies. That's why you should never reveal data unless you are 100% sure of the sender.
The scammer approaches investors via social media (sometimes pretending to be a well-known person) and announces a giveaway or an airdrop (free distribution of cryptocurrencies). A deposit is then requested to enter the giveaway, which, of course, never takes place. They may also ask for data that allows them to access cryptocurrencies directly.
A cryptocurrency mining service is offered that only requires an initial payment from the investor. Once funds are received, the investor is sent false data about their supposed cryptocurrency generation. The deception falls apart when the user tries to make a withdrawal, as the money has disappeared.
In reality, rather than a scam in itself, the use of Instagram is a tool for other types of scams. A successful Instagram account, whether it belongs to a real person with many followers who is hired or manipulated, or a fake profile specializing in crypto, is used to promote scams.
Perhaps the most elaborate of cryptocurrency scams. The scammer identifies a coin with low market value and acquires it in large quantities. This causes the value to start rising, and they use this to spread rumors and false information that stimulate demand for that cryptocurrency. The scammer can then sell at a much higher price and make significant profits, but the coin lacks real value, so once the rumors die down, investors suffer heavy losses.
The best approach to the risk of cryptocurrency scams is to take precautions. It's better to be safe than sorry, so here are some tips to be well-prepared:
Always research investment opportunities. Always. It doesn't matter if your all-time favorite artist announces it or if it seems extremely profitable. Before investing in cryptocurrencies, you must have all the facts, and you should never download unverified applications or plugins.
All investments should be based on prior knowledge of the markets and the product. There are many online resources available to help you follow trends and statistics or seek help and advice.
How many times have we received an email with a great offer for something and rushed to open the page to take advantage of it without even checking who sent it? Probably many. And that puts us at risk, because cyber scammers know this. So, if you haven't asked for something and you receive information, don't rush into it. Don't fall for the fear of missing out; instead, seek out a little extra information.
Often, a spectacularly good offer is used as bait for a scam. This could be an airdrop, a free giveaway, or simply the promise of extraordinarily high returns. And it's almost always a lie.
Finally, although it may seem obvious, you shouldn't trust people you don't know, especially when they are strangers contacting you online. Scammers very often create fake profiles or pretend to be other people. So, if you're not 100% sure someone is trustworthy, be suspicious.
In addition to following the advice from the previous point to avoid falling into the hands of scammers, we can also take a few measures to protect our investments:
Research the security of the exchanges you plan to invest with.
Two-factor authentication, which combines two types of keys, is the most secure, and it will be even more so if you choose character combinations without semantic meaning that you have never used before as a password.
The seed phrase is the recovery phrase for your keys. You must memorize it and keep it secret.
There are different types of virtual wallets. The more secure the one you use, the less likely someone will access it. That's why hardware wallets, which can store cryptocurrencies offline, are the most recommended.
Should all of the above fail, this last piece of advice will save you from ruin. You must be clear about what level of losses you are willing to assume (based on your finances and other factors) and include potential losses due to scams.
Finally, what if you've been scammed? Even if we are well-informed and take precautions, zero risk doesn't exist. A security flaw can always occur, leading us to become victims of a cunning criminal.
Therefore, if you believe you have been the victim of a cryptocurrency scam, don't panic. You still have time to prevent further damage and, perhaps, even recover your cryptocurrencies. To do so, follow these steps:
Any interaction can be exploited by them to steal more funds or obtain information for their benefit.
Emails, WhatsApp messages, screenshots of conversations or transactions, user profiles…
Even though cryptocurrencies are not well-regulated, fraud is a crime. Provide evidence to the police and cooperate as much as they request. Â
Start by notifying the platforms where the scam occurred, so they can strengthen their security measures and prevent similar scams. If you know other people who invest through the same platform, warn them as well so they can take precautions.
There are websites specializing in tracking online scams, and they require all the information you can provide to do so.
This step is essential if suspicious activity has occurred in your accounts, meaning if not only cryptocurrencies but also "real" money has been stolen. You should also report if your credentials have been compromised, allowing access to your bank accounts.
Inform friends and family whom the scammer might access through your accounts about what happened, but also tell other people. Even sharing the case on social media can help prevent scams.
In any case, the most important thing is to learn from the experience and take more and better precautions in the future. No investor is completely safe from cryptocurrency scams, but prevention is always positive. That's why it's crucial to stay updated on security developments, avoid providing personal data or private keys to strangers, and verify who you are dealing with before answering certain questions.
Ultimately, while cryptocurrencies offer a good investment opportunity, they also carry risks. There's a possibility of falling victim to various types of scams orchestrated by individuals who want to seize our cryptocurrencies or directly deceive us into buying fictitious digital assets, pocketing the money.
But don't worry! It's possible to prevent scams and also secure your accounts to make them more difficult. By following the advice provided here by Domoblock.io you can be sure you'll succeed because it not only specializes in real estate crowdfunding and the tokenization of real estate, but also focuses on ensuring your investment is cared for and protected.
Keep reading: cryptocurrency types and cryptocurrency mixer.
Josep Ramón Batalla, 54
Funded
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Target
647.323,06 €
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