It would help if you acquainted yourself with a lot about cryptocurrency as a new investor. As you must already know, cryptocurrency is gaining so much momentum globally. While this is a good thing, it has also opened it up to scammers of different categories. Here, we’ll talk about how scammers use cryptocurrency to their advantage.
So, before you buy Bitcoin Cash, read this, so you don’t fall victim to cryptocurrency scams.
The Stats on Crypto Scams
The scam issue is not new in the cryptocurrency market, especially relating to Bitcoin. Since its inception, many cases of hackers breaking into firewalls and scamming individuals have been recorded. While many crypto platforms continue to put in measures to check this menace, it is clear that a lot more needs to be done.
The cryptocurrency market has recorded thefts of billions of dollars from its revenue. A report as of 2021 recorded that scammers stole a total of fourteen billion cryptocurrencies. The Federal Trade Commission (FTC) reported that almost seven thousand people reported cryptocurrency scams amounting to 80 million dollars. These numbers indicate that the number of reports increased by twelve times compared to previous years.
Cryptocurrency Scams Categories
Despite being arguably one of the most secure technologies on the planet, blockchain technology hasn’t escaped scammers. People who fall victim to these scams are usually unsuspecting new investors, careless investors, and those looking for a get-rich-quick scheme.
Cryptocurrency scams are of different types, but they are mainly categorized into two:
- Through obtaining a target’s authentication credentials and digital wallet. Crypto scammers obtain information that provides access to an investor’s digital wallet. They also get their hands on other private information like security codes and sometimes even physical hardware.
- Impersonating investors, fraudulent business opportunities or investments, or using other malicious means to transfer digital assets directly to themselves.
Common Types of Cryptocurrency Scams
Cryptocurrency scam-related activities on Bitcoin, Bitcoin Cash, ethereum, Litecoin and other currencies vary depending on how they present themselves. However, some of these scams are said to be more common than others, and they include:
- Social Engineering Scams – where scammers psychologically manipulate or deceive victims to obtain private account information.
- Giveaway Scams – where scammers pose as businesspeople, celebrities, or crypto influencers to capture potential targets.
- Romance Scams – where scammers use dating websites to trick investors into believing they’re in love and then using that against them. About 20% of cryptocurrency assets were reported lost to this crypto scam.
- Extortion or Blackmail Scams – where scammers threaten to expose investors unless they send cryptocurrency or share their private key.
- Phishing Scams – where scammers target information on digital wallets; these are particularly interested in private keys. They send well-constructed emails instructing holders to enter their private key information to a specially created website.
How Can You Avoid Being Caught Up?
Below are some preventive measures to avoid falling victim to cryptocurrency scams:
- Never share your private keys with anyone, no matter what or where they say they are from – not even with the POTUS.
- Don’t trade or invest in cryptocurrencies using the advice you got from someone you’ve only met online.
- Don’t invest in cryptocurrency unless you know how it works, and don’t put more money than you can afford to lose.
- Be wary of social media posts claiming to offer cryptocurrency giveaways.
In conclusion, the mad rush into cryptocurrency has been the undoing of many people. Cryptocurrency will always be a top focus of scammers as it gains scale and cryptocurrency. You’ll save yourself from crypto-related scams by understanding the ways scammers scam and prevent it from happening to you.