Crypto Scams and How You Can Avoid Them
Over the years, a number of concerns have been raised regarding the crypto and ICO markets, especially concerning the lack of investor protection in comparison to traditional markets.
Just like any investment, there are risks associated with trading on the cryptocurrency market. For new investors, understanding bitcoin and other cryptocurrencies can be a bit complex and this makes them the ideal target for scammers. There is a great opportunity for fraud and manipulation and it is imperative that potential investors educate themselves concerning the volatile nature of crypto and when they are receiving misleading information.
Checklist: How to Detect a Crypto Scam
We’ve curated a useful checklist to assist new or potential investors in identifying crypto website scams:
- Check whether the website connects securely over https (not http). If the address starts with “http” instead of “https” the data you send to the website is not secure.
- Make sure you can see the word “secure” or a padlock icon in your web browser’s address bar. This indicates that the website is indeed secure.
- If the URL has noticeable spelling errors, the chances are that the website is fake.
- If you do find further bad grammar, awkward phrasing, or spelling mistakes on the website, please proceed with caution.
- If the website promises abnormally high profits, please proceed with caution. This may not necessarily indicate a scam, but it should be flagged.
- Try and find the “about us” page and check whether there is any information on the people who work for the company or if the company is registered. If there is little to no information proceed with caution.
- Check if other reputable websites link to the website you’re on. This will give you an indication that the site can be trusted and is reputable.
- Always check for reviews or testimonials from previous users. The crypto community usually spreads the news about scams fast.
- Be wary of websites that claim any celebrity endorsements. Many investment scams fake celebrity endorsements.
- Learn as much about cryptocurrency exchanges and how they work. The cryptocurrency market is complex. Before investing do the research.
Three Main Bitcoin Scams You Should Be Careful of
Phishing is the most common of all bitcoin or cryptocurrency-related scams. This scam usually takes place when an investor receives an unsolicited email, that claims to be coming from the bank or in this case your crypto exchange or wallet provider. This email contains a link that takes you to a site that looks identical to the exchange or wallet you usually use. Once you enter your account details on this unofficial page, the scammers have everything they need to log in to your real account and steal your funds.
Fake Exchanges and Wallets
Be careful of bitcoin exchanges. Some will entice potential investors with promotional offers that sound unrealistic, while others pressure investors to create an account and deposit funds. Even going as far as offering bonuses. There are also scammers who have created sophisticated fake wallet apps, allowing the user to download and register on the app. These apps are created to steal critical account information.
Many potential investors are interested in generating high returns from the crypto market. For those wanting to get in on the ground floor, the easiest option for the average person is to buy coins or tokens an ICO. In 2018 alone. ICO raised a total of $11.69 billion. Scammers have taken advantage of potential investors by creating fake ICOs and convincing people to buy a cryptocurrency that doesn’t exist. Therefore it has become vitally important to read testimonials and reviews like this Bitcoin trader review to test legitimacy and gain more insights.
Once you have invested in a scam, the chances of receiving your money back are slim. This is true for all international scams, cryptocurrency, in particular, is especially difficult to recover. We suggest that you do as much research as possible into any crypto you are interested in. Cryptocurrencies are speculative, complex, and involve significant risks. Performance is at times unpredictable and there is no guarantee that high-returns will be made on every attempt.
Featured image: Boston Magazine