9 Tips for Avoiding Crypto Scams and Frauds

The crypto industry is complex and widely unregulated, which makes it a breeding ground for scammers. The general public is not well-versed in blockchain technology, and their lack of understanding is why con artists are thriving in the crypto world. If you are investing in any cryptocurrency, it is vital for you to understand how these scams work and what steps you can take to avoid them. In this article, we will go through some useful tips that can help you avoid most of the crypto scams out there. Let’s have a look:

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Identify Phishing Scams

In the world of cryptocurrency, phishing scams are a major concern, especially when it comes to sought-after crypto software wallets. Scammers target your wallet’s private key, which is essentially your crypto’s password, and can gain access to your funds.

Their tactic is pretty simple. They send emails or direct messages with links that take holders to a specially crafted website, prompting them to share private keys. Once obtained, hackers can withdraw your cryptocurrency, and you can end up losing your entire investment. Phishing scams stand out as one of the most common threats to consumers, with the FBI reporting over 300,000 people falling prey to them in 2022.

That is why it is important for you to stay on guard against phishing scams. Avoid sharing crucial information on sketchy websites or counterfeit wallets to ensure the safety of your crypto assets.

Ensure You are Using a Secure Wallet

When purchasing cryptocurrencies and storing them within a third-party wallet (especially hot wallets), it’s crucial to be sure that the wallet comes from a trustworthy company with a solid rep. There are plenty of crypto wallet companies out there, and some of them have gained the trust of the public by offering them secure services over a significant period of time.

Keep your wallet credentials to yourself, and steer clear of logging in when you’re on a public network. Don’t forget to set up two-factor authentication and put passwords on your devices. It adds that extra layer so that even if someone nabs your phone or laptop, they can’t get into your wallet. Having only a password for your wallet can be extremely risky.

Also, think about using a couple of wallets and maybe even some offline storage devices for an extra security boost. This way, you won’t lose the whole stash if there’s a breach. Stay sharp and take these steps to keep your crypto safe and sound.

Don’t Put Too Much Faith in Social Media

Social media, including platforms like Twitter, Facebook, Instagram, and YouTube, is a hotspot for crypto scams. Many people become victims of fraud through these channels, falling for schemes ranging from giveaway scams to deceptive verified accounts on Twitter.

Before placing trust in advice or ideas from seemingly verified accounts, go through their activity. Check the account’s history, its active duration, and the number of followers it has. A brand-new account with minimal followers primarily promoting crypto projects is likely untrustworthy.

YouTube is another avenue for scams, with fake livestreams that deceive viewers into putting their crypto at risk. Scammers create authentic-looking live streams, often using stolen content to appear legitimate and share links to giveaways or enticing content. These links may be phishing attempts or tricks to persuade you to send your crypto to the supposed expert to invest.

Exercise caution on all platforms, and only trust streamers with a solid reputation and a well-established channel. Social media can be a breeding ground for scams, so steer clear of any offerings or links received through these channels to keep your crypto safe.

Always Use Tow-Factor Authentication

If you haven’t set up two-factor authentication on your crypto wallets yet, it’s vital to do so right away. This extra layer of security ensures that even if a hacker manages to grab your login details, they can’t waltz into your wallet or crypto trading account. Why? Because before granting access, a code needs to be sent to your phone, authenticator app, or email. If the hacker does not have those codes, the password is useless to them.  If you ever receive a code you didn’t request, consider it a red flag that someone is trying to breach your account.

Once this setup is in place, it complicates things for fraudsters. Now, just having your password won’t cut it. Some wallets even allow more than two steps for login, so you can add another layer of security. With two-factor authentication, even an accidental slip with your password won’t compromise your safety. Take this simple step today and make your crypto investments more secure.

Do Your Research Before Investing

To protect yourself from falling prey to crypto scams, the most effective strategy is to be an informed consumer. Before purchasing any cryptocurrencies, it’s important to take a look at its key aspects. Understand when the coins were created, identify the creators and their motives, explore the technology that crypto is built on, distinguish their unique features from other offerings, ascertain the number of coins in circulation, and recognize the distinctive value they bring compared to other options. By thoroughly researching these factors, you can avoid investing in rug-pulls.

Furthermore, extend your research to the platforms you use for cryptocurrency transactions. Always prefer secure websites with a reputable track record for safeguarding customer interests. Thorough research enhances your understanding of potential investments and greatly reduces the risk of falling victim to scams lurking around in the crypto space.

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Avoid Investing in Ponzi Schemes

Always beware of Ponzi schemes when you are investing in cryptocurrencies. A Ponzi scheme is a fraudulent tactic promising great returns not by genuine investing but by using funds from new investors to pay earlier ones. With its complexity and newness, cryptocurrency becomes a prime target for such schemes, often taking advantage of the allure of an “experienced investor” with superior knowledge.

These schemes promise to handle the complexities of investing in technologies like NFTs or lending pools on your behalf, claiming to eliminate the need for you to understand the more complex parts. Be wary if someone guarantees substantial returns, as this is the first sign of a Ponzi scheme. Remember, all investments involve risk, and the crypto market, known for its volatility, is no exception. If it sounds too good to be true, it most likely is.

Beware of Blackmail Schemes

Another tactic scammers employ is blackmailing. In these schemes, perpetrators falsely claim to have records of individuals visiting adult or illicit websites. They then threaten to expose this information unless the victims provide them with their private keys or cryptocurrency. They will send you a long email claiming how they have gotten access to your browser history and webcam and can expose you whenever they like. The truth is they don’t have anything and are just fishing.

Also, it is important to recognize these attempts as criminal extortion and take immediate action. If you encounter such blackmail schemes, report them to the relevant authorities in your country without hesitation.

Always Go Through the White Paper

Before investing in any new cryptocurrency, go through their white paper in detail. A white paper is a document released to the public before the development process begins. Legitimate white papers provide clear insights into protocols, blockchain details, formulas, and the overall functioning of the network.

On the other hand, fake cryptocurrencies often lack well-documented and researched white papers. These white papers are often poorly written, with inconsistent figures, and they fail to explain the intended use of the funds raised. You can discern between legitimate projects and potential scams by going through their white papers. If the white paper is shady, it’s your cue to steer clear of that cryptocurrency.

Steer Clear of Pump-and-Dump Schemes

Pump-and-dump schemes involve scammers trying to boost the popularity of a particular cryptocurrency by creating a buzz through mass emails or social media platforms like Twitter, Discord, or Telegram. They hype up the coin so that its price can increase and more people buy it.

The truth is these scammers are just looking to cash out quickly. Once the price is high enough, they sell off their holdings, causing the price to plummet rapidly. While it might seem like a quick way to make money, participating in these schemes is risky and often leads to losses. So beware of these schemes and never invest in a pump-and-dump crypto.

Conclusion:

To wrap it up, using crypto involves risks, but you can keep yourself safe from scams without getting into complicated stuff. Just stick to the tips we talked about, and you’ll be in good shape to protect your assets and dodge most scammers. Stay in the loop with what’s happening in crypto security to catch anything shady early on. Always do your homework and make smart investments to secure your money. Also, if something feels fishy to you, it is always best to avoid such investment. Happy trading!

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