Bitcoin is becoming more popular by the hour. Once it was a topic that only tech-savvy people and those who invested in cryptocurrencies had heard of, but now it’s not uncommon to see the mainstream media talking about Bitcoin and the cryptocurrency market. However, as with any new technology or startup, there are people looking to take advantage of its popularity. Scammers could ruin your fortune if you’re not careful. Here are some common scams that you should be aware of and ways to avoid them so you don’t get taken advantage of.
One way scammers steal your Bitcoins is by stealing credit card or bank information to buy Bitcoin. The scammers will then use the stolen credit card information to purchase cryptocurrency and transfer it into a fake wallet that they control. The scammer will then wait for the victim to try and withdraw their Bitcoin and make sure that they cannot.
A good way to prevent this from happening is by having a virtual temporary card. That way, you can use the number you’re given one time, and dispose of it. The next purchase would be with a completely different number, and scammers won’t be able to use the previous number if they tried to steal it.
Social Engineering Scams
There are two main types of social engineering scams. The first is a phishing scam, which is when someone sends you an email pretending to be from your bank or another company. They’ll send you a link that leads to a fake website with a malicious payload. If you click on the link, the website will ask for your personal information and may also try to install malware on your computer.
The other type of scam is called spear-phishing, where scammers target specific individuals with tailored emails that are more personalized than regular spam emails. These emails will often have made-up details about the individual’s work or personal life and will include attachments with malicious software, such as keyloggers or ransomware, that can lock up files on your computer until you pay the ransom money.
Always be sure to pay attention to the source of anything or anyone who is asking for sensitive information. If it seems fishy and unusual, leave it alone and walk away with your personal information intact.
The most common scam is the pump-n-dump. As the name implies, these scams involve the purchase of Bitcoin before it goes up in price and then selling when the price rises. The scammers are not looking to make any money from this, but instead, want to draw more people into the market. Your goal with these scams is to get enough people in on your scheme so that you can sell out at a profit.
As a result, scammers will try to convince you that their plan involves buying low and selling high (this is how they justify their actions). They may even ask you for your help, promising that if they have a group of people investing in their scheme, they could easily sell out at a profit and all be rich. However, once everyone else realizes what’s going on, they sell out while the victim sits there waiting for their ‘investment’ to pay off.
To avoid this scam, stay away from people who start asking for money upfront or who offer deals where there’s no real risk involved. Also, be careful of any trading opportunities that seem too good to be true. Finally, don’t trust anyone who claims they have inside information or big investors backing them up; just because someone has money doesn’t always mean they know what they’re doing.
One of the most common scams are Ponzi, or Pyramid, schemes. They promise to pay high returns with little effort or risk. You might see ads on Facebook, YouTube, and other platforms that promise investors will make “quick money”. These ads often show pictures of people who have already made a lot of money by investing in these schemes. Most of the time there are paid actors working under someone to get people to believe in their false services.
ICOs and Phony Cryptos
This scam to be aware of is called ICOs, or Initial Coin Offerings. This scam becomes less popular, but it’s still out there and it’s an easy one to fall for. The scammer will tell you that they have a brilliant idea for technological innovation and will offer you the chance to invest in their company by buying their own cryptocurrency called “XCoin.” They might even list a percentage of the company, so you can invest in them for as low as 3-5% of the company. But, when you buy your XCoins, you find out that they only bought enough coins to pay themselves off. The reality is that they are just using your money and running away with it without creating any product or technology that they promised they would deliver.
To avoid this scam, always do your research on these companies before investing in them. If something sounds too good to be true then it probably is. ICO is also unregulated and has very risky investments without any guarantees of success or return on investment (ROI). Also, sticking with cryptocurrencies on well-known exchanges such as Binance, Coinbase, or Crypto.com will ensure you don’t fall victim to this type of scam.