Thursday, August 11, 2022

Cryptocurrency scams & how to avoid them

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Adetunji Matthew
Adetunji Matthewhttp://www.aidthestudent.com
I’m Adetunji Matthew, an Economist, Social Media Manager, software Developer/Marketer Sales Consultant, and Ecompreneur. I’m popularly known as “Matt” As an artist and designer, I aim to create something brilliant daily. Eager to learn more, I use my free time to get better at w hat interests me, whether it's researching, teaching, or even something entirely new.
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Scams are not something new in any field, they are updated as technology advances. As the cryptocurrency market rises, there’s also an increase in the rate of crypto scams. Fraudsters take advantage of people’s gullibility and sometimes, greed. While some scams are quite obvious to detect, others are difficult for people to recognize because they’re presented credibly.

For crypto scammers, it’s a good deal, because once the scam is done, it’s very difficult to reverse it and reach those on the other side of the screen. In this article, we will tell you what the most common scams are and how not to fall for them, keep reading!

Common Cryptocurrency Scams

Here are some common crypto scams:

1. Giveaway/raffles on Social Networks

Social networks are already very widespread, and scammers also take advantage of them to deceive people. With this method, they can ask you to send them only 1 BNB/BTC/ETH (and other types of cryptocurrencies) and they promise to pay you back multiplied by 10. Too good to be true!

If you find yourself in this type of giveaway, check the account it comes from, since it is most likely fake. Many times, accounts from different social networks are cloned to make them look like legitimate and famous characters to gain people’s trust. Note that if a genuine company ever runs these types of contests, you’ll never have to send your money first.

Remember that cryptocurrency transactions are immediate and irreversible, so once the payment is made, you cannot recover it. If you see this type of fraudulent offer on social networks, report the account and if they are impersonating a real company, send them a message so that they are also aware.

Also Read: The effect of crypto ban in Nigeria

2. Ponzi schemes

With this method, they will contact you to offer you a great investment opportunity with which you will obtain guaranteed benefits. In the financial world, anything is hardly guaranteed, so you must be vigilant. This type of scam involves many people and is usually slow to catch on.

The organizer will offer to invest some amount of cryptocurrencies – same with you and other people. The investments will go to a common fund, but the oldest investors will get paid with the investment of new participants. It then becomes a cycle in which new clients must constantly be brought in to meet the payments.

This scam is also quite common and they may contact you via email or social media to try to thrill you. Do not be fooled by the benefits that it guarantees, because even if it takes time, the system will explode, making you lose what you have invested.

Also Read: 10 Bitcoin alternatives for long term investment

3. Pyramid schemes

Similar to Ponzi schemes, but somewhat more complex and with a different structure. It is a fairly common method in other sectors such as wellness and personal care. At the top of the pyramid is the organizer, who will recruit several people, who in turn will recruit more. In this way, a very large structure is created that branches out as more people join.

This method promises benefits for recruiting new members who have to invest in the business – in this case with cryptocurrencies. Older members get benefits here also. It forces people to continually scam other people to obtain an economic margin and you will become part of the fraud if you join too.

In the long term, it is not a sustainable or viable model due to its great expansion growth. Many of the people who are at the lower levels of the chain end up not only not making a profit, but also losing the money they invested in the first place.

Also Read: 10 reasons you should invest in Cryptocurrency today

4. Fake mobile apps

Not only do you have to be careful with fake social media accounts, but also with mobile apps. These apps are designed to steal cryptocurrencies from people who install them. How do they do that? When a user uses the app as a wallet or to send/receive payments, they are sending themselves directly to the scammers.

These apps often imitate other official ones that are well-positioned in Google. To ensure the security and guarantee of crypto mobile apps, you have to download them from the official website. Needless to say, once the transaction is made, the scam is irreversible, so better check it out before you start using any app.

Some fake crypto mobile apps will also entice you to watch ads to get cryptocurrency as a reward. Why do they do it? They earn revenue from the advertising they insert and are seen by users.

5. Phishing

Phishing is a common practice in which scammers pose as real and reputable companies to obtain victims’ personal data. It usually happens in the world of finance and also with cryptocurrencies. Scammers can contact potential victims through various means –  the most common mediums are phone, email, fake websites, or messaging apps.

There is no standard modus operandi for all scammers, but many times they pose as a company’s helpdesk. Once they contact users, they ask for their passwords or private keywords to solve a certain problem with their account. With this data, they can directly access people’s crypto funds.

A legitimate company will never ask for your personal information, so it’s the first red flag if you receive a notification asking for it. Don’t trust either if they ask you to reset your password or some of your information, since the link they provide you can lead to a false and malicious website.

Also Read: How to make money with cryptocurrency in Nigeria

Tips to avoid cryptocurrency scams

Although cryptocurrency scams are updated and scammers find new ways to trick people, we must always be vigilant to avoid any scam. Here are some tips you can keep in mind to ensure that your transactions are more secure:

  • Check the URL of the web pages you visit. Many times the domains are similar to the original ones.
  • Bookmark your most visited pages as Google may show you a malicious website.
  • Ignore social media or email notifications if you haven’t asked for help.
  • Always communicate with companies from their official pages.
  • Do not share your passwords with anyone.
  • Do not trust anyone’s good faith and do your own prior investigation.

Also Read: Top ten secrets you need to know about bitcoin

Final Thoughts

The scams mentioned in this article are just some of the popular crypto scams. Scammers keep updating and finding new ways to scam users. However, the tips we shared can help you to detect and save you from new crypto scams. Also, very importantly, avoid being greedy as cryptocurrency scams are usually enticing.

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