Cryptocurrency is a hotly debated digital money with wildly fluctuating prices that can go up and down in days or even hours and minimal regulation.
Scammers jump in when there’s much money to make or lose.
According to recent research by Andy Klein, broker of The Investment Center Platform, says that over 400,000 cryptocurrency frauds were recorded in only the previous year.
That’s a 40% rise over the previous year. Unfortunately, this year, that figure is likely to increase by another 75%, hurting consumers with tens of billions of dollars.
So, what are the most common bitcoin disadvantages? Then there’s the deceptive giveaway. A phony ad promises to double your money back if you contribute, using photographs of Bitcoin millionaires Tyler and Cameron Winkelvoss without their consent. They also exploit Elon Musk, the founder of Tesla, as a ruse to promise you a doubled return.
Others are phony initial coin offerings or ICOs. A credible initial coin offering (ICO) will raise funds for a new cryptocurrency startup. However, fraudsters construct a bogus firm, create internet buzz, and persuade investors to invest. According to published reports, investors lost $375,000 due to fake ICOs.
Also, even though Ponzi schemes are apparent, people still fall for them. According to US authorities, OneCoin was involved in a $4 billion Ponzi scam. Remember, if an investment guarantees a profit, it’s a symptom of a Ponzi scheme.
A few crucial considerations should be kept in mind.
First and foremost, be skeptical of crypto investment proposals made on social media sites or over the phone.
Be wary of intense sales pitches urging you to “invest immediately.” Pump and dump techniques invest appear to be increasing in value before suddenly plummeting after you’ve invested.
Beware Of Fake Wallets
When the popularity of cryptocurrencies grows, so does the number of people who want to defraud investors and traders. With the increased number of smartphones, e-wallets, and exchanges available, providing users with more options than ever before, it’s easy to be tricked by fake wallets. Several have been discovered and deleted from Google’s Play Store. You may enter your information and make purchases using the fraudulent wallet, but any cryptocurrency you put into the wallet is going into someone else’s pocket.
To avoid being a target, research thoroughly before selecting any wallet. Read reviews and user feedback, especially the bad ones, to get an idea of the worst-case scenario.
Avoid Illegitimate Brokers And Exchanges
Only use an exchange with a good reputation, which can be easily found out via some research. Scam brokers and illegitimate exchanges will tempt users with a coupon or guarantees instant rewards to tempt people to join. You shall be responsible for your safety, and that is possible via doing thorough research and homework on several exchanges you may select from. Check out user feedback and stay up to date with any security flaws or threats.
Pump And Dump
It’s not uncommon for scammers to buy a new altcoin in large quantities. This triggers FOMO (fear of missing out) among other investors, briefly raising the cryptocurrency’s share price. Then, scammers sell their coins at a lower price as new customers want to invest in the new coin and prices increase.
Pumping and dumping are prohibited in the financial market, but they are far too familiar in the broad and vague world of cryptocurrencies.
Several tools are available online to detect certain scams by monitoring volume fluctuations and increases in specific cryptocurrencies.
Before making a purchase, remember to conduct your research. Never send money or give out credit card or bank account information until you’ve thoroughly investigated the platform.