);

Cryptocurrency: How To Avoid Scams

The rise in cryptocurrency’s popularity has also led to the rise of cryptocurrency scams. Unscrupulous crypto-predators take advantage of both the “newness” of the market and the naivete of the average consumer to propagate these bad-faith deals. Let’s take a look at some of the most common scams in the cryptocurrency industry, and how to avoid them.

“Fake Wallets”

A common cryptocurrency scam found on the Google Play Store are so-called “fake wallets.” These are apps that look like real cryptocurrency “wallets” for online trading, but in actuality are little more than phishing opportunities for unscrupulous thieves. The most common fake wallets rip the user’s private keys and seed money. There are a number of ways to suss out a fake wallet from a real one. For example, real cryptocurrency wallets have official websites that you can visit to find out more information about the company. Additionally, real cryptocurrency wallets have been on the Google Play store and/or the Apple store for quite some time — and they have good reviews in the store.

Pyramid and Ponzi Schemes

The 2017 OneCoin incident warned potential cryptocurrency investors off of Pyramid and Ponzi schemes, but other pyramids and Ponzi schemes have cropped up in OneCoin’s wake. Thanks to this, blockchain systems are currently being considered as standard protocol for cryptocurrency exchanges.

Pump and Dump Scams

The CFTC says that cryptocurrency “pump and dump” scams are extensions of the old “penny stock”/boiler room scams. Interest is generated by false promises, especially to consumers that don’t know better. Then, as interest in these cryptocurrencies increased, the value would increase in kind. When the prices would reach a high enough level, the unscrupulous investors would put the remainder of the shares on the open market, the prices would crash, and everyone was left holding a worthless cryptocurrency. In an example provided by Forbes, the so-called “pump and dump” was over in eight minutes.

How to Avoid Common Cryptocurrency Scams

  • Only invest what you can afford to lose. The cryptocurrency market is volatile — more than the stock market — and over-investing is never a good idea.
  • When considering a Bitcoin wallet (in particular), look for a wallet that’s listed on Bitcoin.org. This website is maintained, and trusted, by the Bitcoin community effort.
  • Do thorough research on all investment opportunities before making a decision.
  • Always keep your eye on the market to see what the latest “scams” are all about.

Sources

The 8 Worst Cryptocurrency Hacks in History (And What Exactly Happened)

https://cryptodigestnews.com/how-to-avoid-the-most-common-crypto-scams-64816d583fd8

5 Common Cryptocurrency Scams and How to Avoid Them

How to Avoid Cryptocurrency Scams

https://www.thestreet.com/investing/bitcoin/bitcoin-scams-14640202

6 Things You Should Do to Avoid Fake Bitcoin Wallet App Scams

https://www.cftc.gov/sites/default/files/idc/groups/public/@customerprotection/documents/file/customeradvisory_pumpdump0218.pdf

https://www.forbes.com/sites/johnwasik/2018/02/23/how-to-avoid-crypto-bitcoin-pump-and-dump-scams/#1185a5e010b0

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