Steemit Crypto Academy Contest / S6W5 - Common Crypto Scams And How To Avoid Them
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The Steemit Crypto Academy has been great in delivering top-notch contests for us, and I love doing the tasks of this community every week. This week's contest is titled Common Crypto Scams And How To Avoid Them by @crypto-academy.
Crypto scam is a growing problem in the cryptocurrency market. With the rise of digital currencies, criminals have taken advantage of unsuspecting investors looking to make quick money. From fake investments to Ponzi schemes and phishing attacks, it’s important to stay vigilant and protect yourself from these crypto scams. I will invite my lovely friends, to follow my post as I will be sharing my understanding of this topic.
My Understanding On What Crypto Scam Is All About |
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Crypto scams are unfortunate realities of the digital world, they are malicious schemes used to deceive people of their hard-earned money. They can take many forms, from fake investment opportunities to phishing attacks, to fake exchanges and wallets.
Crypto scammers often use fake websites or ads to convince people to invest in an ICO (initial coin offering). These ads may look legitimate, but they are designed to deceive people into giving away their money. In addition, scammers may offer false guarantees of huge returns on their investments.
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Over the years, they have been lots of successful crypto scams that have ripped people off their money. Scammers often rely on exploiting people’s lack of knowledge and gullibility. They may target those who are new to cryptocurrency, claiming to have exclusive trading secrets, or promising huge returns if their victims invest in a particular project. These false promises can be tempting, especially for those who don't understand the risks associated with investing in cryptocurrency.
By relying on psychological manipulation, scammers can get victims to trust them and ultimately give up their money. Crypto scams are successful because scammers understand human psychology and know how to take advantage of it, as well as their emotions, to steal their money.
For example, they may promise something so outrageous it seems impossible not to believe them. Or they might use fear tactics, telling potential victims they need to act quickly or else they'll miss out on a once-in-a-lifetime opportunity.
Some Major Types Of Crypto Scams And How To Spot Them |
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Cryptocurrency is a form of digital currency that is becoming increasingly popular. While it offers many advantages, it is important to be aware of the different types of crypto scams that can occur, and how to spot them in order to protect your crypto investments.
PONZI SCHEMES |
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A Ponzi scheme is one of the most common types of cryptocurrency scams out there. It’s an investment fraud where investors are promised high returns with little to no risk. The scam works by having an individual or group of people promise outrageous returns on investments without actually providing any goods or services.
This is done by using the money from new investors to pay off earlier investors and creating a never-ending cycle of fraudulent payments. Ponzi schemes can be hard to spot because of their focus on offering potential returns that seem too good to be true.
Additionally, they often create a sense of urgency among investors, pressuring them to act quickly before they miss out. In order to protect yourself from Ponzi schemes, it’s important to do your own research into any investment opportunities you may be presented with, as well as to verify the legitimacy of the organization and the individuals behind it.
It's important to recognize the warning signs of a Ponzi scheme before investing. Some of these warning signs include:
- High return rates: Ponzi schemes usually offer returns of 10% or higher and usually offer guarantees of future profits.
- Pressure to invest quickly: Ponzi schemes often create a sense of urgency by suggesting you must invest now or risk losing out on opportunities.
- Limited information available: Fraudsters tend to provide limited or sketchy information about the investments they are offering.
- Promises of “guaranteed” profits: No legitimate investment can guarantee a return, so if you hear this type of promise, it could be a sign of a scam.
Always remember that there are no easy shortcuts to making money, so don't trust any offers that seem too good to be true.
ICO SCAMS |
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Initial Coin Offerings (ICOs) are a type of fundraising used by startups and companies to raise capital for their projects. Many ICOs have been created to fund various projects and businesses, but unfortunately, not all of them are legitimate.
ICO scams have become increasingly common, and they can be incredibly hard to spot. In an ICO scam, fraudsters will pretend to launch a legitimate Initial Coin Offering, when in reality they are just collecting money from unsuspecting investors. They may make up attractive technical terms and use convincing websites and marketing materials to entice people to invest in their projects.
Unfortunately, the money collected through an ICO scam is rarely ever returned, as scammers can quickly disappear with the funds, leaving the victim destabilized and frustrated. It is therefore important for investors to do their thorough research before investing in any ICO, and to be wary of unrealistic promises or guarantees of returns.
It is also important to remember that an ICO does not necessarily guarantee success for the investor, the same risks associated with other investments also apply to ICOs. The price of the coin may not rise or may even drop significantly.
Fake ICOs are designed to look like legitimate offerings, but they are actually fraudulent projects with the intention of stealing your money. Some ways to spot a fake or scam ICO includes:
No Whitepaper: Legitimate ICOs will typically have an accompanying whitepaper outlining the details of the project, including the team members, mission statement, token economics, and more. If a project does not have a whitepaper, it is likely a scam.
Unrealistic promises: If an ICO is promising you huge returns without any risk, it is probably a scam. Legitimate projects will not make extravagant claims about returns.
Anonymous Team Members: If the team behind the project is anonymous or has limited information available, this could be a sign that they do not want to be held accountable if the project fails.
Poor Website Design: The website should look professional and well-designed, with contact information and social media links. If the website looks amateur or incomplete, it could be a sign that the project is not legitimate.
While it is impossible to guarantee that all ICOs are legitimate, doing your research and keeping an eye out for red flags can help protect you from falling victim to a fake ICO.
PHISHING SCAMS |
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Phishing scams use fake websites or emails that look like they come from a legitimate business, to try and trick people into giving up their personal information, such as usernames, passwords, or credit card numbers.
Scammers will often impersonate trusted exchanges or wallets, to make it more likely that someone will trust them. They may even create a website that looks almost exactly like the real thing, down to the logo and color scheme.
If you ever receive an email that appears to be from a cryptocurrency exchange, you should be wary. Before clicking on any links or giving up your personal information, verify that it's coming from the real site by checking the sender's email address and looking at the URL in the address bar.
It’s also important to use secure passwords, and two-factor authentication (2FA) when available, and not to share your login details with anyone.
Most phishing scams are designed to look like legitimate emails from companies, government organizations, banks, or other reputable sources. They might include branding elements, logos, and recognized language to make them appear more convincing. Be wary of any message that requests you to click on a link or open an attachment, as this could lead to malicious software being installed on your computer.
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The best way to protect yourself against phishing is to be vigilant and pay attention to any unusual requests for information. Before responding to a message, double-check the sender’s email address and the link they are asking you to click on. It is also important to be aware of the latest phishing techniques and trends.
PYRAMID SCHEMES |
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In a pyramid scheme, the members at the top will make the most money, while those at the bottom of the pyramid will get nothing in return for their investments. This type of scam is particularly dangerous because it often takes a long time for victims to realize that they are being taken advantage of.
The key warning sign of a pyramid scheme is that investors are encouraged to recruit other investors in order to make money. It is also important to note that any investment opportunity that requires you to pay a fee before you can start making money is likely a pyramid scheme. Pyramid schemes are illegal and participating in one could lead to serious financial losses.
Pyramid schemes usually require participants to buy in with a certain amount of money in order to join, and then they must recruit new members who will also pay money to join.
The only way to make money in a pyramid scheme is to keep recruiting more people. This means that as the pyramid gets larger, it becomes harder to find new members and eventually collapses, leaving the people at the bottom with nothing. Pyramid schemes are illegal in most countries and should be avoided at all costs.
EXIT SCAMS |
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An exit scam is a type of crypto scam that happens when a project or business suddenly shuts down without warning and disappears with users’ funds. This type of scam is one of the most common, and it has cost many people their savings.
To help protect yourself from an exit scam, it's important to research any ICOs you plan to invest in thoroughly. Check reviews and ratings from other users, do background checks on the company, and see if the project is actually delivering on its promises.
Their projects don't usually have a clear track record, and neither is it backed by real-world proof of concept.
Some other red flags include; rushed deadlines, overly optimistic promises, or requests for large deposits.
Be sure to keep your private keys safe and secure; this will help prevent you from losing your funds if the company suddenly shuts down.
FAKE WALLETS SCAMS |
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A fake Wallet scam is a type of crypto scam that involves the creation and use of fake and illegal wallets to extort crypto coins from users. Scammers create and develop wallets that look legitimate for storing crypto assets.
In most cases, they usually build wallets on less popular and unfamiliar blockchains to make their services look more legitimate. Many scammers will use high-pressure sales tactics and enticing offers to get you to sign up quickly. Be wary of any offers that seem too good to be true and always do your research before investing in any cryptocurrency venture.
Given the fact that this is one of the most used types of crypto scams today, it's important to observe and know how to detect some of its signs.
No support system: If a wallet has no support system or any other customer service options, it’s likely a fake wallet. Genuine wallets typically have customer service representatives to help users with their problems.
Unrequested Emails: Fake wallets may send unwanted emails with links to their site in order to entice potential victims. If you receive any of such emails claiming to offer cryptocurrency services, avoid them at all costs.
Poorly Designed User Interface: Fake wallets usually have poorly designed user interfaces that can make them difficult to use and navigate. Genuine wallets usually have simple and easy-to-understand user interfaces that make the process of sending and receiving cryptocurrency straightforward.
An Anonymous Or Suspicious Looking Team: Fake wallets are often associated with anonymous teams that provide no information about who they are or their expertise in developing wallets
Unofficial App Stores: Fake wallets may be hosted on unofficial app stores, which should be avoided at all costs. To ensure the safety of your funds, always download cryptocurrency wallets from official app stores such as Google Play Store or Apple App Store.
If you encounter any of these signs when searching for a cryptocurrency wallet, it’s best to avoid it altogether and find an alternative. Make sure to do your research before investing any of your money in a new wallet.
The Incident Of A Scam Event I Know |
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It was in the summer of 2020, an international cryptocurrency scam stormed the internet. The scheme involved a group of cybercriminals who created a fake crypto exchange called CryptoRuble and tricked money-minded victims into transferring their real crypto assets to it.
CryptoRuble offered incentives such as bonuses for deposits and low trading fees, leading many people to believe that it was a legitimate platform. However, as soon as victims deposited their funds, their money vanished.
The criminals used a variety of methods to take advantage of users, including setting up a fake customer service number and email address and creating online ads that falsely claimed that CryptoRuble was endorsed by government agencies.
Unfortunately, thousands of users fell victim to the scam, with estimates placing the total losses at more than $50 million. It was one of the largest crypto scams to date and has served as a reminder to investors of the importance of doing thorough research before making any investments in cryptocurrencies.
Once someone deposited their funds, the scammers quickly withdrew them to their wallets, leaving the victim without any cryptocurrency assets. The scammers also employed social engineering tactics such as impersonating celebrities in order to encourage people to trust the site.
In addition, the scammers also used automated trading software to manipulate prices on the exchange and make it appear as though the prices were increasing exponentially, leading many people to believe they were profiting from their investments. The scammers then capitalized on these false profits by selling the coins they had stolen and pocketing the money.
The scammers were able to pull off this massive scam due to the lack of regulation in the cryptocurrency industry. This allowed them to take advantage of people who were not knowledgeable about the industry, making it easy for them to exploit their victims without any fear of government officials.
How A Person Can Protect Himself From Crypto Scam |
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Crypto fraud has deceived thousands of people and yet more people are still falling victim to it. I will be sharing some tips on how to protect yourself and your investments from any form of crypto scam.
Before investing, it’s important to do your research, by learning about the company behind the coin or token, its mission, and the team members. Be sure to read the whitepaper to get an understanding of the project’s technology and roadmap.
Find out if the team is running any legitimate projects, such as a business or a charitable organization. Make sure that they are not just trying to raise funds through an Initial Coin Offering (ICO) and disappearing with your money.
Find out if there is a community of users who are supporting the project. Look at online forums such as Reddit and Twitter to see what other people are saying about the project.
If people are openly discussing the project in a positive light, it’s probably worth investing in. On the other hand, if there is little to no discussion and no one knows much about the project, you may be dealing with a crypto scam.
Crypto scams come in many different forms, but one of the most common is through emails or direct messages. The scammer will often send an email or message that appears to be from a legitimate organization, such as a bank or cryptocurrency exchange.
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They will ask you to provide personal information or send money in order to access a special offer or gain access to an account. Do not respond to these requests, as they are likely a scam.
If you receive an email or message that looks suspicious, don't click on any links or respond. If the sender is asking for money or other personal information, it is likely a scam. You should also be wary of emails that include typos and poor grammar. Legitimate companies usually take the time to make sure their emails are accurate and professional.
One of the most important pieces of advice when it comes to protecting yourself from crypto scams is to avoid getting emotionally involved. It can be tempting to trust strangers on the internet, especially if they seem friendly or sympathetic. However, it’s important to remember that the people behind these scams are professionals at manipulating people.
They know how to play on emotions to try to get their victims to part with their money. And never invest more than you can afford to lose, and always do your research before investing in any project.
Two-factor authentication (2FA) is a must when it comes to protecting yourself from crypto scams. 2FA is an extra layer of security that adds steps to the login process, making it harder for hackers and scammers to gain access to your account.
When you log in, you will be asked to provide both a password and a code sent via text message or email, providing extra assurance that only you have access to your account. With 2FA enabled, if a scammer does manage to get your password, they won't be able to log into your account without the code.
When it comes to crypto scams, one of the most common tactics used by fraudsters is the promise of high returns. They may promise high rates of return on your investments with minimal effort or risk. This is often too good to be true and should be avoided.
It's important to remember that legitimate investment opportunities are based on realistic, achievable returns.
Conclusion |
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The cryptocurrency industry has seen its fair share of scams over the years, with many of them resulting in significant financial losses for those affected.
It's important to always keep your funds safe by using two-factor authentication whenever possible. By taking the time to do your research and using some other tips above, you can protect yourself from crypto scams.
Generally, I find this topic interesting and educative, kudos to the organizers. Am glad I participated, and am inviting @drhira, @edidiongeffiong, and @barski to check out this contest.
M> earlier investors and creating a never-ending cycle of fraudulent payments.
That's so true . The 4 spot signs are adorable.
Yes that holds true even for genuine ICOs .
That's a new concept for me and thanks for enlightening is.
Good luck
That's correct as far software wallets are concerned. Wallet scams are even seen with hardware wallets as well. In hardware wallet scam devices carrying malware are created to implant viruses into the investors devices like computers etc that are otherwise used to access crypto exchange and wallets and funds are extorted thereby. These wallets blende normal standard devices . So to avoid such scams one must always go for standard device .
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Curated by : @steemdoctor1
You have made very valuable remarks here dear friend. Truely, even some genuine ICOs experience cases of price decrease and drop. Most cases or crypto scams are hard to spot given the fact that they are very similar to legit platforms. Nevertheless, we just need to make proper research before venturing into any crypto project.
Thanks for your wonderful time and support here, I really appreciate boss❤️:-)
Hey brother,
You have more than enough knowledge about cryptocurrency scams and I think every crypto trader should have such knowledge to prevent him from scams and frauds.
You're right if we have turned this feature on than the chances of scams minimize because it is so hard to by-pass 2 factor authentication.
The things you mentioned for detecting a scam project will really help us to detect and distinguish between scam and legit projects.
Yes such apps say to download them from chrome and from website and show they are going to launch but they scam and run away.
Thank you brother for an impressive entry, keep working hard for the community.
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Thanks for your lovely remark and support here brother. The implementation of Two-factor authentication (2FA) is one of the best way of minimizing crypt scams, as you are more likely to get notified during the process of the attack. And like I said about fake wallets, they are not usually found on official play stores, so we should be careful when dealing with unofficial apps.
Thanks for your time here my boss, I really appreciate ❤️ :-)
Brother, one thing keep in mind that 2FA is not ultimate solution. Hackers can bypass our no and email. My father account was compromised and he didn't receive any text on phone. later it was found that the hacker bypassed phone no.
Extra security like Google or Microsoft authenticator should be added.
Wow, I have learnt alot from you brother, thanks alot❤️:-)
But I learned a lot from your detailed article, Really thankful to you.
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Thanks for your show of support @steemdoctor1, I really appreciate ❤️:-)
You're welcome brother ☺️
👍🏼👍🏼
Nice entry my friend, you've really written well and i have one or two from your entry
Thanks for the invite... I wish you success my friend 👍
Thanks for your lovely remark dear friend, I am glad you have learnt something from this task. I really appreciate your time and support here ❤️:-)
You're always welcome my friend, it's my pleasure 😊
There are a lot of scams in the Cryptocurrency world and even people who are tricked will lose everything they have.
Psychological factors are indeed very vulnerable where we must be aware and must really study the world of crypto investment well,
I see that paramide patterns are often visible even in plain sight, and these patterns are always able to attract people and end up being deceived, considering the lucrative crypto world, someone can be rich in an instant and also can be poor in an instant.
For that, I agree with you friends that the best solution to avoid Common Crypto Scams is to learn and understand what we do.
Good luck friends... 👍
You are very correct dear friend, even experts and some popular crypto enthusiasts have fallen for various forms of scams in the past. The scammers manipulates with the psychological behavior of the users and rip them of their hard earned money. We ought to make proper research when venturing into crypto projects. Thanks for your time and support here, I really appreciate ❤️:-)
Hi, @preye2, you wrote a beautiful article brother. As crypto growing continuously the scams are also increasing day by day, and if we don't our of them then for sure we will be the prey of the scammers one day.
And the scammers know that people want money and they catch this weakness and use it as a weapon against the normal crypto users. And also many people easily get attracted by the huge offers given by them, and then they fall in their trap.
Thanks for your lovely remarks and valuable comments dear friend. Crypto scam has spread out across almost every part of it's ecosystem, decieving lots of users and taking advantage of their love for money. This has caused many countries to reject the adoption of Cryptocurrencies.
We just need to follow the tips as stated above to spot and avoid some of this scams. Thanks for your time and support here brother, I really appreciate ❤️:-)
Crypto scams have done more harm in recent years, and we need to start spotting some of this ways it can be detected and avoided. Thanks for you valuable remark and time here boss, I really appreciate ❤️:-)
This is a very good point. Anyone into crypto must always consider this before going into any crypto project.
I must commend that you have marked a very important point, because our emotions are the key factors targeted to manipulate and steal our funds. Thanks for your lovely remark and support here, I really appreciate ❤️:-)
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