Steemit Crypto Academy Contest / S6W5 - Common Crypto Scams And How To Avoid Them

Hello, to all my friends here, I wish you all a good day and you will achieve success on all your work. And I also thank you the Steemit team for creating a beautiful contest on the topic - "Common Crypto Scams And How To Avoid Them" for the S6W5.

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In Simple, crypto scams are methods used by an individual or an institution to collect the personal data of a normal user to steal money from their crypto wallet. Well, cryptocurrency is still in its beginning, but it will undoubtedly become an integral part of our future. And that's why investors from all over the world aren't sitting on the sidelines; instead, they're rushing to capitalise on this once-in-a-lifetime opportunity.

However, just like any other financial investment, digital assets are vulnerable to scammers and hackers. As a newer financial investment class, the crypto industry is still largely unregulated, despite attracting millions of people worldwide who want to invest in these virtual coins.

Source Pixabay

And this abundance of opportunity, combined with a lack of regulation, creates an opening for cryptocurrency theft. As more investors enter the market, new variants of cryptocurrency scams emerge. As I researched more I find out that , by making scam, the scammers stole more than $1 billion dollar of money from 2021-2022.

Basically, the crypto scams are classified into two major section : those that attempt to gain access to someone's wallet and those that attempt to steal directly from someone.

Crypto Scam by Gaining Access to a User's Wallet

Scammers attempt to access a victim's digital wallet by stealing wallet authentication information such as passwords, private keys, and recovery phrases, or by infiltrating the hardware.

Crypto Scam Done by Directly Stealing From The Victim

In this case the scammer scams a user and steal his money by offering a variety of investment opportunity through his website.

Well, we discussed about the main two types crypto scams which is classified according to the process by which the scam was done but now let's discuss about some common crypto scams.

Fake/Phishing Websites

Scammers frequently entice investors by advertising bogus websites that promise huge returns. These websites appear legitimate, and it can be extremely difficult to tell them apart. These sites use domain names that are strikingly similar to the original sites they are attempting to imitate, such as popular exchange domains. Initially, these sites allow users to withdraw and earn money in order to gain trust (all while accessing their personal information and account details). As the user invests more, the site eventually shuts down or declines user requests, and then the user loses all his assets.

Fake E-mails And Mobile Applications

Firstly e-mail scams are extremely common, where many scammers send emails to users posing as legitimate businesses, requesting immediate payments or account confirmation. Secondly, scammers launch similar apps on some reputed application stores and when a user downloads mobile applications, the apps compromise their personal information and account data. For instance:- A fake app of the crypto exchange Poloniex, existed sometimes before on the Google Play Store, and many Poloniex users lost valuable assets as a result.

Source Pixabay

Pump And Dump Schemes

In these schemes, someone will artificially hype a specific crypto coin, usually a new coin with little trading history, in order to inflate the price and subsequent demand for the coin. They "pump" the coin by driving investors through social media platforms such as Twitter, Telegram, and emails. As more investors purchase the coins, the fraudulent company "dumps" them by selling them at high price. This process devalues the asset, and its price may plummet dramatically in a matter of minutes.

Ponzi Schemes

Ponzi schemes are named after Charles Ponzi, a con artist who proposed an investment programme in the 1920s that promised 50-100% returns in 90 days. Initially, the programme paid off its first group of investors, attracting new investors. However, the first group was paid with the new group's investments — there were no actual returns. Ponzi stole over $20 million through this pyramid scheme. Ponzi schemes appear legitimate enough to attract new investors, but the vast majority of victims are never successful and the same happens in crypto too.

Scams Done By Celebrity Impersonations

Scammers use fake social media accounts of big celebrities on Facebook and Instagram to trick fans into spending money on fake tickets to private concerts, chances to meet the celebrity, or charity donations — While, none of which are real.

Source Pexels

Giveaway scams

These scams are spread via social media platforms such as YouTube and Twitter. They use fake accounts and urge investors to spend money on a crazy "opportunity". And as a result In 2021, we saw a dubious scheme defrauded over $2 million by impersonating Elon Musk.

Fake ICOs Scams

Well, ICO or the Initial coin offering is much like IPOs where the crypto companies offer their coins on a discounted price, but in crypto these idea go very bad for the investors, this ICO is only used to create fake hype of a coin and by which a lot of people invest their money on it, and after the people invest their money they run away with all the amount.

Well regarding this I want to say that I'm a tech geek and always aware of any type of scams and frauds and I also don't like to give my personal data to anyone. So, I'm not scammed ever neither my friends or a person who I know was scammed.

To protect yourself from any type of scam first, you should educate yourself about this technology and how it works, but I also have some tips by which you can stay safe from scams.

Source Pixabay

• Firstly, you should never discuss about your crypto gains to anyone neither online nor offline, because it can attract the eyes of scammers and hackers.

• Secondly, Set up separate emails for all of your cryptocurrency accounts, and don't give out this email address to anyone. This alone should significantly reduce your chances of becoming a victim of email-related scams and hacks.

• Thirdly, use a password manager, such as LastPass or 1Password, and create long, secure passwords for all of your accounts.

• Fourthly, set up a PIN or passcode for your account then use two-factor authentication for all your crypto related apps. For this purpose you can use Google Authenticator or Authy which are mostly strong and secure softwares.

• Fifthly, set up passwords on your computer and phone so that if you lose one or leave it open in a public place, someone can't just walk into your pre-logged in accounts and withdraw all of your money.

• Sixthly, make certain that you are navigating to legitimate sites and not imitations. It is critical to carefully examine URLs to ensure that the site is spelled correctly and that there are no extra characters. To avoid being caught off guard, bookmark the websites you frequently visit.

• Lastly, do not click on links in emails from people you do not know. By this you can make yourself safe from not only crypto scams but also from other types of monetary scams.

Crypto scams are becoming more common. The cryptocurrency market is buzzing with promising projects, but it has also become a haven for scammers and fraudsters. The best way to avoid scams is to be vigilant, protect your wallet, and conduct thorough research before making investments.

I would like to invite my friend @lavanyalakshman, @simonnwigwe and @juichi to participate in the contest.