Cryptocurrency, like any other digital asset, is susceptible to scams. The crypto space has witnessed a number of scams over the years and the trend is unlikely to cease in the years to come. Risk of fraud poses a threat to any kind of investment and cryptocurrency investment is no exception.
The modus operandi of cryptocurrency scams can broadly be categorized into 4 different types. Here’s an overview of the most common types of cryptocurrency scams that you need to beware of.
Fraudulent ICOs will take the top spot in the list of cryptocurrency scams. The most common way to pull off a scam is to fabricate an ICO and generate huge amount of money before vanishing off the scene. The temptation to gain high return on investment without doing due diligence is to be blamed for such scams. Don’t be unrealistic. If an ICO is promising 100X returns within a span of weeks, it’s more likely to end up being another scam in the making.
Second on the list of scams is dubious exchanges. Came across a new cryptocurrency exchange that sprang out from nowhere and started claiming all things superlative? That’s a sign of something being fishy. Deposit your virtual coins with such an exchange at your own peril as you would have no way to get them back if it goes out of business all of a sudden.
Fake wallets are a relatively new inclusion to the list of scam projects. While hardware wallets and desktop wallets are comparatively safer options, the same can’t be said of mobile wallets.
Of-late there’s a steady rise in the number of app wallets for Android and iOS devices on Google Play Store. Distinguishing between a fake and a genuine one is a tough task. So don’t just pick any random wallet from Play Store as chances of it being fake is quite high – thus jeopardizing the security of your coins. Instead, opt for the one that has been in the market for quite some time and has a solid reputation for being trustworthy.
Phishing scams are another common type of fraud that you will come across in the world of cryptocurrency. In case of phishing scams, fraudsters try to get hold of your passwords and private keys by injecting malicious codes to hack the underlying systems. If you come across any suspicious links in emails/messages, don’t be tempted to click on them. It can very well be a trap to steal your confidential data.
Being a decentralized market with no regulatory authority, cryptosphere is prone to various types of scams. Staying proactive and adhering to security guidelines can be of great help to fight against hacking attempts. Above all, doing your research right is the best way out to stay clear of fraudulent projects.