Digital currencies are on the rise and are becoming increasingly popular among investors. However, you should know that cryptocurrency, like other forms of payment, isn’t free of scams. Even your cryptocurrency accounts can be compromised.
Cryptocurrency’s rise in popularity has lured criminals who use sophisticated scamming methods to trick people into handing over their cryptocurrency or giving access to their digital wallets. Here we will be discussing what a crypto scam is and some common cryptocurrency scams you should be wary of.
What Is A Cryptocurrency Scam?
A cryptocurrency is a form of digital currency that only exists electronically. With cryptocurrency, you don’t need an intermediary such as a bank to facilitate transactions; you can send someone cryptocurrency online on your own via your phone or PC. This cryptocurrency is stored in a digital wallet, but like all things digital, these too can be compromised. Since these transactions do not involve an intermediary such as a bank, it is extremely difficult to recover funds once lost.
According to Chain Analysis’ 2022 Crypto Crime Report, cryptocurrency scams led to the loss of over $7.8 billion worth of cryptocurrency. Scammers can provide you with fraudulent investment opportunities or new cryptocurrency projects that appear legitimate, but once they have your money, they will disappear. This is one of the many ways you can get scammed.
Common Cryptocurrency Scams
The best way to avoid crypto scams is to do your research on them. You should know the most common cryptocurrency scam types and take preventive measures accordingly to keep your wallet secure from compromise.
Here are some of the most common crypto frauds you will run into:
Social Media Scams
Social media has become a hub of crypto scammers and bots trying to invade your privacy and compromise your accounts. Crypto scammers might pose as celebrities or representatives of brands on social media platforms. They can scam you in several ways. For instance, they might promote giveaways that have you deposit cryptocurrency in a wallet address to get double the amount; however, this never happens, and your cryptocurrency can’t be recovered. Others might enter your DMs and send you links that might compromise your account once you click on them.
Fraudulent Emails
Just as you might run into fake deals on social media, the same applies to your email. Scammers might send you emails promising access to cryptocurrency if you pay a small fee first, or they might offer you an incredible cryptocurrency investment opportunity. They may also link you up with professional-looking websites that seem legitimate; however, once you make a payment on these websites, the website disappears, and so do the culprits with your money.
These emails are difficult to distinguish from reliable sources so take your time to verify the identity of the email, see if it is legitimately connected to a company. Always check the domain name and beware of sharing your private keys online. You should also never click on any links listed in the email; these might download malware or suspicious software into your device.
Social Engineering Scams
Social engineering scams are a sort of manipulation technique used by hackers and cybercriminals to get access to your personal information. This sort of manipulation is psychological in nature and will trick users into giving away their sensitive information.
Phishing is a type of social engineering technique in which hackers pose as a trusted source so you can fall victim to their plans. Others might use baiting, a technique in which a user is given false promises of wealth or prizes and manipulates the user into giving away his personal information. Some might convince you of new business opportunities you should invest in, but these turn out to be scams.
Romance Scams
Romance scams are done via dating apps where targets are manipulated into giving away their account credentials to another user. Scammers will feign romantic interest to gain the trust of the victim; they might then have you download fake crypto trading apps, as we mentioned earlier.
To combat this, you should be careful of who you choose to get close to online and don’t download apps you aren’t sure about.
Fake Mobile Apps
Another way you can get scammed is through fake mobile apps. Although app stores such as Apple’s App Store and Google Play are on the lookout for fake accounts which they remove immediately, many can still fall victim to these scams.
Some apps might claim to be mining Bitcoin, Ethereum, or other cryptocurrencies but will ask customers to pay for more capabilities. Hackers might also have you believe you are investing in a new cryptocurrency but end up taking over your savings or planting malware onto your device.