Samuel lost his $500 savings to crypto scams, and he concluded that cryptocurrency and its industry are nothing but a scam. He even convinced a few of his friends never to invest in anything crypto.
Many people are like Samuel, and maybe some are still skeptical about the cryptocurrency market as a result of what they have witnessed or been told just like Samuel’s friends.
But is the cryptocurrency market really a scam?
The answer is simply NO.
The cryptocurrency market is just like a normal marketplace you are familiar with, we can’t conclude that because there are “few” people who sell fake clothes or shoes and say all the market-sellers are scammers.
The truth is, there is no business or any organization in life that some set of people will not take advantage of. mention it, religion, politics, or academics?
No matter what, some people will still scam others.
As the popularity of digital currencies tends to increase and evolve all over the world, more and more people join the cryptocurrency trend; it becomes easy to scam cryptocurrency users as the number increases.
CNBC reported that the money lost due to crypto scams is up to $14bn, while it is $1bn between January and March 2021 only.
Who falls for crypto scams?
Anybody can fall for a crypto scam. But those who are more vulnerable are the poor, desperate, ignorant, and those who are looking for quick ways to make money.
Although it is never possible to be able 100% safe from crypto scams, there are various precautions that you can take to reduce and minimize the risk of getting scammed.
But note something;
Definition of crypto scams or scams generally is not just about losing money. It also involves losing your privacy to fake people/companies who will in the end sell your information for money.
Some crypto scammers are not interested in your ‘short-time’ money, they need a way to invade your life and make you homeless.
With these tips highlighted here, you will be able to protect yourself and lower the risk of getting scammed significantly.
How to Protect Yourself from Crypto Scams
If you don’t want trouble, trouble itself will try to pull your feet into it.
One key principle that you must uphold when using the internet is to be able to protect yourself, your details, your privacy, and your information.
The reason is that there can be a breach of information and your confidential details would be exposed to the public, this is why you should protect yourself in order to be secured on the internet.
A key factor that people do not know is that all crypto scams look different but they are actually similar in essence. Newbie cryptocurrency users always fall gullible to scams and this has retraced their steps towards acquiring crypto coins.
With the use of common sense, it is possible to avoid most of these crypto scams.
At times, you can get skeptical and critical when analyzing cryptocurrency offers for investments, also, you should prepare your mind because certain scams will surely appear as you show more interest in cryptocurrencies.
One simple rule which you should have on your mind is; “If the offer sounds too good to be true, it probably is a scam.”
But that’s not just enough right?
You need to know there is fire on the mountain even without you seeing the fire, maybe you should know by just seeing the smoke.
Without mincing words, here are some of the most common crypto scams which every cryptocurrency enthusiast should be aware of, and how to protect yourself.
What are some of the crypto scams?
#1: Cloud Mining Services
I personally believe ‘mere’ cryptocurrency mining is a scam. This kind of offer is common in countries like Nigeria where the youths are adopting cryptocurrency massively.
As a result of this, crypto scammers try to scam them by saying they can mine bitcoin or any cryptocurrency on their phone.
The gospel truth;
You can’t mine bitcoin or cryptocurrency on your phone, it’s not possible! Check how crypto mining works here.
Get that straight, anybody that tells you that you can mine crypto on your phone but you have to pay a certain amount of money, run, it is one of these crypto scam attempts.
But there is a caveat;
If you partner with a trusted crypto firm, you can mine altcoins (cryptocurrencies other than Bitcoin).
You simply buy or rent mining hardware located in a miner’s facility to mine for coins in your house or anywhere you like.
The hardware consumes electricity a lot, so you should prepare for this if at all you are interested in cloud mining.
Cloud mining scam websites are always on the lookout to defraud crypto mining community members for which the vulnerable amateurs have no choice but to fall for the trap.
If you are in the camp of people who prefer cloud mining to hardware mining, you’ll need to be extra vigilant and careful because this is the easiest way of getting scammed.
There are several tricks that cybercriminals and scammers would do to get potential victims and cover their tracks.
- One of such tricks is by keeping their domain and WHOis information hidden.
- Another trick they use to get victims is by registering their crypto cloud mining company in reputable places like New York, Georgia, Washington, and London but there are all foreign residents who wouldn’t register it in their country to avoid being caught.
So avoid anything mining especially if they mention mining with your smartphone or laptop.
#2: Multi-Level Marketing (MLM) Schemes
Imagine someone telling you that you have to pay money to join a marketplace, after paying, you will have to invite people to join too before you make money on your investment.
Does that make sense?
Well, maybe it does. But why can’t you let me stick to one, let me pay money and make a profit, or, call people for you and make money on each people I referred?
Bitcoin and MLM (multi-level marketing) schemes also make use of the aspect of network marketing (which is popularly referred to as referring or direct selling), through this, they make bitcoin and other cryptocurrencies sound like a scam.
Multi Level marketing schemes make promises and exaggerated claims that make the user feel fulfilled and that he can make his money quickly and make profits from his invested capital.
Just as mentioned, these schemes can easily be identified very quickly because they all have something in common.
They are not actually selling any service or product, instead, they invite you to join a complex group with other users; you’ll be required to make some payments and fees; after that, you will be promised to move from a particular level to another.
After the end of everything, you will get scammed in the pyramid scheme.
An example of this crypto MLM scam is Forsage, one of the top crypto scams in the world, It came like a storm, people really invested their money and settled down to cry bitterly. the SEC sue Forsage for $300m but would that pay all the victims?
To make money in the cryptocurrency market, you don’t need to invite anybody, you just have to learn how the market work and invest!
If you are a beginner and you will like to learn everything you need to know about cryptocurrency including trading and buying real coins, I recommend you buy the Trade & Make Money course by Chris Ani.
#3: Bitcoin Investment Packages (BIPs)
Bitcoin investment packages (BIPs) are another type of scam in the crypto industry. The Bitcoin investment schemes are not really different from the cloud mining scams.
In the real sense, they promise to return on investments and they would pay out in small or in daily returns until all payment activities would stop and they abscond with the investment funds of users.
But not that Bitcoin investment scams are different from Ponzi schemes.
Usually, these “investments” seem extremely profitable and lucrative at the first instance because the very first set of people register to get the benefits as they get paid.
Then they start testifying and convincing people of their gains, and more users will join and invest to get profits from the scheme, but these users begin to face problems when they tend to withdraw their earnings, in essence, the money invested disappears.
Poor and ignorant people are in trouble!
#4: Identifying Fake ICOs
Identifying fake ICOs gets harder because the industry is getting more sophisticated; which makes it difficult to identify the genuine ones from the scammers.
An Initial Coin Offering (ICO) which looks to sell coins must have a piece of detailed information that is clear and comprehensible.
People behind this scheme utilize what is known as crypto giveaway scams, they simply send a free and useless coin to you, once you accept the coin to your wallet, they will use it to steal all the crypto assets you have in that wallet.
It is called Rug-pulling… They don’t need access to your phone or password, just accept the fake coin and that’s all.
An established and reputable company will not be able to scam you if it is bound by the government regulations of a country and if it compromises such license, it would be apprehended and unlikely to be able to run far.
In addition to this, a good ICO must have a good presence on social media, through this method you can search for genuine and honest reviews.
But again, this is not 100% way to protect yourself. A regulated company can still scam you. A 100% way is to avoid anything called ICO if you don’t know about the technology or motivation behind the coin.
#5: Pump-and-Dump Schemes
Pump and Dump schemes are another type of scam that you must avoid. The pump and Dump scheme is all about inflating the prices of less popular crypto coins by spreading false information about that coin in a bid to get interested and enthusiasm from crypto users to actually invest their capital in it.
A good example is Zugacoin.
They pumped Zugacoin as high as $200k+ two years ago, it got to $20k+ last year, but it is now $1+
The culprits (scammers) in these schemes are people who are known as the “pumpers.”
They are the market players that “pump” a token (most often, it is an unpopular cryptocurrency that is not popular and seldom desired).
These players make purchases of significant amounts of these coins and make attempts to ‘pump’ them and hype them across numerous channels such as the social media platforms like Facebook, YouTube & Instagram to get users who would fall for it.
Once the token’s worth has artificially risen, they would dump this token in the hands of unsuspecting investors and depart, hence, the tokens become useless.
To avoid this type of scam, you can simply check the market caps of coins if they are low, but if the coin has a high price and sudden random surge, you should know that it was artificially done by fraudsters to get victims.
#6: Email Scam
In one way or another, someone, a scammer gets ahold of your email address and the next thing is to start spamming you with different and enticing emails just to invest on a platform or buy a token.
Avoid replying to any email like that, don’t even think of trying it out, it’s a scam!
No legit cryptocurrency exchange website owner or marketer will send you an email without legally collecting your email address with your consent.
The offer may look good, but report the email address of the sender as spam as soon as possible. They don’t have anything to lose, they are messaging hundreds of people at the same time, they believe if a few of you fall into the trap, they will still make money.
It is one of the crypto phishing scams, once you click on a particular link sent to you, they may have access to your device and cart away the valuable assets you store there.
Do not be part of those few.
Conclusion – avoiding cryptocurrency scams
Investing, trading, or saving in cryptocurrency is a viable way to make money online. But if you are so desperate to the extent that you don’t care about the risks involved, you will lose money.
Losing money by mistake or error in your analysis can’t be painful compared to when someone scammed you.
If you want to buy bitcoin or cryptocurrency, use a trusted platform like Buycoins Africa.
To avoid any reason to shed premium tears, note all these 6 kinds of crypto scams listed above and you will be saved to some point.
Avoid fake ICOs, they will rug-pulled you.
Avoid crypto offers on email, avoid any Ponzi scheme in form of multi-marketing marketing and every other thing mentioned in this blog post.
Aside from the listed types of crypto scams, one thing you need to avoid is using any exchange or wallet to store your cryptos.
NOTE: the author is not a financial advisor, take this content as a personal opinion just to help.
If you have any experience you would like to share with others about crypto scams, kindly use the comment box below or send a message to info(at)gbolamedia.com.
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