How to protect from crypto scams | Interactivecrypto

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Cryptocurrency trading has been on an influx in recent times. It is, however, marred with scams. Several scams mean you need all the information when starting to trade. Use this article for the types and how to identify scams. It also comes with ways to avoid scams.

Let’s get to it;

Top Crypto Scams

  • Pump and Dump

The pump is a market modified fraud. The scammers take advantage of the volatility of crypto to create a fake market price increase. They target smaller or unknown cryptocurrencies.

Most of the traders invest emotionally. They choose an asset due to the fear of missing out. Once the coin gets to some of the highest levels, the scammers vanish. The investors lose all their money.

  • Ponzi Schemes

A Ponzi scheme is where a strategy invites traders to invest with a promise of better returns. They tend to pay out the first investors, thus creating confidence in the others. The new investors then invite others. 

After some time, the asset disappears without a trace. Even though Ponzi schemes have become easy to spot, traders still fall for them in droves. 

One of the most famous Ponzi schemes in crypto history is the BitConnect. The scam operated for over a year, attracting billions in investments. 

  • Cloud mining scams

Crypto mining has become so popular in recent times. Buying cryptos from exchanges is quite costly. Mining provides an alternative option to gain coins. It is, however, also expensive to purchase and run the mining machines. That is where the mining pools come in.

Those with mining machines rent them out for a fee. The mining scams convince the miners to invest initial costs then disappear. The most famous crypto mining scam is MiningMax

The bitcoin wallet keeps private keys safe. Several fake exchanges and apps are attracting unsuspecting traders. They let the investors keep their details only to disappear afterwards. 

Ever since the successful Ethereum, ICOs have become so popular. The coins offer a stake for willing investors. The concern with the ICO’s, however, has been on several fake ones. A study established more than 80% of ICOs are fake.

How to Identify Scams 

The best way to protect against the crypto scams is by knowing how to identify them. You won’t easily fall for any fraud if you can notice it. Most of them tend to have similar characteristics. 

Here are some of the top characters of a crypto scam;

Crypto is a trade of chance. The market is quite volatile and comes with no assured gains. The scams understand how most people are looking for assured profits. They want to invest little and gain the most. 

Look for anything that offers assured astronomical gain. Your mantra should be anything that seems “too good to be true” is a scam. 

Never share your crypto marketplace passwords. Some people, however, don’t have such information. The scams can easily take advantage of this misinformation. They tend to provide for files asking for personal data. Be wary of any site that requires personal data like passwords and usernames. 

Most of the fraudulent activities work like a Ponzi scheme. They understand the power of the social currency. This is not a call to stay away from all referrals. There are several crypto affiliate programs to use. 

  • Previous scam 

The history of an entity matter when it comes to cryptos scams. Some scams are periodic. Look out for any information about previous scam activities. 

Any legit crypto comes with reliable information for the users. A scam comes with no detailed white paper. Without the whitepaper, you won’t know the operational plan of the currency. 

The lack of information on the management team is also a red flag. A legit asset provides information on founders and the developing unit. They provide experience and expertise to improve user confidence. 

How to Avoid Scams 

Now that you understand the different types of scams and how to identify, you can avoid them. Some of the top ways to avoid scams are; 

1. Research 

Due diligence is the surest way to keep safe against any impending scam. Crypto is predominantly digital with all the information you need available online. Look out for the concerns on legitimacy, history, and other users’ reports.

Still, you must be aware of paid reviews. Use information from several legitimate sites. 

2. Verify details 

Most of the digital currency scams are successful due to user negligence. The scammers can easily clone products like websites and wallets successfully. Verify the information you use and those that you give.

Verifying details might be time-consuming. However, you’d rather spend all the time in the world but stay safe.

3. Look out for anything too good to be true.

Crypto investment is not for you when you are after assured returns. Like any other investment, it comes with risks. The returns, if at all available, are not like the get-rich-quick schemes. 

Avoid the too good to be real offers by investing what you can afford to lose. 

4.Only Use Reputable sources.

The crypto world is full of resources. Whether you are looking for wallets or assets, there is a lot to choose from. Protect yourself by using only reputable sources. 

Look for regulated platforms. They should provide security measures like 2-factor authentication when logging in. 

5.Report suspicious activities 

Social media has turned out to be the breeding ground for crypto scams. Look for suspicious information and report to the support. This keeps you and the other users safe. 

Bottom Line 

Even though trading crypto is the next frontier in investing, it comes with too much scam. The sector requires one to stay vigilant at all times. Use this guide as a starting point to keep safe when trading crypto. 

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