As cryptocurrencies continue to become increasingly popular, so too do the number of scams. Many people are now turning to cryptocurrencies as exciting investment opportunities. Unfortunately, as a relatively new technology, many people are crypto investment beginners. This can make them particularly susceptible to scams. If you’re interested in investing in cryptocurrencies but you want to avoid getting scammed, you can do a few things.
The Importance Of Avoiding Scams
Falling for a cryptocurrency scam can easily leave you in serious financial trouble. These scams can impact not only your cryptocurrency assets but your other assets as well. If you’re fortunate, legal services will be able to help you get some of your money back. For example, the recent Coinbase lawsuit was able to secure nearly $1 million for members of a class action lawsuit.
However, many victims don’t get the legal justice they deserve and instead just lose a significant amount of money. This is why it’s essential to avoid cryptocurrency scams at all costs.
Related:What Are Impersonation Scams In Crypto?
Know The Types Of Common Scams
The best way to guard yourself against the latest scams is by knowing their most common forms. If you know how scam artists are likely to target you, you’ll be more wary when those types of approaches come up. There are two common strategies that hackers look to use.
First, they’ll try to gain access to your digital wallet or the credentials you use to authenticate yourself. To do this, they’ll try to get information such as your security code, account numbers, or social security numbers. The other way scammers operate is by trying to convince you to transfer your cryptocurrency assets elsewhere.
For example, they may convince you to invest your assets, only to disappear with your funds. Fraudulent investments and business opportunities are two popular scams to look out for.
Be Careful Who You Trust
The key way to avoid cryptocurrency scams is by being careful of whom you trust. There are very few people who should have access to your crypto assets or to the information you use to log in. Anyone else who is seeking to get this information, even outside of cryptocurrency discussions, may be trying to scam you.
A common scam that involves gaining someone’s trust is fraud involving romance. The individual will work to convince the target that they are in a romantic relationship. Once the scammer earns the trust of the target, they’ll start shifting the conversation toward investment opportunities. These scams are so popular that the FTC found that nearly 20% of money reported lost in romance scams was in cryptocurrency.
Avoid Suspicious Emails And Websites
You should also be wary about your interactions online. It’s common for scammers to try to learn your cryptocurrency credentials through malicious websites and emails. For example, the scammers may create a fake website that looks like the website you normally use to log into your financial accounts.
They’ll then email you this fake website and pretend to be from your financial institution. Once you supply your information to this fake website, the scammers will record your information.
Always investigate any emails you receive regarding your crypto assets. Check to see where the email came from and whether this is an account officially associated with your crypto lender. You should also avoid clicking on any links from email addresses that you don’t trust. Finally, when opening a website, make sure it’s a secure connection by looking for “HTTPS” in front of the URL rather than just “HTTP.”
Related:How Crypto Scams And Investment Fraud Networks Operate
Do Your Research
The last way to guard yourself against crypto scams is by conducting thorough research. For example, most cryptocurrencies publish a white paper during the development process, which is available to the public. This white paper clearly describes the protocols and blockchains involved with that specific cryptocurrency.
If you can’t find a thorough document that outlines how the crypto network functions, there’s a good chance it’s a less-than-trustworthy cryptocurrency.
You should also look to investigate any team members for investment opportunities. Some white papers will identify the developers behind the project. If it’s an open-source crypto, you can instead look for users on sites like GitHub or GitLab.
In essence, you should be able to find some information about who is actually running this cryptocurrency. If, instead, you find any team members and the white paper is full of errors, you’re likely looking at a scam.
Safely Invest In Crypto
Like all investments, investing in crypto comes with some risk. However, you shouldn’t have to worry about the threat of a scam at the same time. While there are many crypto scams out there, many of them are also easy to spot if you do your due diligence.
Take your time with any investments, conduct thorough research on who and what is involved, and be careful about who you trust. If you can do this, you can feel more comfortable in your ability to avoid a scam.
