All You Need to Know About Cryptocurrency and Scams

Jan 28, 2022
5 min read

Cryptocurrency is virtual money that exists solely on technology. Unless you utilize a service that allows you to exchange cryptocurrencies for a real token, there is no actual coin or bill. Without the use of an intermediary such as a bank, you normally exchange cryptocurrencies with someone online, using your phone or computer. Although Bitcoin and Ether are all well known cryptocurrencies, there are numerous more, and new ones are created regularly.

What are the most common ways that people use Cryptocurrency?

People utilize cryptocurrency for a variety of reasons, including rapid payments, avoiding transaction fees charged by traditional institutions, and anonymity. Others invest in cryptocurrencies in the hopes of seeing their value rise.

What is the best way to obtain cryptocurrency?

Cryptocurrency can be purchased using an online trading platform. Some people make money with cryptocurrencies through a rigorous process known as "mining," which necessitates the use of advanced computer equipment to solve extremely difficult math riddles.

What do you do with your cryptocurrencies and where do you keep them?

A digital wallet, which can be online, on your computer, or on an external hard drive, is where cryptocurrency can be stored. If something unexpected happens, such as your online exchange platform going out of business, sending bitcoin to the wrong person, forgetting your digital wallet password, or having your digital wallet stolen or compromised, you'll likely find that no one can help you recover your cash. And, because bitcoin is often transferred without the use of an intermediary such as a bank, there is often no one to turn to if you have an issue.

Using cryptocurrency to make payments

If you're considering paying using cryptocurrencies, keep in mind that it's not the same as a card payment or other traditional ways.

Payments made with cryptocurrency are not protected by law.

If something goes wrong with your credit or debit card, you are legally protected. If you need to dispute a purchase, for example, your credit card company has a procedure in place to assist you in getting your money back. Cryptocurrencies, on the other hand, rarely do.

Payments made with cryptocurrency are rarely reversed.

Once you've made a cryptocurrency payment, the only way to receive your money back is if the person you paid pays it back to you. Know the vendor's reputation, where the seller is situated, and how to contact someone if there is a problem before you buy something with cryptocurrency. Before you pay, double-check these details by performing some research.

Some information about your transactions may likely be made public.

Cryptocurrency transactions are often referred to be "anonymous." But the truth is more complicated. Some cryptocurrencies use a public ledger called a "blockchain" to record transaction data. This is a public list of all bitcoin transactions, both payment and reception. Depending on the cryptocurrency, details like the transaction value and the sender's and recipient's wallet addresses may be uploaded to the blockchain.

A wallet address is a long series of numbers and characters that is associated with your electronic wallet. Although you can register your digital wallet under a false identity, transaction and wallet information can be used to identify the people engaged in a single transaction. When you buy something from a vendor that gathers additional information about you, such as your mailing address, that information can potentially be used to identify you.

How To Stay Away From Cryptocurrency Scams?

Scammers are constantly coming up with new ways to take your cryptocurrency. Anyone who insists on paying in bitcoin is a sure sign of a con. Anyone who suggests paying by wire transfer, gift card, or bitcoin is a con artist. Of course, if you pay, you nearly never get your money back. That's exactly what the con artists hope for. There are a few bitcoin scams to be aware of.

Scams involving investments and business opportunities

Some businesses claim that you can make a lot of money in a short period and achieve financial independence.

Some con artists claim that you must pay in cryptocurrencies to have the privilege to attract people into a programme. They claim that if you do, you'll be rewarded with cryptocurrency for your efforts. They promise that the more bitcoin you pay, the more money you will make. However, these are all bogus promises and guarantees.

Some con artists begin by making unsolicited offers from so-called "investment managers." These con artists claim that if you give them the bitcoin you purchased, they can help you grow your money.

However, if you log in to the "investment account" they set up for you, you'll discover that you can only withdraw your money if you pay fees.

Unsolicited job offers to assist recruit cryptocurrency investors, sell cryptocurrency, mine cryptocurrency, or convert cash to bitcoin have been sent by some scammers.

Some con artists post fake job postings on job boards. They'll promise you a job (in exchange for a charge), but then take your money or personal information.

Scams in the romance industry
Fraudsters frequently use dating websites to deceive naive victims into thinking they are in a genuine long-term relationship. When confidence is established, discussions frequently shift to profitable cryptocurrency opportunities and the ultimate transfer of money or account authentication keys.

Scams using imposters and giveaways
Fraudsters impersonate influential people, business executives, and cryptocurrency influencers as they move down the zone of influence. Many scammers promise to match or multiply the cryptocurrency donated to them in what is known as a giveaway scam to entice potential victims. Well-crafted messaging from what appears to be a legitimate social media account can establish a sense of legitimacy and urgency. This imaginary "once-in-a-lifetime" chance can tempt consumers to send money immediately with the expectation of receiving a quick payout.

Look for claims like these to assist you to identify the businesses and individuals to avoid:

Scammers promise that you will profit. It's a con if they guarantee you'll make money. Even if a celebrity endorses it or there are testimonies. (Those are easy to forge.)
Scammers promise large sums of money with a high probability of success. Nobody can promise a specific return, such as doubling your money. Much less in such a short period.
Scammers claim to be able to provide you with free money. They'll say it'll be in cash or cryptocurrencies, but promises of free money always lie.
Scammers make bold statements with no supporting evidence or justifications. Smart businesspeople want to know how their money is being invested and where it is going.
Check it out before you invest. Look for the company's name and the cryptocurrency's name, as well as words like "review," "scam," or "complaint" on the internet. Take a look at what others are saying. Also, learn about other frequent investment swindles.

Emails of extortion
Scammers frequently send emails claiming to have embarrassing or revealing images, videos, or personal information about the recipient. Then they threaten to publish it unless you pay in cryptocurrencies. It's not a good idea. This is blackmail and an effort at criminal extortion. It should be reported to the FBI right away.

Scams on Social Media
It's a fraud if you receive a tweet, text, email, or social media communication instructing you to send cryptocurrency. Even if the message came from a friend or was posted by a celebrity you follow, this is accurate. It's possible that their social media accounts were compromised.

Report the scam to the social media site right away, and then report it to the FTC at ReportFraud.ftc.gov.

Scams in Cryptocurrency and How to Report Them

Report any cryptocurrency-related fraud or other suspicious behaviour to:-

ReportFraud.ftc.gov is a website run by the Federal Trade Commission.
CFTC.gov/complaint is the website of the Commodity Futures Trading Commission (CFTC).
sec.gov/tcr, the United States Securities and Exchange Commission (SEC), and the cryptocurrency exchange company you used to transmit the money.

Final Thoughts

The recent spike of interest in Cryptocurrencies has stimulated the interest of a wide range of investors, but it has also attracted the interest of scammers.

The most common goal of crypto scams is to obtain private information such as security codes or to dupe an unsuspecting user into sending cryptocurrency to a hacked digital wallet.

Giveaways, romance scams, phishing, extortion emails, and other social engineering scams discussed in the article are a problem in general, but they are more frequent when it comes to bitcoin.