Nowadays, cryptocurrency investments are some of the most tempting opportunities investors are looking into. For some, these investments were a get-rich-quick scheme, for others, investing money in digital currencies led to significant losses. The cryptocurrency market is very volatile and therefore entails great risks. You can make or lose money at a dazzling speed. However, besides the risk you automatically incur when you buy crypto coins due to their unsteady nature, there is also the risk of being scammed while carrying out cryptocurrency transactions on different dedicated platforms. Here are some of the most common cryptocurrency scams you should be aware of if you want to invest in this market.
Hacking
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In theory, crypto transactions are secure as they go through a blockchain. Then through multiple computers and they are being checked on each one of them against a database. Hacking the system is not easy as you would need to access the majority of the computers connected to that chain. However, hackers almost always manage to find a way to break even into the most secure systems. Over the past years, multiple entities in the cryptocurrency market have been targeted by scammers, including exchanges, digital wallets, or mining companies. The problem for investors is that unlike other types of assets that are covered by insurance, crypto coins don’t offer insurance and once your digital wallet is hacked and the coins are transferred elsewhere, it is very hard to get them back.
Fake Crypto Coins Investments
There are thousands of crypto coins out there and the number is constantly rising. With new coins being launched every week, it is hard to tell which ones are legit investment opportunities and which aren’t. Scammers who are aware of how cryptocurrencies work have created fake coins and then started to lure investors to purchase them. There are many strategies con artists rely on to get people’s attention. They either create websites where they promote their coin or try to attract buyers by email or social media platforms where they pretend to be successful investors or brokers.
Regardless of the method they use, the consequences are similar. After many investors purchase that crypto coin and its price skyrockets, scammers sell their coins and make lots of money. While new investors see their balances plummet.
Other investment scams are even more drastic. After a while, when investors want to sell their coins and withdraw their money from the websites where scammers asked them to create an account, they realize there is nothing there.
To avoid phony cryptocurrency investment scams, new investors should steer clear of brokers or companies that promise safe and guaranteed returns, which is something no one could really offer in a market as volatile as that of cryptocurrencies.
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Giveaway Scams
When con artists carry out this type of scam, they theoretically offer free crypto coins to support small or novice investors. They tell victims they need to send a small amount of crypto, promising they will add more to help them maximize their profit. However, once scammers receive the coins, they never answer back or make a bigger transfer in return. A scam of this type, in which Elon Musk was impersonated, managed to draw more than $2 million in crypto.
Fake Crypto Wallets
Crypto wallets are the places where you store crypto coins. As you can’t transfer them into your bank account unless you change them in conventional currency. Crypto wallets, just like any other digital piece of information, are exposed to hacking. However, the biggest risk for investors is storing their money in an online wallet that’s fake. By this, we refer to wallets created by scammers who hold the master keys of users’ accounts and drain money from these accounts.
To avoid fake crypto wallets, it is recommended to transfer your coins only in reputable wallets that have been around for many years, are available in many countries. Also have comprehensive websites where you can find plenty of information, including contact information and terms and conditions. Moreover, you should also read reviews or check out testimonials you can find online. For any legit wallet that has plenty of customers, you can surely find feedback online.
Finally, remember that the golden rule of any type of investment is to avoid offers that sound too good to be true, because they probably aren’t, especially in such a volatile market where crypto coins can significantly increase or decrease in value in a matter of hours. All rights reserved, Clearwater Management Korea.
