The acceptance of digital currencies to the mainstream can no longer be doubted as they have changed how we perceive and manage finances. Cryptocurrencies differ from traditional currencies which are issued by governments, in that they run on decentralized networks which are based on blockchain technologies. There is value in cryptocurrencies as they are transparent and allow for financial independence. They provide a solution to the traditional banking systems, which are efficient, secure, and have no borders. The following article aims to explore how to protect your crypto holdings in 2024.
An Overview of Cryptocurrencies Scams:
A cryptocurrency scam based on deceptive or fraudulent acts in digital currency trading. It involves illegally acquiring digital assets, funds, or sensitive data from unsuspicious individuals. As the popularity of cryptocurrencies increased, professional hackers started exploiting these digital assets and platforms. Scammers use various tactics based on technology and human behaviors to get access to the private information and digital wallets of traders. They also attract potential investors through flexing attractive returns and benefits.
Prevailed Types of Cryptocurrency Scams:
Here are some of the major cryptocurrency scams given below – which are mainly used to get into the accounts of users.
Phishing scams are based on creating fake sites and emails that resemble actual platforms. This type of scam aims to obtain secret data such as passwords, profile login credentials, and other personal data from the target audience.
In 2018, Cryptocurrency Exchange Binance users faced a phishing attack and received phishing emails. This Email contained a security gradation link to an authentic website. It was a fraudulent phishing email targeting users’ login credentials.
Ponzi Schemes commit high returns to new investors from the funds of old investors. It prevails in fake profitability and returns ratios on invested funds. In actuality, investors are losing their investments gradually. It reflects false profitability ratios initially and ultimately ended in the collapse of the Ponzi scheme. An example is BitConnect cryptocurrency, which operated from 2016 to 2018. It promises higher returns on investments. BitConnect abruptly served from 2016 to 2018. It promises higher returns on investments. However, later on, BitConnect unexpectedly closed down its platform and caused a loss to investors.
Fake Initial Coin Offerings:
Often, scammers create and offer new ICOs and claim to offer new cryptocurrency with higher returns. They capture funds from investors but never deliver returns as promised. One prominent example is Centra Tech, a blockchain start-up involved in ICO Fraud in 2017.
Fake cryptocurrency exchanges are established to mislead users into depositing funds. After funds are deposited, scammers disappear, or the platform malfunctions. It involves random hackers who target people to target their actual currencies against fake currencies.
Pump and Dump Schemes:
Organized groups were created to artificially inflate the prices of cheaper cryptocurrencies through deceptive information and rumors. Once the price artificially increases, scammers start selling their holdings. After some time, this artificially managed price starts to decrease and causes loss to late-stage investors.
A notable example of a pump and dump scheme is GAW Miners and Paycoin Cryptocurrency. In 2014, GAW Miners launched Paycoin with fake promises of returns and guarantees and succeeded in misleading thousands of people.
Malware and Hacking Fraud:
Online scammers use various techniques and malevolent software to hack and steal cryptocurrency wallets, passwords, and login identification from users. In 2014, Mt Gox was declared bankrupt after an attack from hackers. This attack causes a loss of 850,000 Bitcoins. It caused a loss worth hundreds of millions of dollars.
Often, scammers involve famous, influential figures in the cryptocurrency systems to mislead individuals. The purpose of this scam is to deceive customers to get sensitive information and capture their funds. This type of scam involves hacking famous personalities’ social platforms and using them to spread information about fake currencies and platforms.
Multiple high-profile Twitter accounts were hacked, including Elon Musk, Barack Obama, and many others, and used for cryptocurrency scams.
Tips to Safeguard the Cryptocurrency:
Here are some of the top ways you can utilize to avoid cryptocurrency scams.
Secure Digital Wallets:
The first step in protecting the cryptocurrency is choosing the right and secure wallet. Investors should learn about these wallets and select the one that provides more security and authentication. It is challenging for scammers to target the Wallets with higher security standards.
Encryption and Security Protocols:
Encryption and security protocols play essential roles in avoiding hacking. Encrypted platforms allow for the safeguarding of secret information and digital assets. Further, layers of security protocols are added to restrict the access of unwanted people.
Implementation of Two Steps Authentication:
Two-step authentications also play a vital role in securing cryptocurrency wallets and online transactions. It adds extra layers of security and verification. Two-step authentications minimize the chances of unauthorized access to accounts and online transactions.
Keep The Software And Applications Updated:
To avoid unwanted threats and intruders, you must keep updated on the software and applications about cryptocurrency and security. It is a proactive approach and helps minimize risks. Companies Often upgrade security protocols by foreseeing the upcoming threats prevailing in the market. It is necessary to keep the devices and software upgraded.
Beware Of High Returns:
Scammers often commit higher and quicker returns to attack immature or new investors. Unrealistic or high returns are the primary tactic to manipulate individuals. Investors should review specific parameters before considering investing in new cryptocurrencies and platforms. Investors must cross-check through various channels to ensure the authenticity of the project.
Lack Of Available Information About The Project:
Lack of information about the projects, cryptocurrency, and management triggers the fact that some fraudulent activity is involved. Reputable and authentic projects share comprehensive and concrete information regarding management, systems, and technology developed for cryptocurrency. If complete information is unavailable, investors should be vigilant regarding the project and try to gather more information about the project and management.
Pressure To Invest Swiftly:
Scammers use pressure tactics to trigger investments. They apply such tactics to create urgency for investors to make quick decisions without research. If there is pressure to invest in a project rapidly, stepping back and evaluating the platform and its management is necessary. Looking into history also helps in understanding history.
Avoid Unsolicited Communication:
Scammers use social media and unwanted Communication to approach the targeted audience. Unwanted Communication, including emails, messages, and social media contacts, promotes investment opportunities with attractive returns. However, lawful cryptocurrency projects only contact potential investors with their prior consent through social media.
It helps to be careful about investment opportunities through emails and social media messages. First, you should verify the information through an independent search before making any decision.
Lack of Regulatory Compliance:
Legitimate cryptocurrency platforms understand the importance of regulations about digital currency and focus on strict implementation of these regulations. The absence of regulatory compliance and the availability of licenses are red flags and may lead to possible fraud or scams. Regulatory compliance ensures the transparency, legality, and accountability of the platform. Before investing, investors should verify whether the cryptocurrency platform complies with the relevant regulations, holds the license, and has the necessary documentation.
Nowadays, cryptocurrency trading is increasing as people become more familiar with tech and the digital world. Investors keep searching for new opportunities with attractive benefits and quick returns. Due to open platforms and the lack of availability of regulations, scammers are also using the cryptocurrency space to scam investors. However, whether you are new to crypto or an experienced investor, you should be careful regarding online trading and using trading platforms. By applying the abovementioned tactics, investors can avoid the risk of fraud and loss of personal information. Effective cryptocurrency security lies in technology upgradation, individual vigilance, and continuous learning.