How to Avoid Bitcoin Scams?
2018 was a record-breaking year for crypto hacks. From several cryptocurrency exchange hacks to the cryptos that were stolen, this currency has set a lot of records the past year. If given a number, $1 billion was lost in hacks alone in 2018.
And, with bitcoin’s popularity increasing, people realize its value that brings out both the good and bad in human nature.
However, the bad means scams and hacks. In the end, hackers and scammers want to profit from bitcoin, even if it is through nefarious means. They usually target unprepared victim, who, as a result, lose their bitcoins.
So, here are a few bitcoins scams and how you can avoid them.
· Phishing
Phishing is the most common scam that you must be already familiar with. It is when someone tricks you into thinking they are a genuine and trusted website or company.
It also occurs when you receive an unsolicited email that looks like it is from your wallet provider or crypto exchange. If you click the link in the email, you either get malware or lose your coins.
Also, you could also end up entering your account details on that scam site, which means now scammers have everything they require to log in to your account and steal your funds.
How to avoid phishing scams:
1. Do not click on any links or hyperlinks in emails.
2. Always double-check URLs to make sure you are visiting a genuine site.
3. Never disclose your private key.
· Fake Wallets And Exchanges
You must have come across something like “Buy bitcoin 5% under market value” on social media. And, you have clicked at least once on the link considering it looks so tempting. But, it’s merely a marketing trick to get you to visit a fake exchange.
Just like these fake exchanges, there are also rogue bitcoin wallets, which are somewhat harder to identify as wallets store your funds and not trade. Fake bitcoin wallets are scams for malware to infect your machine and steal your private keys or passwords.
Considering these things, make sure you keep an eye for fake wallets and exchanges. While visiting an exchange site, make sure it is HTTPS secured and not HTTP. Also, look out for exchanges that offer to sell bitcoin for PayPal. You can also refer to this guide for choosing the best cryptocurrency exchange. Further, thoroughly research the wallet before trusting any random wallet.
How to avoid fake wallets and exchanges:
1. Always trade on popular and well-known exchanges.
2. Before you create an account, thoroughly research any exchange or wallet.
3. Never let yourself be pressured into depositing funds or disclosing any personal information.
4. Don’t download any wallet from the app store rather only download software and apps from legitimate wallet providers and exchanges.
· Ponzi Schemes
Also, known as Pyramid schemes, Ponzi schemes are yet another way of stealing your coins with a promise of “doubling your bitcoins.” Basically, this scam lures in new traders and investors with the promise of unusually high returns.
Moreover, Ponzi sites generally have a referral program, which means if you get other people to sign up for the same site, you may make a few cents. Sooner or later, these types of schemes collapse after the promoter runs off with the money, or it becomes difficult to lure new investors.
Ponzi sites are harder to identify, but they can easily be spotted if you understand that the only way to double your money is to first send it to them.
How to avoid ponzi schemes:
1. Never trust a project that promises returns that sound too good to be true.
2. Look out for the projects that encourage you to recruit new investors to enjoy bigger profits.
· Malware
Crypto-related malware gets access to your web wallet and empties your account. It also monitors the Windows clipboard for cryptocurrency addresses and replaces the genuine address with an address belonging to a scammer. The malware can even infect your system with a cryptocurrency miner.
Ransomware is also another type of malware you should look out for. This malware partially or completely blocks access to a device unless you pay a ransom in bitcoin.
How to avoid malware scams:
1. Keep your antivirus software always updated to protect yourself against malware.
2. Never open suspicious attachments.
3. Do not download or install programs unless you are 100 percent sure they are from a legitimate, reputable provider.
· Pumps And Dumps
In the pump and dump scheme, people try to artificially drive up the price so they can dump their holding for a profit.
In layman’s terms, a large group of buyers targets an altcoin with a small market capitalization buys that coin in large amount at a particular time to drives its price up and then sell to take advantage of the large price rise.
This type of scheme is illegal, but that doesn’t make it any less prevalent. Being very common, there are many online groups dedicated to this practice. So, it’s critical you steer clear of this scam.
How to avoid pumps and dump scams:
1. Look out for “fake news” on social media platforms that hypes specific coins.
2. Be cautious of low-market-cap cryptocurrencies that usually have a low trading volume but suddenly undergoes a sharp price rise.
3. Carefully research the credentials of any crypto before buying.
Ending note: In addition to the tips mentioned above, there are plenty of safety measures you can take to protect yourself against frauds. Make sure to stick with established providers to minimize the chances of hacks and thefts. You should always use a cold wallet with 2-factor authentication if your wallet allows for it. Another key point is never to share your private key with anyone.
