The internet is vast. So much so that 2021 was a record-breaking year for cryptocurrency and fraud as the online scammers stole $680 million worth of crypto, according to the Federal Trade Commission. Because of this massive growth in crypto, it has become an opportunity to grab for malicious hackers and scammers as they have plenty of ways to scam people and get a hold of their crypto assets.
Understanding how cryptocurrency works is beneficial, even to those who use it sparingly. But scamming is not specific to just cryptocurrency. In general, scams can happen to almost anything you own digitally that has real-world value. Scammers then try to get a hold of them to make money.
More questions arise about crypto scams and how to avoid crypto fraud. The key to survive is constantly staying updated with the latest development in the field of cryptocurrency and being familiar with common crypto scams. It’s time to dig deeper to answer more questions.
Overview: Crypto Currency Scams
Crypto scams are categorized under financial scams, but scammers go after your cryptocurrency instead of real money. Although bogus, the tactics deployed by scammers are mostly the same as other financial scams.
The hackers try to scam you by asking for your crypto wallet credentials, posing as wallet’s customer support executive, or just simply sending you a phishing email where you have to share confidential login information.
Cryptocurrency is only a little over a decade old, and many people invest their savings in crypto. Because of the decentralized nature of cryptocurrency, some people use cryptocurrency to make payments and avoid the traditional bank charges on transactions, while some hold cryptocurrency as an investment.
Because of this decentralized nature of cryptocurrency, once a transaction is held between two parties, it is non-reversible. The chances of you getting your money back if it was mistakenly transferred or scammed are very low. That is one of the main reasons you should always be aware and, at all costs, be careful who you share your credentials with and who you trust to give your money.
The main goal of a scammer is constantly manipulating the victim to transfer cryptocurrency into the perpetrator’s account. However, it is not the only cryptocurrency, as NFTs can also be targeted. Any crypto asset that can provide monetary value is under threat.
Until March 2022, the Federal Trade Commission reported that cryptocurrency scammers had stolen more than $1 billion since the beginning of 2021, with the most extensive cryptocurrency loss coming from investment-related crypto fraud at around $575 million.
Why Are Cryptocurrency Scams On The Rise?
There are many reasons why crypto scams are on the rise, but only a few create a bigger picture. The internet is vast, and because of crypto’s decentralized nature, the scammer, once getting a hold of your crypto asset, can disappear into the void of the internet, leaving absolutely no trace behind.
This fact is crucial to note because this is one of the main reasons scammers target digital assets more than physical ones. The chances of getting caught if using extreme caution are pretty unlikely. Hence, it is a safe route for them to make quick money by scamming people.
Scammers usually go after people who need to become more familiar with the ups and downs of the internet. People are unaware of how badly things can go wrong, even if you share a simple one-time password code with them.
People who are unaware and don’t know how to stay safe digitally are easy prey for scammers and are easy money. Let us have a look at the most common cryptocurrency scams.
What Are The Most Common Cryptocurrency Scams?
There are plenty of types of cryptocurrency scam, and some of them are easy to spot and very common. Most of them revolve around investing or asking for login credentials.
Investment scams are usually from a scammer trying to manipulate you into investing in a specific cryptocurrency. In return, it promises that you will earn a considerable profit immediately, in a couple of days or months.
If you follow through with the process that involves such investment, you can safely say goodbye to your cryptocurrency. The trick used by scammers is to manipulate you into building trust, so you will do what they say.
In the case of phishing scams, scammers send you emails with malicious links, pretending to be from a trusted source, like a company or an organization. After which, if you open the link, you are told to input your credentials for important crypto wallets.
All this is fake to steal your login information so that the scammers can take over your account and flush everything to other accounts of their own, rendering your account empty. As we mentioned before, the nature of crypto is decentralized, which makes it easy for them to move crypto using multiple transactions leaving no trail behind.
Social Media Scams
Social media has a massive impact on everyone’s life now. Scammers use this to their advantage. They use multiple social media accounts on platforms like Instagram and Facebook under some celebrity or company’s name with a similar or different username.
Scammers’ trick is again to force you into making an investment or transferring to their wallet in return for something valuable, which never occurs. These types of scams are one of the most common and very profitable for scammers.
How To Protect Yourself From Crypto Scam?
One of the best ways to avoid crypto scams is to be aware. If someone you haven’t talked to or texted before is sending you a message to make a crypto investment or transfer, it is a red flag. They are probably trying to scam you.
Scammers, as mentioned before, usually impersonate celebrities, companies, or even the government. And it is not just for the crypto scam. If anyone asks for login credentials to your accounts over the internet or on a call, never share anything with them unless you know them personally.
And speaking of investment, give it a background search first if you see an opportunity to invest in a cryptocurrency. Cryptocurrencies like Bitcoin and Ether are well known, but some might try to do a rug pull once that specific cryptocurrency achieves a particular value. The same thing happened to the SQUID coin, in which thousands lost their investments.
If the whole concept of cryptocurrencies seems odd or difficult to understand, then you should take advice from some genuine crypto experts to protect yourself from scams. Because cryptocurrency is digital, there is no evident physical proof that you own it, and the risk of losing your digital investment comes with it. Hence, it is highly recommended to keep your credentials and keys safely stored.
If you are a victim of a cryptocurrency scam, you can contact some organizations such as FTC and the FBI Internet crime complaint center. And if you use a crypto wallet, you can even get in touch with their support team to further assist you.
Cryptocurrency, being still relatively new, is a scary concept for many. Not for scammers, however, as they are still fixated on making money by using the vulnerability of people who do not know how to keep themselves safe on the internet.
Social media has helped scammers greatly to their advantage, but it has also helped many samaritans to come forward and spread awareness about crypto scams. Slowly and steadily, many people have been saved from getting scammed.
To avoid cryptocurrency scam, the information mentioned in this blog is very critical to remember so that you can protect yourself from scam and keep your loved ones safe.