This shows the negligence on part of such people who refuse to spend some time learning about the latest revolution. And that is because such people have pre-conceived notions strongly etched in their minds.
Like I stated earlier, there are scams, undeniably, but isn’t it true for every other industry in the world?
Moreover, I acknowledge that fact and that’s why I am here to tell you about some of the most common forms in which crypto scams take place.
Cryptocurrency scams that everyone should be aware of
1. Fraudulent ICOs
The most common way to pull off a scam is to fabricate a fake ICO, create marketing hype and persuade people to buy.
That is because ICOs are a great and innovative way to kickstart a company and that is the aspect that is misused. (Read: What Are ICOs ( Initial Coin Offering) & Why Are They Good For You?)
Ethereum has become the breeding ground for these fraudulent ICOs but Ethereum is not directly responsible for it as it is an open-source project.
Instead, it is the ignorance of newbie investors who dream of 100x gains in a matter of weeks by just HODLing worthless ICO tokens.
Usual signs of fraud ICOs or Token Sales:
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Copied whitepaper
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Half team anonymous
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Unusual hurry in execution
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Mismatch of written & said words
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Ignoring hard questions
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No strong reasons for the token economy
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No roadmap
Be aware of such types of scam ICOs or Token Sales. Here are a few examples of fraud ICOs for learning and inspiration:
2. Shady Exchanges
The second most common form of scam that you will come across would be a ‘shady exchange’. The exchanges that sprang up over-night and started bragging. One needs to be very careful with such exchanges because once you trust them and deposit your coins there, you have no way to get it back if the intentions of that exchange are not right.
Also, some exchanges that start well can run away with your money any time because they fail to scale and innovate to stay relevant in the market.
Some of these platforms as reported by Bitcoin.com are:
01crypto, Btc-cap, Capital-coins, Coinquick, Cryptavenir, Crypto-banque, Crypto-infos, Cryptos.solutions, Cryptos-currency, Ether-invest, Eurocryptopro, Finance-mag, Gme-crypto, Gmtcrypto, Good-crypto, Mycrypto24, Nettocrypto, Patrimoinecrypto, and Ydconsultant.
Do read:
3. Fake Wallets
With the launch of Bitcoin, many fake android wallets have also been launched on play store.
That’s why it is a big NO from us to pick any wallet randomly from the play store because there are chances that it will be fraudulent and you may end up losing your money.
Though these wallets may promise you the seed and control of your funds, never fall for them without proper due-diligence.
It is one of the easiest ways to scam people and happens many times during the launch of Bitcoin forks. These wallets take your seed or private keys and rip you off your BTC too.
#Scam #Alert: we received reports that users had their funds wiped out by a clone of our wallet that goes by the name "BTCGold Wallet" #RT
75 people are talking about this
Bitcoin Gold [BTG]@bitcoingold
**SCAM ALERT**
This [[btcgold (XBG) "btcgold .biz"]] is not affiliated with the Oct 25 #bitcoin hard fork called Bitcoin Gold (BTG). #bgold
56 people are talking about this
4. Pyramid or Ponzi Schemes
This form of scam is easiest to spot but people still fall for it.
If you find a crypto project that actively encourages the recruitment of new investors to maximize your profits, it is a Ponzi scheme. This system works on the model of scamming the one who enters the system later.
Also, schemes that promise absurd returns are definitely Ponzi schemes.
You can quickly do a litmus test to avoid such schemes or projects by following two simple bits of advice given by Andreas M. Antonopoulos, a renowned Bitcoin speaker, and proponent.
Andreas M. Antonopoulos✔@aantonop
Does it promise regular returns that exceed average market returns?
It's a Ponzi
Does it focus more on recruiting new people than any product?
It's a pyramid scheme#litmustests
952 people are talking about this
5. Phishing Scams
Phishing scams are another common form of scam in the cryptosphere.
Here, the scammers will try to get your username, password, or seed keys somehow by fooling you. Mostly the attackers use two methods to achieve this:
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Punycode
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Fake Airdrops
Do watch this video from Harsh to identify and avoid such forms of scams:
6. Pump & Dump Groups
Pump & Dump groups on Telegram, Slack, and IRC are not something new in the traditional market also so why the crypto market will be left behind in this.
If you search on Telegram, you will find many crypto groups with 40,000-100,000 members in it.
What do you think they do in such groups? They don’t chit-chat. Instead, these groups are the tools to manipulate the prices of altcoins that have low market caps.
In this way, people who act fast or first get the advantage and the people who are a bit late suffer from the plummeting prices in just a matter of minutes.
There are several tools available in the market to monitor the volume increase in a particular crypto which helps in identifying such schemes.
I know some people make money like this but I am not one of them and I would suggest you stay away from it too.
7. Impersonators
The most sophisticated form of scam.
In this type of crypto scam, scammers make fake Twitter and Facebook account to impersonate the actual legit project or the person behind it.
You will find many impersonators on Twitter acting like Vatalik Buterin or Binance’s CEO and announcing airdrops etc which are never true.
Example of a fake Vatalik account:
Also, scammers have started acting as crypto exchange support staff to scam people of their crypto funds. Here are the reports.
Conclusion
Scams in any industry is not a new thing and crypto being a decentralized and open source concept is one of the easiest to replicate.
The only way to not get scammed is to trust legit sources of information, as well as self-education of investors through trusted sources like CoinSutra.
CoinSutra has all the material to make you understand how the whole crypto ecosystem works that’s why all you need to do is to spend some time teaching yourself so that you don’t get scammed.
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