Even though half of the world has already jumped on the train because it has proven to be the right choice, investing in cryptocurrencies carries with it a wide range of intertwined risks and therefore it would be advisable for investors to keep their eyes open for the scams, and not follow every advice they find on the internet.
Any serious investor would first consider learning how to recognize a genuine from fake, and for that purpose we have decided to write an article about it. Below are some information that will give insights about what are the most common fakes, and how to deal with them.
Fake projects
Sometimes it happens that the team and the community promote a crypto project by falsely presenting it. A great example of something like this is the One coin project, which was presented as a new bitcoin, which will bring owners millions, thanks to its blockchain technology. It is true that the blockchain never existed, nor did the cryptocurrency itself. The promoters escaped, and the developer was declared the biggest crypto fraudster. Such projects that are falsely presented are also called Scam projects.
Tip: Before you invest in a cryptocurrency, you need to research enough about it: Are there any on CMC, is the project team active, what do they have on Github, is there a community and what do they think, do they have a telegram, twitter, discord etc. Further on, do they have a whitepaper, are they published on some stock exchanges and which ones, where does that project actually lead. It is very important that you are informed about the project and follow its development.
Trading platforms and exchanges
A trading platform or exchange can be made as a scam from the beginning, but it can also happen that unforeseen events can occur, which can lead to the loss of users’ funds. When a trading platform or an exchange cheats and the founders run away with the money, we call it Exit scam. This happened several times in 2018 with smaller exchanges, when the money just disappeared. Some are being sued, and some have even returned money to individual users.
In addition, there are stock market hacks, to which stock exchanges react differently. Certainly, larger stock exchanges have better protocols and security systems, and it also happens that they return money to the victims from their own pockets.
Tip: Always buy cryptocurrencies on larger and more well-known exchanges, if you still need to use a smaller exchange or exchange office, check with the community to see if that exchange is valid and research online. After the purchase, withdraw your funds to your personal wallet and thus reduce the time your currencies spend on that stock exchange. Choosing to trade on safe platforms, means to decrease the risk of ending in a fraud. Therefore, read reviews and user experiences others have posted, to find the one that provides best conditions for trading, such as bitcoinscodepro.com/de.
Ponzi schemes
These classic scams function on the principal, something like “buy our coins, hire 3 people and make a guaranteed profit!”. Whenever you see a promise of risk-free profit, you can be pretty sure it’s a Ponzi scheme (or some other kind of scam). These are a scam because they don’t actually make a profit for their users – the money paid by new recruits is used to enrich the founders and former adopters. In the end, the last people to enter these schemes are guaranteed to lose money.
Mining scams
Using conventional computers to dig up crypto is no longer a worthwhile investment of your time or money. For example, bitcoin can be practically mined only with the help of specialized mining computers which cost over a thousand dollars. Miners typically use many of these at once for more efficient mining.
Some scammers offer cloud services, where they claim to host one of these computers that you can rent. Customers of cloud services blindly trust these companies / fraudsters to run mining computers and make a fair profit. However, there is no way to know if these companies have any of these at all. Even if they did, it’s impossible to know if they’re paying you your full earnings or some companies are keeping it to themselves. Consider this: If this type of mining was really profitable, why wouldn’t cloud mining companies just use self-mining computers?
Malicious software
Cryptocurrency Malware is malicious software disguised as cryptocurrency wallets and miners that can steal your passwords and private keys if you install them. Be very careful when deciding which software to install. Some crypto exist only as a means of distributing malware to steal private keys.
Why is crypto world so interesting to scammers?
Well, it makes perfect sense. It is not important to the fraudster what exactly the focus is, it is important that the focus brings money. It was to sell educational material, books, cryptocurrencies, investing, it is important that there is a profit. And cryptocurrencies themselves are still an unexplored area for a large number of people, who can easily fall prey to fraud, due to their recklessness or lack of technical knowledge about cryptocurrencies.
Tip: Stay awake and as far away from Facebook groups as possible. Cryptocurrencies that do not have a blockchain cannot be mined, there is no job that is not done without making a profit. Multiplying the stakes when you send someone your money will only cause that person to multiply their money.
So, are all crypto fake, or a scam?
Not all cryptocurrencies are scams, but unfortunately the industry attracts many scammers. They prefer online scams because they can hide their identity and avoid being caught. Since cryptocurrency is internet money, it is only natural that it attracts many of these scammers. Be especially wary of any cryptocurrency that guarantees profits or that are claimed to be an improvement over Bitcoin without discussing your own exchanges.
