The cryptocurrency market has seen growth at an exponential rate over the past several years. Its value Bitcoin alone has risen to over $50,000 by 2021 because more people have poured money into the market. Unfortunately, the amount of frauds that have occurred in the market has also been increasing. Are you interested in cryptocurrency? Before you make the leap to invest in cryptocurrency, remain aware of various kinds of frauds and scams happening.
An Review of Cryptocurrency Scams
Its abstract character cryptocurrency and the technology behind the hood make it much easier for fraudsters to execute their scams within the industry. Many times, scammers using cryptocurrency combine marketing jargon and false statements regarding the technology behind cryptocurrency to convince victims who are not aware of the validity of their schemes.
The enormous potential of cryptocurrency to be used for fraud is becoming more apparent. In the year 2019 alone, more than $4.5 billion lost to scams involving cryptocurrency.
Scammers who are more technologically skilled than others utilize hacking methods as well as social engineering techniques to develop their crypto-currency schemes. Although blockchain networks and the methods used to secure them are secure, many victims of scams do not be aware of the need to look for the most effective techniques like email fraud.
Here are some scams with cryptocurrency that you need to be aware of before purchasing bitcoin or any other cryptocurrency.
1. Initial Coin Offerings
The initial coin offer (ICO) is an opportunity to raise funds that utilizes crypto and smart contracts to facilitate payments between the organization and its partners. ICOs are utilized by companies that use cryptocurrency to raise funds from potential users. Although a number of fantastic businesses have been created with ICOs, a lot of the fundraising methods are viewed as frauds.
A study from 2018 showed the majority of ICOs are frauds. In the early days of ICOs, lots of companies spent months promoting their fundraising activities. Many different strategies were employed to raise funds, such as offering bonuses for guerilla marketing. Although they didn’t have any workable products, many projects were able to raise money prior to ceasing contact with their investors.
Many of the ICOs appeared to be run by legitimate entrepreneurs who had good experience. In many instances it was later discovered that the alleged “entrepreneurs” were in reality fake criminals who used the identities of other individuals. Certain projects can even gain the support of famous celebrities in the industry.
It can be difficult to tell the difference between legitimate ICO as opposed to a fake one. This is due to being aware that the vast majority of ICOs were executed online, with almost no interaction in person between the ICO’s organizer and the those involved.
However, even legitimate ICO projects are unable to recover the funds of their funders due to the result of hacking attacks against them. A study conducted in 2018 showed that $400 million of $3.7 billion was taken of ICO projects by hacking. Methods that are commonly used, such as phishing were employed to trick authentic ICO projects into disbursing their funds.
2. Bitcoin Mining Scams
The Bitcoin Mining method that makes use of computing power to safely include transactions into the ledger of blockchain. The blockchain’s computers solve complicated mathematical issues which help verify transactions prior to adding them to the unchangeable ledger. A number of other cryptocurrency-related projects utilize similar mining techniques to protect their networks.
In the past it has become more difficult to execute with any device. Today, earning profits through Bitcoin mining requires more sophisticated hardware which can be difficult to obtain and make use of for the common person. This is why a lot of people want to outsourcing cryptocurrency mining to third parties.
A number of scammers have made use of the willingness of consumers to use crypto mining companies. The people behind scams that involve mining cryptocurrency attempt to convince their clients that they should invest money in the mining pools so they can earn substantial gains. They usually cease responding to messages from their victims after receiving the money.
The perpetrators responsible for Bitcoin mining schemes might attempt to persuade their victims to attract new investors. These kinds of schemes typically require the removal of funds from new investors in order to make payments to previous investors until the payment cycle is no longer sustainable.
3. Cryptocurrency Giveaways Can Be Scams
The scams of cryptocurrency giveaways involve the use of social engineering in order to induce investors to transfer their cryptocurrency to be eligible for more tokens. The scams are quite convincing, particularly when scammers pretend to be celebrities in order to make their victims believe in them.
Different social media platforms were employed to conduct frauds involving cryptocurrency over the years. Scammers included text in videos of tech leaders they uploaded to YouTube. The text encourages viewers to join fake cryptocurrency contests. A lot of people believe that these giveaways are legitimate since the videos feature prominent names from the technology industry.
Twitter accounts are also used to steal money from those looking forward to giveaways of crypto. Criminals pose as celebrities and prominent people from the tech industry to earn the trust of people using the service. The giveaway posts are derived from the fake profile of the scammer to their timeline, as well as the tweets of other users.
4. Fake websites and crypto Scams
Fake domains can be utilized to display web forms as if they belong to legitimate entities in the field of cryptocurrency. Fake websites have been utilized to create fake wallets and cryptocurrency exchanges appear legitimate.
Hackers can access the personal information of users of cryptocurrency wallets after they have obtained their information regarding their exchanges and wallets. The data obtained could be used to access the personal accounts of the victims.
Fake websites could additionally prompt users to install software. Users, who believe they’re using an authentic site, might download a program with malware that infiltrates personal information of their computer.
5. Incentives for Yield Farming
Yield Farming is an decentralized financing technology that allows people to earn income from staking crypto. Yield farming software that is built on the Ethereum blockchain can automate the lending process, allowing individuals to earn interest by the liquidity. Certain yield farming projects utilize Bitcoin.
There are a lot of legitimate yield-based farming projects created by top developers within the financial decentralization ecosystem, however there are many cyber-scammers who duplicate the code of other projects and then insert their malicious code to steal money. Some scammers have gone so in the direction of pretending as legitimate extended durations before pulling off investors’ feet before leaving with the entire money.
The mute nature of the yield-farming ecosystem is very difficult to know if an initiative can be considered legitimate. Even when projects are genuine, there’s an opportunity that the software of the project may contain bugs that could be exploited for profits.
In recent years there has been a growing concern that scammers are creating fake hacks to ensure they can shift responsibility for loss of funds away from them on to another “unknown” fraudster.
6. Cryptocurrency based on email Scams
It’s not a secret that privacy online is gradually becoming a thing in the distant past for the majority of us. Privacy-friendly user agreements have become frequent in recent times. This makes it easy for scammers to steal your personal information from the dark web, or even from legitimate websites that you are using.
By providing your contact information An imposter can claim to be a service that you use and send you an email to ask you to click on a link inside the body of the email. The email may contain the details of an issue needing urgent attention. This can encourage the recipient to follow a link that is malicious or visit a fake site that allows them to share the information they have without knowing the risk.
Email scams can be extremely easy to miss because many people have a lot of confidence in the services they use, and don’t typically expect an email from a trusted service to be fake.
Be secure from the Crypto Wild West
Although cryptocurrency is changing the world in amazing way, numerous people who’s lives were devastated by scams in the industry. It is crucial to keep an eye out for suspicious signs (both old and new) when you are using cryptocurrency-related platforms.
The use of cryptocurrency technology has simplified numerous financial processes and placed banking into the hands of the general public. This could mean that you may be one of the weaker links in security chain and be the victim of a cryptocurrency scam. The technology and the people who run the platform you choose to use must be taken into consideration as well. considerable amount of consideration when deciding whether you want to choose a crypto platform.
