Many people are still unfamiliar with the crypto market, and they should perform a thorough analysis before investing in it to prevent being duped. Scammers have been drawn in by a lack of knowledge, the rapid rise in the value of cryptocurrency, and people’s desire to earn quick cash.
Here is a quick look at some of the scams people run into when trying to buy Bitcoin and some advice on avoiding them.
- People Pretending to Be Celebrities
This is the easiest one to fall for of all of the scams out there for people who buy Bitcoin. Several people have created fake social media accounts claiming to be various celebrities to trick people into investing in cryptocurrency. Perhaps the most memorable one was the one involving con artists pretending to be Elon Musk. Reports show that over two million USD was given to these scammers in just six months.
Even if they’ve been posted by your favourite celebrity or trusted social media accounts, always check the investment details against legitimate sources such as press releases and announcements on websites.
- Use Online Portals Cautiously
Investors, especially those new to cryptocurrency, should proceed with caution when investing online. Scammers use a variety of online portals to try and trick people out of their hard-earned money. Never follow links for investing from video streaming services, online dating portals, or social media accounts. This scam came about because people who are passionate about investing in cryptocurrency want to share their findings with others, so they use social media and other online portals to help get the knowledge out. The problem is scammers have copied their content and use it to try and bait investors.
Before investing any money into an online company, do some research beforehand. Reputable cryptocurrency companies encourage all investors to invest time in research before investing.
- Spyware, Malware, and Viruses
New spyware, malware, and viruses have emerged, posing a greater risk to investors using websites to acquire cryptocurrency. These types of viruses acquire access to a user’s account(s) and drain the remaining amount, effectively leaving the investor with nothing.
The best way to avoid these kinds of scams is to install and use reputable antivirus and malware programs, along with a good firewall. These programs must also be kept up to date for them to remain effective. Make sure all currency transferring apps being used utilize two-factor authentication. Always double-check the website being used for the transfer and avoid downloading any kind of attachments.
- Non-Fungible Token Scams
Before talking about how to avoid this scam, investors need to know what it is. Non-Fungible Tokens, also known as NFTs, exist on the blockchain and are considered unique digital widgets. These are usually high-end digital art creations that sell for a lot of money. These go back and forth between markets, providing a haven for con artists.
With NFTs, artist impersonation is just one of the many ways con artists try to scam people. It also happens to be the most common. In such situations, con artists try to sell well-known works for a low price before being reported. Scammers can also take your money through brand imitation, phony shops, and deceptive bidding.
Verification of the account is the best way to avoid this style of scam, but even that isn’t 100% foolproof. If a site or account looks even the tiniest bit fake, don’t reveal any personal information. MetaMask is a great program to install on computers for enhanced security. Always look closely at the URL and how people are being directed to different sites. If it is at all questionable, don’t use it. It should look similar to a regular cryptocurrency transfer site or online banking site.
- Pump and Dump Scam
Another well-known cryptocurrency fraud that has alarmed investors is the pump and dump. These work similarly to penny stocks and are typically inexpensive. A cryptocurrency expert or influencer buys huge numbers of a low-cost coin and begins pushing it on social media. Then they’d seek investors to acquire them, leading to a rise in the coin’s value. The influencer then sells all of their coins for a large profit. John McAfee is a perfect example of this pump and dump scam.
The best way to avoid falling for this type of scam is to do independent research. Never take the advice of a celebrity on social media, no matter how much they might be admired.