5 Cryptocurrency Scams To Watch Out For & How To Spot A Crypto Scam

Cryptocurrency has grown in popularity over the years, attracting a diverse range of users. There are many ways that people use cryptocurrency, depending on their specific needs and preferences. For starters, cryptocurrency is often used as a way to make quick payments. The transfer fee involved with traditional banks can be quite high, leading some people to opt for alternatives like cryptocurrency instead. It also offers users some anonymity, a feature that may not always be available with other types of transactions.

Some individuals also hold cryptocurrency as an investment. As with any type of investment, there is always an element of risk involved; however, the value has only gone up since the introduction of digital currency — making it especially attractive for those who want to make powerful long-term investments without relying on speculation or luck alone.

In addition, crypto can often be traded for fiat money or other assets quickly in most cases — allowing investors to take advantage of market trends quickly and efficiently. All these factors combined have helped to make cryptocurrency a viable option for many investors and traders around the world — giving them access to lucrative opportunities wherever they may be located.

Though there are opportunities, there are a few cryptocurrency scam that might affect you. Learn about these and keep your money safe from the scammers.

Bitcoin Scams

Bitcoin scams are one of the oldest threats around cryptocurrency trading and investment. Despite this, the first-ever cryptocurrency, bitcoin, has long been viewed as a safe option for many new investors and traders due to its established name recognition and broadest adoption, evidenced by traditional financial institutions offering Bitcoin investments.

Phishing scams pose one of the largest dangers to Bitcoin holders who, through personalized emails or texts from seemingly legitimate sources – companies or individuals - are tricked into revealing their private keys or sending their bitcoins directly to an illegitimate wallet belonging to a con artist. 

To protect yourself against phishing scams, it is essential to check any sender's email address and verifying any linked sites are genuine before providing information or committing any money. With increased confidence comes increased safety; always vet suspicious links supplied via email or text messages lest you be victimized by nefarious scammers preying on vulnerable people.

NFT

Non-Fungible Tokens (NFTs) have become this year’s hottest trend. People are buying NFTs on digital collectible sites like NBA Top Shot, purchasing digital avatars for social media, and using them as tickets for events. As the popularity of NFTs grows, so do the scam opportunities for scammers.

One of the main NFT scams involves the production of counterfeit NFTs and falsely claiming them to be from popular projects like Bored Ape Yacht Club that are currently increasing in value. 

Scammers can create clone projects with fake art or copy an original project and use it to pretend it is from a legitimate artist or collector. To be out of these frauds, buyers should familiarize themselves with current NFT prices through legitimate sites such as NFTpricefloor.com, since suspiciously low prices may signify a counterfeited project not endorsed by the original creator. For added security, users should source their items through OpenSea which displays a blue checkmark if an item is verified by its creator as authentic.

Social Media Scams

Social media has become a breeding ground for crypto scams in recent years. According to the US Federal Trade Commission, nearly half of all people who reported losing crypto since 2021 fell victim to an ad, post, or message originating from a social media platform. 

Tweets from seemingly verified blue-checked accounts have become much less trustworthy since Elon Musk acquired Twitter, as any subscriber can pay for that checkmark.

When engaging with cryptocurrency platforms on social media one must take extra precautions and look for suspicious activity or profiles. 

If a brand new account with few followers starts suggesting investments in crypto projects, it's almost certain that it is not a reliable source but rather some kind of scam aimed at taking advantage of unsuspecting investors. One scam unique to social media comes from YouTube, where people set up fake live streams to trick viewers into giving away their cryptocurrency holdings.

Cloud Mining Scams 

Cloud mining is a relatively new concept that has become popular in recent years. It essentially allows people to mine for cryptocurrencies without having to purchase their own expensive mining equipment.

In theory, this should make it easier for these individuals to make money from cryptocurrencies without having to spend large amounts of money on hardware and electricity costs. Unfortunately, many cloud mining companies turn out to be scams or, at best, ineffective. People end up spending more than what was promised or even losing out on their initial investment completely.

Another potential problem comes from Initial Coin Offerings (ICOs). With an ICO, start-up crypto companies can ask customers to send over active cryptocurrencies like Bitcoin in exchange for a discount on the new coins they are launching. This could potentially lead to financial losses if the company is fraudulent and turns out not to be legitimate. As such, it is important to do your research before investing any funds into an ICO. With proper due diligence, you can avoid falling prey to cloud mining scams or fraudulent ICOs and keep your hard-earned money safe

Cryptocurrencies are relatively new in the investment world and can be a great way to increase your financial portfolio, but there is always the risk of cryptocurrency scams. To protect yourself from these types of scams, it’s important to understand how to spot them. One of the most common red flags that indicate a crypto scam is promises of guaranteed returns. If an investor makes any type of guarantee that their crypto will make you huge amounts of money, this is a sure sign they’re not being honest regarding their investment and should be avoided at all costs.

Another warning sign of a possible cryptocurrency scam is if the initial coin offering does not have a whitepaper or has an extremely poor one. This document should act as the blueprint for any cryptocurrency project and explain how the technology works and why it would be beneficial to investors. If a specific project has lacking or has incomplete documentation, then it likely wasn’t planned out properly and could end up costing you financially if you seriously invested in it. It’s better to avoid those projects altogether instead of throwing your money away on something that doesn’t have proper foundations.