Cryptocurrency is getting popular with each passing day as its protocols are improving and blockchain technology ensures enhanced safety “Frauds in Cryptocurrency”.
With thousands of cryptocurrencies available today in the market, you can easily enter the cryptocurrency world.
But is investing in cryptocurrency all safe?
There have been multiple events recorded in the history of cryptocurrency when people lose their money due to fraud. There are fraudsters in the crypto market who make themselves ready to lure crypto investors into fraud.
Let us find out how you can stay safe from fraud when investing in cryptocurrency.
- 1 What is Cryptocurrency?
- 2 Benefits of Cryptocurrency
- 3 What are Cryptocurrency Investment Scams?
- 4 How Can You Spot Cryptocurrency Scams?
- 5 How to Avoid Scams in Cryptocurrency?
- 6 Conclusion
What is Cryptocurrency?
Whenever you are planning to invest in an asset or cryptocurrency, you should build your knowledge about it.
Cryptocurrency can be defined as a digital currency that exists online on blockchain technology. It is based on a peer-to-peer network and its transactions remain unanimous.
You can invest in cryptocurrency through a crypto exchange platform. You can buy cryptocurrency using your credit card or can exchange your existing coin for new ones, for instance – Bitcoin for Ethereum.
Cryptocurrency is highly secured by cryptography that minimizes the chances of fraud.
Carl Runefelt, alias, The Moon, is a global crypto leader who believes in the mass adoption of cryptocurrency.
According to Carl, “No matter where you are, Bitcoin is always online, always working for you, and for everyone else. I think that is revolutionary, and I am so happy to be part of Bitcoin, especially in times like these of massive global uncertainty.”
Benefits of Cryptocurrency
Cryptocurrency has come a long way since it was launched into the financial market. Bitcoin has become the world’s largest cryptocurrency by market capitalization, thanks to its positive adoption and profitability.
You can enjoy the following benefits by investing in cryptocurrency:
- Freedom from bank regulations.
- Ease of making transactions.
- Cryptocurrency is available 24/7.
- Remarkable profits when the market is bullish.
- Low transaction fees as compared to bank transactions.
- Invest in multiple projects like non-fungible tokens (NFTs).
- Create your cryptocurrency.
- The facility to invest in over 18,000 cryptocurrencies.
What are Cryptocurrency Investment Scams?
Although cryptocurrency has made a lot of progress, there still exist some types of fraud in cryptocurrency.
Here are some of the scams that you can suffer in cryptocurrency:
Fraudsters are always looking for the opportunity to make illegal money. They sometimes create fake cryptocurrency trading platforms or fake versions of existing official crypto wallets to trick crypto investors.
You might someday receive an email asking you about sharing the key to your personal wallet. This is a phishing scam that scammers do to steal cryptocurrency from crypto wallets.
Pump and Dump Schemes
Fraudsters create fake hype around a cryptocurrency through social media platforms or email. Once they successfully inflate the price of the coin, they sell their holdings which crashes the coin within minutes.
Carl, on his YouTube channel, The Moon, says, “To make huge profits from investing in cryptocurrencies, one must carry rigorous market study and notice the factors which affect a particular cryptocurrency.”
This is yet another way through which scammers can easily lure you into Frauds in Cryptocurrency. They sometimes get fake endorsements from celebrities or influencers about a certain project which is totally fake.
How Can You Spot Cryptocurrency Scams?
The best way to avoid frauds in cryptocurrency is that you should be able to spot them beforehand.
Here are some ways to spot cryptocurrency scams:
Promises of Guaranteed Returns
Cryptocurrency is extremely volatile, and your returns can fluctuate at any time. But if you are offered guaranteed returns in a cryptocurrency, this means that it is a fraud, and you should avoid it.
Absence of the Whitepaper
Every cryptocurrency comes with a well-maintained whitepaper that explains the technology and purpose of the cryptocurrency. If a cryptocurrency does not have a whitepaper or even it is not properly managed, you should avoid investing in it.
You would be promised free money by investing in a cryptocurrency. If this is happening, instead of looking for extra money, you should know that this never happens in cryptocurrency, and it is a scam.
How to Avoid Scams in Cryptocurrency?
Once you have decided to invest in cryptocurrency, you should know that there would be multiple challenges in your way like Frauds in Cryptocurrency.
Here are some easy tips that you can follow to avoid fraudsters in cryptocurrency trading:
- The first thing that you should do is research the coin comprehensively before investing in it. This will help you understand the current trends of the coin.
- Treat everyone with extreme caution who approaches you for investment opportunities and payments in cryptocurrency.
- Never share your crypto wallet key with anyone. Remember once you have lost it, all your cryptocurrency is gone.
- You should have a secure crypto wallet. Chose a popular crypto exchange platform that offers a highly secured crypto wallet, or you can keep your cryptocurrency in a cold wallet or an offline wallet.
As the popularity of cryptocurrency is increasing worldwide, fraudsters are also trying their luck to make money through fake ways.
Once you are in cryptocurrency, you should be very careful with each step that you would be taking.
By incorporating the above-mentioned tips into your cryptocurrency trading strategy, you can avoid Frauds in Cryptocurrency and secure your money.