Types of cryptocurrency scams

 Types of cryptocurrency scams

Cryptocurrencies are currencies that are available digitally. Cryptocurrencies are widely connected through many computers in a shared network. The government has no involvement in the management of Cryptocurrency transactions. Cryptography is the technique used by cryptocurrencies that helps them to manage cryptocurrency transactions. 


Why are people becoming victims of cryptocurrency scams?

People are becoming victims of crypto scams as scammers are utilizing various tactics to cheat cryptocurrency users and steal their digital money. The cryptocurrency scammers are smartly convincing their audience to invest in their so-called fantastic cryptocurrency investment offers. Once they get them to invest through them, The crypto scammers then disappear along with the money they receive from their crypto users. 


Reasons why people are still choosing Cryptocurrency trading?

Cryptocurrency users enjoy several below-mentioned benefits of using cryptocurrencies. 

  1.  Banks and other government bodies do not manage cryptocurrency transactions. If a person possesses cryptocurrencies, then they own those cryptos and operate their own transactions. 
  2. Another advantage is that Cryptocurrency transactions take place within a few minutes, but a wired money transfer may occur within twenty-four hours. 
  3. The transaction costs in the case of cryptocurrencies include little to no charges. 
  4. In the case of international crypto transactions, the blockchain network processes the transaction, and it does so within a fraction of a second. With this, we can easily note the point that Crypto transactions happen quickly and that too within seconds. There are no geographical barriers in the case of sending and receiving cryptocurrencies. People can send cryptos from any location and to anybody. 
  5. Cryptocurrency wallets keep the cryptocurrencies safe, and you can manage the cryptos with the help of your phone or a computer.
  6. Cryptocurrencies are advantageous for those who don’t have traditional bank accounts. They can manage crypto transactions from any location, without any hassles.
  7. There is no such requirement where cryptocurrency users need to provide personal information for the execution of cryptocurrency transactions, unlike the requirements laid out by central banks. Instead, the transactions can occur anonymously. 


How do cryptocurrencies function?

Let us understand how Cryptocurrencies function with the help of these below-mentioned pointers;

  1. Digital currencies are sent from one crypto user to another with the usage of a virtual or crypto wallet.
  2. For using the wallet, every user needs a private key. Without the private key, the cryptocurrency user cannot access their crypto wallet. 
  3. The crypto transactions are recorded in the public ledger. It is because of blockchain technology that counterfeiting cryptocurrencies seem impossible. 
  4. The data relating to cryptocurrency transactions are shared globally for verification purposes.
  5. In Cryptocurrency trading, when a public ledger records the transactions, the details related to the transactions won’t be revealed and therefore the Crypto trader will remain anonymous. 
  6. When you purchase a cryptocurrency, you also own a private key. With this private key, the transactions automatically get authorized on the blockchain network so that spending funds can be convenient and more manageable. 


Categories of crypto scams:

Below are the various categories of crypto scams. 

Blackmailing or extortion cryptocurrency fraud:

In blackmail fraud, the crypto scammer contacts the victim through email or call and mentions that there is some sensitive information about the victim, such as photos, videos, etc. The scammer blackmails that if the victim wants the data to be safe then they have to pay some money in the form of cryptocurrencies. If the victim does not make a payment in cryptocurrency, then the information will be released. The victim sends their cryptocurrency to the scammer. After receiving the crypto, the scammer just vanishes. 


For example, A gets an email from a person telling him that this person has his sensitive videos. Then this scammer starts to blackmail A and asks for a cryptocurrency payment; otherwise, they give an ultimatum that his videos will be released. A sends his Cryptos to the person because of his concern about the release of his videos. However, after some time, A realizes that he has lost his crypto and that person was a fraudster. 


Cryptocurrency investment fraud:

In cryptocurrency investment fraud, the fraudsters pretend to be the investment managers, managing cryptocurrency investments for their users. They contact potential traders about a so-called cryptocurrency investment opportunity and then promise that they will get a massive return on their investment. In reality, no such cryptocurrency investment opportunity exists, and it is a strategy used by scammers to trick crypto users into investing through them. 


Phishing fraud:

In this type of scam, you may get an email from someone asking you to click on a link. The link then leads you to a phony cryptocurrency website that requests you to provide your cryptocurrency login credentials. As soon as you enter the login credentials to your cryptocurrency account, it is accessed by fraudsters, and they steal your cryptos. 


Social media crypto scams:

Cryptocurrency users come across plenty of crypto investment offers on social media, some of which may seem too good to be true. In those offers, they may ask the crypto users to invest their money to get more investment returns. It may sound awesome, but in reality, those crypto investment offers are fake. 


Fake apps:

In this scam, Scammers create several fake cryptocurrency apps to get people to download them and get hold of their data. However, these fake cryptocurrency apps may look attractive, making people download, use, and directly send their money to these scammers.


What are some indications of a cryptocurrency scam?

Plenty of crypto scam indications are helpful to crypto users in protecting themselves from crypto scams. 

  • It is essential to avoid any crypto investment offer that sounds too convincing or tempting.
  • Don’t respond to the calls regarding crypto-investment offers that guarantee you more returns. 
  • Please do not respond to threatening emails asking you to send cryptocurrencies to keep your so-called personal information safe. 
  • Never respond to social media posts or advertisements that specify cryptocurrency investments. It is a possibility that they are fake.
  • It is not a genuine offer if you come across a celebrity promoting crypto investment offers. Please bear in mind that celebrities do not encourage cryptocurrency investment offers. 


People who invest money in cryptocurrencies must know the warning signs of crypto scams to protect their cryptos. In addition, it is also a good idea to know about crypto scams.