Bitcoin scams, Cryptocurrency investors have gained a lot over the last few months during the crypto bull run, and the gains are still increasing. The market for the cryptocurrency world or model includes many levels and the market for scammers has been increasing a lot. Unlike banks or brokerage accounts, there is no Federal Deposit Insurance Corporation (FDIC) or Securities Investor Protection Corporation (SIPC), some insurance for you when you get scammed.
The reason is with cryptography or blockchain technology; you are your own bank. Currently, with banks or brokerages, the scenario, if you get scammed, for example, SIPC will cover up to $500,000 in investments, but will only protect $250,000 in cash. The FDIC, meanwhile, will protect up to $250,000 per deposit account per customer, which means you might protect $1 million or more across several types of accounts at one bank. (FDIC) or SIPC coverage is a complex subject on its own, one which Spends In Crypto will cover to educate our readers.
What is a bitcoin scam?
There isn’t much difference between Cryptocurrency scammers and traditional scammers. The bitcoin scammers will target eager investors by luring them into a false sense of security, like offering incredible deals and amazing profits. They trick clients to invest money in the scammer’s platform or send the money to their outside platform. Once the scammer got his crypto, they will vanish and leaving investors with nothing.
Bitcoins scams can come from any direction. The scammers not only target common people, but they also target celebrities like Elon Musk. Some scammers use malware or hacking software to get the details of the victim’s account. So as bitcoin scamming is increasing a lot, you need to familiarize yourself with some of the most bitcoin scams. Even the Bitcoin official site warns us about scammers.
Top 5 bitcoin scams
Here are the top five bitcoin scams that are most common nowadays. So familiarize yourself with these bitcoin scams if you don’t want to become one of their victims.
Social media con artists
If you use a good old password for your social media accounts, then immediately change it. It will be very easy for hackers or scammers to retrieve that password. One of the notorious examples of this scam occurred in January. The hackers found a Twitter account with a blue tick and they hacked it and changed the name to Elon Musk, then they liked all the tweets that were posted by Elon Musk previously.
They have sent some hacking links from that account and for those that opened those links and for their wonder; the bitcoin scammers emptied their wallets within seconds. This notorious example will show how hackers or scammers use social media to hack someone’s account. So don’t click on the links that say to increase your profit double or triple.
DeFi Rug Pulls
DeFi stands for Decentralized Finance. This aims to reboot traditional financial models by allowing the users to stake their cryptocurrencies and earn profits by depositing them into savings accounts or CDs. Once you start investing in this, your money will rapidly and outpace the rates offered by the banks. As you get higher returns, you will make some contracts with that company. At this point, the bitcoin scammers will steal all your funds without a chance to recover them. So you need to beware of all the DeFi platforms which offer you higher returns and also only dealing with platforms that are reputable.
Non Fungible Tokens is the current investment craze. They exist on the blockchains and can be transferred back and forth. The actual or the original image of the NFTs are easily duplicated. When it comes to cryptocurrency who holds the hashtag holds the power. So if your account is hacked, and you have transferred NFT to outside users, then it will become very difficult to bring it back.
Blockchain technology is permanent and irreversible. Also, the scammers will prey on large profits and offer fake NFTs to users. As the NFT scams are rising day by day. Again, advise purchasing NFTs through legitimate reputable websites only and two-factor authentication.
Altcoin pumps and dumps
Like penny stocks, the Altcoins are cheap and illiquid. The crypto pumps and dumps always go down like penny stocks. A crypto influencer buys a large number of altcoins and then pumps them into followers’ accounts. Once the crowd piles, the scammer will exit the position. Then the followers will be left confused holding altcoins with a much lower value, or like we like to say in crypto, they will be left” holding bag”. As altcoins are volatile, in a single day, your investment could lose value even as high as 90%. This doesn’t mean altcoins are a scam.
Spend In Crypto is here to educate you, to protect yourself in the future. You might ask, “so how to i protect myself from pump and dump?” The answer to this question is always researched first. Research which altcoin you would like to invest in, and why? If you see an altcoin rapidly increasing in price, do your research. Most altcoin price hikes are not a scam, it could be because of a positive announcement by the company which will in turn increase its value in the eyes of investors.
Viruses and Malware
This is also one of the easiest and effective methods to scam. Scammers and hackers always don’t need to invent new technologies to hack your accounts. Sometimes an old-fashioned computer virus will do that for them. This old-fashioned malware or viruses will hack your computer in a few seconds and transfer all the funds to the hacker’s account. As these transactions are irreversible, the victims have no recourse. Luckily, because of the increase in technology, many antivirus and malware software companies continue to develop and keep up to date with bitcoin scammers that use viruses and malware. We also recommend using two-factor authentication.
These are the bitcoin, or cryptocurrency scams you need to know. This will help you prevent scams and hacks.
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