What is a Crypto Scam and How to Avoid It?

Being one of the most lucrative options for profiting, crypto trading has received tremendous popularity, however, when you exchange crypto trying to make money, you always face difficulties or even fraud schemes on your way. 

Crypto scams pertain to malevolent activities in the world of crypto. These activities are designed to deceive people and manipulate the crypto market for the perpetrator’s financial gain. There are numerous forms of crypto fraud, although some prevalent ones include:

• Phishing is designed to trick users into providing their sensitive data, such as private keys, by creating fake websites or emails that appear to be legitimate crypto platforms.
• Ponzi or Pyramid schemes – scammers assure high investment returns and utilize funds from new investors to pay off previous investors. Ultimately, the scheme falls apart, causing many people to lose their money.
• Fake ICOs – scammers establish fraudulent ICOs, advertising new crypto at low prices to attract investors. However, after receiving funds, they vanish without providing products or services.
• Pump and sump schemes – artificially inflate the value of a low-value cryptocurrency by spreading false information or rumors. Once the value rises, the perpetrators sell their holdings, causing the value to plummet, resulting in other investors incurring losses.

How to Avoid Bitcoin Scams?

Looking at the crypto scams list we have just mentioned, we extract the following tips to avoid them:

• Research and education. It is vital to understand the basics of cryptos, blockchain technology, and how various scams work. Keeping up-to-date with the latest news and developments in the crypto space is also essential.
• It is wise to be cautious of investments or schemes promising guaranteed and exceptionally high income. 
• Verify the legitimacy of projects. Before getting into an ICO or any new crypto project, it is crucial to thoroughly research it, its team, the whitepaper, and the community. Look for red flags such as a lack of transparency or plagiarized content.
• Secure your accounts. To ensure an extra layer of security, it is crucial to use unique passwords for your accounts and enable 2FA. It is also important to be wary of suspicious emails, attachments, and links that may lead to phishing attempts.
• It is advisable to stick to well-established and reputable crypto platforms. It is important to read reviews, check for regulatory compliance, and be cautious of newly created or unknown platforms.
• Be skeptical of pump and dump groups. Participating in groups or communities that promote pump-and-dump schemes should be avoided. It is crucial to remember that short-term gains from such activities often outweigh the risks and potential losses.

By being vigilant, skeptical, and knowledgeable, one can significantly reduce the risk of falling victim to crypto fraud and safeguard their hard-earned money.