How to Avoid Scams While Buying Cryptocurrency?

By  //  January 16, 2022

Since the rise in Bitcoin, we have seen an increasing number of online threat cases. Be it an online transaction through blockchain or else, cyber threats are everywhere and crypto is no different. As more and more people are adapting to this new world of digital transactions, hackers and scammers are attacking more profiles in the account. 

The federal trade commission mentioned the rising cases of crypto scams in one of their reports, defining that US consumers lose more than $80 million to online cryptocurrency scams in a period of six months (October – March 2020).

The volatile nature of cryptocurrency is not alone to be blamed at, misinformation from digital outlets (influencers), myths, are other significant reasons for the increased rate. Considering doing an investment into a startup or exchange platform one needs to be aware of the risks it comes with. 

Analysing and investing only in blockchain-powered firms eliminates the chances of cyber threats, as suggested by crypto experts. Decentralised platforms offer transparency and safety, thus making them safer to invest in.

Having a solid revenue and business model, pre-specified digital currency liquidity and ICO rules allow investors to build trust, giving firms a higher chance to scale up in the global market. As a matter of fact, firms with no backup plans, revenue plans, and predefined rules will lack in terms of profit and thus will result in nothing but loss. 

COMMON SCAMS ONE WITNESS WHILE BUYING CRYPTOCURRENCY

1. FAKE INVESTMENT PORTALS

One of the most prominent threats while using cryptocurrency is fake bitcoin exchanges. In 2017, BitKRK operated a fake crypto exchange in South Korea which defrauded many investors and buyers out of millions of dollars. However, it was precluded by the financial authorities of South Korea later.

These firms/sites look extremely legit and display themselves as an authorised crypto trading community. However, awareness around the scam, and utilising only recognized platforms is the key for trade protection. 

2. FAKE MOBILE APPLICATION

This is a typical way of tracking investors into downloading fake applications from Google Play and the Apple store. However one can easily find the fake apps and get the issue fixed, however, this does have an influence on the digital community. There are a large number of people who get scammed into downloading and using these applications, as reported by Bitcoin News.

A great risk for Android users, one should be aware of the authorised applications and websites. Before downloading, notice aspects such as misspelt applications name, copied applications, fake logos, incorrect branding etc. 

3. PHISHING 

A primary concern area, phishing scams focus on stealing private and public keys to access crypto wallets. Also known as “technical support scams”, scammers often pose themselves as tech support to get your information. They might also display themselves as employees of fake crypto businesses and will contact you, offering crypto-related help.

Once they receive your login credentials, boom! your saved money is gone. Another way of performing phishing scams is through scammers asking for remote access to your device and sending you suspicious wallet addresses.  

4. EXTORTION

Scammers often claim to have incriminating information about you and will threaten to release your confidential data. For a return, they asked for large bitcoin payments. To make it more persuasive, they might show you data breached information like an old password.

This is criminal extortion and should be reported directly to the FBI’s Internet Crime complaint centre (IC3). For further safety, run a malware scam on the divide and change the password asap. Remember these are scareware scams and are designed to scare you in return for money. 

PROTECTION AGAINST SCAMS 

 Investigating claims around investment

No direct payments to government officials or public figures

Keeping keys confidential

Two-factor authentication

REPORTING CRYPTO SCAMS

While encountering any of these scams, contact the FTC, commodity Futures trading commission, or securities and exchange commission. Utilize social media platforms like Instagram, Twitter and Facebook to report and share such crimes. Do not share private data with strangers claiming themselves to be legitimate, double-check for your safety and report the scam to local authorities. 

SUMMARY:

Crypto scams are rising, attacking more and more communities. Staying aware of the common scams, performing double verification before investments, reporting cyber threats and extortion, updating passwords regularly and following authorised portals are something one should follow while trading crypto and how decentralized is bitcoin.