The major reason most of the regular person failed to invest in cryptos are scams. Scams are all over the place not just in cryptos but crypto markets for most of the part are unregulated so if u got scammed u cant do anything. In this article we will see the most type of scam scammers use and how to avoid them.
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Lets first see the type of scams that scammers mostly use...
Ponzi Scheme
Giveaway scam
Phishing scam
ICO exit scams
Comment scams
Ponzi Scheme
The first scam I wanna talk about here are Ponzi scheme. Ponzi scheme are well all over the world and it is older than crypto itself dating back to 1920's.
How it works is very simple, the scheme asks u to invest and invite people to the scheme through various modes and it will pay u through their money. It usually promises high rates of return with little or no risk to investors. This is similar to a pyramid scheme in that both are based on using new investors' funds to pay the earlier backers.
What Ponzi scheme bakers generally do is they will pay the earlier investors and always try to acquire new investors through them and try to get large sum of money. They will usually have a set of money allocated for distribution to the early investors when the funds run out they will take the remaining money and run away.
How to avoid a Ponzi scheme
Ponzi scheme mostly has similar characteristics if u come around a similar characteristics avoid it
They usually promise high return with little to no risk.
In crypto currency volatility is very high despite of this they will promise a consistent flow of returns whatever the market condition may be.
They will not inform what they are gonna do with your invested money or they will simply say it is secret or it is way too complex to explain.
The investors usually don't get any paperwork for investment.
Constant pressure to acquire new people.
U need to at least acquire some referrals before withdrawing your money.
Giveaway Scam
It is a type of scam when someone said I am gonna have a giveaway for something in order to participate u need to pay this much amount in crypto. These scams are pretty effective. Sometimes they even hack a famous person twitter account and will announce giveaway, this way regular person believes it and will loose their money. They even give out ads on YouTube, twitter and other social media so pls be careful next time before clicking a link.
How to avoid them
If u wanna price they announce u need to pay first for it.
They usually use free email accounts like Gmail or yahoo ( all major companies have their own custom mail).
They usually send a msg like u won something through your participation or entering in a tournament but u don't remember entering.
The msg will be tooo convincing to believe.
They also instruct u to wire your money in a specific way so its hard to trace it back
Usually they don't know your name or other info
If u have received a giveaway notification by mail check whether it is a bulk mail. Do u possibly think many people will win in a contest so easily.
Phishing scams
Phishing scams send emails that mimic reputable entities like banks, online resources and credit card companies to trick the receivers into sharing their financial and personal information or downloading malware. The targets may be directed to malicious web sites also posing as legitimate sites where they will be asked to enter login credentials and other personal information the attackers can use to commit identity theft. Its dangerous not only for your crypto but for your personal life too so pls be careful when u open a link in a mail or any other site.
How can u prevent from phishing
While visiting important sites go through official link don't go through ads.
Don't download important aps like wallets or any other privacy concerned files through ads.
Be careful while replying a mail through that they will get more information about u.
Do not click any links in spam mails it will be easy for the scammers to hack u then.
Be careful about opening or saving any document or attachment that come with spam mails. Do not trust these kinds of emails even if they appear to be sent by some authorized entity.
Never send a confidential information like your bank details thorugh email especially through free email service .
Use a firewall to protect your self from scams
Do not subscribe to every site u see for mail promotion it will be then easy for the scammers to send a mail same like that and trick u.
Do not respond to any mail if u have a slightest doubt as a spam mail.
ICO Exit scams
ICO scams are more common since the ICO boom from late 2017. So what scammers do is they create a new cryptocurrency project and based on that project they will launch a coin and sell it for a minimum value. Its same like IPO( Initial Public Offering) done in stock market. After selling all their coins through IPO they will run away with your money.
In the first eight months of 2018 more than $100 million dollar funds have been stolen through IPO exit scams and it has not been recovered till now.
Eventhough most of them are fake some legit companies affect because of this u need to verify it before investing. How do u verify it
Do your own research
Read the white paper completely and analyze it
If the project is legitimate then its highly unlikely they will engage in lot of promotions
Go with your gut instinct its funny but it sometimes may be true, ask yourself whether it too good to be true.
If you don't get what they are trying to convey then don't invest.
Check whether the founders have a good track record.
How to spot one
Poorly written white paper with many typos and it will not be clr why they are bringing a new project or crypto coin into the market while there are more than 5000 coins already in here.
Imaginary Projections like they will have a complete road map on what they are gonna do but it will always will be delayed.
By the time you found out about these projects their roadmap says it is around for 1 yr or six months or so.
No team details or false details.
No working product
Investors should avoid investing in an idea-only product with a multiyear roadmap.
Comment scams
Comment scams are pretty common in yt and other social media page. What the scammers will do is they will go for a famous influencers page, search for his recent post and will comment down below about how they earned from a particular site or how they earned this or that very convincingly.
How to prevent yourself
Just ignore these kind off comments first.
I am 100% sure 99% of them are fake.
Do not give your money to people u don't know about.
Check his account about page in his profile most of them create new accounts when they do something like this.
That is all the scams I am covering today guys, but the truth to be said this is just scratching the surface there are lot more that many don't know are heard off. As we are trying to secure our assets. scammers also evolve in more new ways to scratch your money.
If u have gone through any of this scams or any other type of scams pls comment down below as it will help others to be more careful next time.
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I feel a victim to multiple Ponzi schemes in the past 4 years, I became a kind of expert in figuring them out. Thanks for reminding me about these types of scams!