4 Common Bitcoin, Ethereum And Cryptocurrency Scams You Shouldn’t Fall For
Investing in cryptocurrencies such as Bitcoin and Ethereum is one of the best and most profitable investment opportunities available in the world presently.
With the cryptocurrency market bagging Billions of dollars daily, it is very potent and so also does it come with many risk factors.
Aside from the fact that cryptocurrencies are very volatile and one could lose all or a huge chunk of their investment in cryptocurrencies when the market dips, the greatest risk associated with this gold mine is scam or fraud.
There are numerous scams or fraud associated with Bitcoin, Ethereum and other cryptocurrencies.
In this article, we shall look at 5 scams associated with Bitcoin, Ethereum and other cryptocurrencies and how to avoid falling victim to such scams .
Cryptocurrency Mining Scams
This is one of the world’s leading cryptocurrency scams that has wiped out many people’s crypto stock before they even realise it.
Cryptocurrencies especially Bitcoin, Ethereum and some others require that when someone transfers the cryptocurrency to another person, some other people approve or confirm the transaction before the money can reflect in the recipient’s account. This process is known as mining.
Mining is usually done using some complex devices or softwares which are dedicated to confirm crypto transaction. For every transaction confirmed, there is an amount of cryptocurrency allocated to the miner. The bigger the volume of the transaction, the higher the mining fee which is distributed amongst all those who confirmed that particular transaction.
Due to the nature of the confirmations, there are usually companies which buy the mining machines and use them to mine in large quantities. Some companies make more than 1 BTC daily from mining.
Now, in order to acquire more mining machines and be more efficient, some of the companies ask the public to invest with them so that they get percentage profit on their investments monthly or weekly. The percentages usually run between 1.2% daily to as high as 7 or 10% daily.
Scammers capitalize on this to design some fake websites claiming to be cryptocurrency miners. When you send them your investment amount through their bitcoin wallet, you either don’t hear from them again or they’ll shut down the whole system after a while.
It is therefore important that you read reviews about mining companies before you make any decision to invest with them.
Bitcoin Doubling Or Growth Scams
For Bitcoin Doubling scams, it usually gets those who are greedy and do not appreciate what they own or have.
Scammers who go for this method usually use social media or email messages to invite unsuspecting people.
They usually tell beautiful stories of how some people invested some Bitcoin with them and got their Bitcoin doubled in two days, three days or 7 days.
If you engage with them further, they’ll send you proofs of what they have been able to do for others and the reason why you should also invest with them.
As interesting as it may sound, there is no such thing as doubling your Bitcoin or any other cryptocurrency.
Bitcoin is not a living thing so it does not grow. If you have 5 Bitcoins today and you do not spend it or send part to someone, you’ll still have 5 Bitcoins tomorrow. The only change is that the value might differ. But the volume is still the same.
Anyone who promises to double or increase your Bitcoin or any other cryptocurrency is just trying to lure you into sending them your coin so they could add to theirs and grow theirs instead. Stay away from such people. You send money to such people at your own risk!
Crypto Trading Scams or Account Management Scams
Just like any other financial instrument, cryptocurrencies depend on demand and supply to determine their value at every given time. As such, people buy and sell cryptocurrencies on specialised websites called Exhangers from time to time in order to make profit.
However, doing this requires some skills and some level of expertise which may not readily be available to everyone.
For this reason, the ‘experts’ sometimes take Cryptocurrencies from other people and trade the currencies on the behalf of the owners.
While this is a very nice way of making money since the owner usually splits revenues with the manager on a 60-40 % basis, this can become a space for scammers to operate.
Do not send any currency to anyone to trade in their personal account for you. It is risky. They can bolt with your currency.
The best thing is for you to create your own trading account and giving the people access to the account manager part where they can only trade within your account but not be able to make withdrawals.
Also, you can do copytrading. Where the experts tells you which currency to buy within a specific time and how to do it. So you just have to follow their lead. This one gives you 100% control over your account.
Before new cryptocurrencies go live to be used by all and sundry, there is phase where the currency is on offer to the first set of investors who buy the currency at a very low price.
This stage is called the Initial Coin Offering. The ICO stage is to enable the crypto company gather enough money and logistics to promote and push the coin globally when it finally goes live.
Usually, most ICO prices are below 1 dollar. For people looking to make huge margins of money from cryptocurrencies, investment in ICOs remain one of the best ways of making good returns.
Usually, when the currency launches officially and the marketing is good, the price doubles by some number of folds from the ICO pricing. This gives the ICO investors some good returns.
The problem however is that many ICOs are fake and do not come from real cryptocurrency companies. They are mostly from some criminals who have designed a website, claiming to be solving a certain problem and therefore selling their tokens at an ICO price. They may also add other promises that look very appetizing.
If you invest with them, it is either the website gets deleted after launching and then your coin becomes useless or they don’t make any attempt at marketing or listing the currency on platforms so there is no way you can sell it.
Though there is no sure way to determine if an ICO is real, you can check by finding out the website’s ownership details, checking the team behind the project. If there is no team displayed on the ICO site, be careful. Also if there are names and faces, quickly search those names on social media especially twitter and Facebook to see if you’ll see them. If you can’t see a large majority of them, run away as fast as you can.
Bitcoin or cryptocurrencies are very friendly ways of digitizing the economy as they are decentralized and are easy to use and very quick too. However, the anonymity attached to their transactions make them powerful tools for some unscrupulous people who wish to rob others off their money.
The cryptocurrency scams discussed above are not exhaustive as there are many other ones that are common in our daily lives.
It is our hope however that based on this article, you know how to identify and deal with possible cryptocurrency scams in future.
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