As the popularity of cryptocurrencies continues to grow, more and more people are joining the cryptocurrency community. It becomes easier to deceive them as the target audience grows.
There are many precautions to take, and while it's impossible to protect yourself 100% from hackers and scammers, you can significantly reduce your risk of getting ripped off by being aware of the problem and how to protect yourself.
How to protect yourself
There is one key rule that should be followed if you want to surf the Internet safely. The rule is quite simple - you must investigate this problem as thoroughly as possible. The key actions of all fraudulent schemes are essentially very similar. By using common sense you can very easily avoid more of these scams. By being as skeptical as possible about certain things, you will be prepared for different developments and scams that you may encounter. Keep this simple rule in mind:“If an investment scheme is too good to exist, it obviously isn't real.” In other words, don't trust the altruism of someone who puts a piece of cheese in front of you.
Here are the five most common scams to watch out for.
#1: Cloud Mining Services
Scam cloud mining websites are designed to defraud members of the mining community and those new to cryptocurrency. If you are of the opinion that cloud mining is preferable to regular mining, then you need to be especially careful. These companies use various tricks for their scams. They often register their activities in a prestigious location such as New York, although all directors are foreign residents. Therefore, we advise: if you believe in fairy tales about cloud mining, before investing in it, drink cold water and do a light jog of several kilometers. This will help cool your hot head.
#2: Network Marketing (MLM) Schemes
Bitcoin MLM schemes use direct sales and take advantage of the popularity of Bitcoin to pull off a scam. They are filled with promises that make users believe that they can easily earn a lot of money without really straining themselves. 100% per month and not a cent less!
Such schemes can be easily and quickly detected; they have one thing in common. They don't actually sell any product or service.. Instead, they ask you to join some obscure group with many levels and usually require some kind of fee to join. In the end, you are left with no money, empty hands and a head full of ashes.
#3 Bitcoin Investment Packages (BIPs)
BIPs are another type of scam in the Bitcoin environment. Bitcoin investment schemes are not much different from cloud mining, where users first receive small payments and later, when their owners have collected enough funds, payments stop. BIPs are essentially pyramid schemes. Since the “investment” usually looks extremely profitable, and the user receives payments every day at first, many people want to reinvest the funds they receive for even more profit. The moment the user wants to withdraw funds, problems begin.
If you want to invest using a digital currency investment system, you must first check all the details about the company and the people running it. Nothing is certain in the investment world, so beware of companies that guarantee a 100% return. After all, as you know, in our world, only a pathologist can give a guarantee.
No. 4: Identifying fake ICOs
It is quite difficult to recognize fraudulent ICOs these days, as scammers are becoming more sophisticated. On their websites you can find detailed descriptions of the currency and even white papers. However, there are some clues that can help you spot a scam.
A reputable company is unlikely to rip you off, given the fact that it is bound by government regulations and is unlikely to succeed. It is also worth checking the social networks of company managers for activity. Startups are unlikely to promise you something that sounds too good to be true, keep that in mind. Believe only those who talk about risk and the unreasonability of high expectations.
No. 5: Pump and dump
Pump & Dump schemes are a relatively simple type of scam for beginners. It involves artificially inflating the prices of unpopular tokens amid the spread of false information about them..
The criminals in this scheme are people often called “pumps”. These are market participants who buy a large number of tokens and try to “pump” them on various social platforms. As soon as the value of the token artificially increases, they drain all assets and disappear into the fog.
To avoid such deception, keep an eye on token prices. If the price was low but suddenly rises sharply, it may be artificially inflated by scammers.
Be on the lookout
The easiest way to sum up this article is to emphasize the importance of research and common sense. By carefully reviewing all the information about the company you are going to invest in, you will greatly reduce the risk of being deceived.
According to https://www.financemagnates.com
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