Watch out for unregulated cryptocurrency exchanges and social media hustlers

How to spot cryptocurrency scams? What are the traps most often set by fraudsters for unaware investors? Contrary to appearances, these are often not fancy combinations, and thieves operate according to proven and effective patterns. See how to protect yourself from them so as not to lose money and not burn yourself at the beginning of your adventure with the exciting cryptocurrency market.

Nobody wants to become a victim of fraud related to Bitcoins or other cryptocurrencies. However, it is a new market for most investors, often completely unknown. Nevertheless, if we are deceived, we feel bad: it is a kind of humiliation, causing frustration, even if the financial losses were not great. But we have good news for everyone: spend some time educating yourself about the way scammers work to learn how to spot suspicious signs. This makes it easy to avoid unscrupulous scammers.

Undoubtedly, the cryptocurrency market is tempting even to those who have little to do with blockchain technologybut even with the financial market in general. Therefore, it is worth knowing that there are people who want to take advantage of this lack of knowledge. In this article, you'll learn what social media scams and unregulated exchanges are, sometimes disappearing as quickly as they appear. You will learn about the warning signs worth paying attention to and learn how not to lose your money.

Cryptocurrencies - the pros and cons of easy use

Contrary to appearances, if we do not follow the basic rules, we can easily lose ours Bitcoiny and other cryptocurrencies. On the one hand, BTCs are protected by cryptography. Unbreakable ciphers are actually the basis of cryptocurrencies, which also cannot "get lost", thanks to decentralization, i.e. the dispersion of data on different servers. The whole thing is held together by a complicated private key, which cannot be an easy-to-break password, consisting of the date of birth or name and surname.

However, the problem most often does not lie in technology, but in the weakness of the human factor. A large part of the cryptocurrency market scams are the voluntarily (most often, of course, unconscious) handing over of passwords or even depositing bitcoins directly into the scammer's wallet. Learn about the four most common bitcoin scams.

Fraud on social media

We use social media more and more often, and there are also more and more of them. That is why scammers try to find potential victims through them. And how to do it? Most of all, earn your trust.

On July 15, 2020, hackers managed to hijack some 130 known Twitter accounts, including famous celebrities, politicians, and businessmen such as Elon Musk, Barack Obama, Bill Gates, Kim Kardashian, and Kanye West. After taking over account management, they called on followers to send Bitcoins to a specific address, promising to double all donations and donate the money to charity - a Covid-19 vaccine researcher to the fund. So they took advantage of trust in well-known people and the still prevailing pandemic and the fear of its consequences. Admittedly, it was quickly noticed that it was a scam, but before everyone knew it, the scammers received about 121. USD.

The method of this scam is common on social media especially on Twitter and YouTube. Usually, however, fake accounts are created that claim to be known Twitter users, such as Elon Musk, and claim that they will, for example, give away some assets. The scammers write that they need proof of commitment and even honesty (!) And indicate the address to which cryptocurrencies need to be sent to double their quantity. After sending cryptocurrencies, however, they are quickly transferred and are lost.

How to Avoid Social Media Fraud

Well ... in short: there is no need to count on miracles. No one has ever distributed their money on social media and there is no indication that they would do it anytime soon. Millionaires really have no trouble allocating their financial surpluses. If they are not investing in another company, they choose charities that allow them to precisely control the flow of funds.

Hardware wallet scams

Hardware wallets are widely used because no one will remember long and complicated private keys. It happens, however, that cheaper, but unknown hardware wallets are offered by scammers. They are set up so that they can access the wallet's password. And from here it is only a step to take over all the cryptocurrencies that are stored on it.

How to avoid hardware wallet scam

Better not to choose cheaper cryptocurrency wallets from dubious sources, even if they are much cheaper than known counterparts and delivered faster. After purchasing a wallet, you must also change the access password immediately.

Unregulated Cryptocurrency Brokers and Exchanges

New cryptocurrency exchanges are constantly emerging, because the turnover of digital assets is constantly growing. Usually they try to attract new customers with great discounts and bonuses at the beginning. But it is often too good to be true. However, it turns out only at the time of withdrawal, or rather attempts to pay, when there are further problems, errors on the site and incomprehensible messages. Money is never recovered, and after some time there is no trace of the stock exchange itself.

How to Avoid Fraud on an Unregulated Cryptocurrency Exchange

It's relatively easy. At the beginning, there is no point in taking advantage of the new exchanges appearing on the market. There are already a lot of them on the market, so we can easily choose a broker or an exchange with a decent history and traditions. You can also check what security methods the exchange uses. The rule is simple: the harder it gets, the better. Because it means that the stock market is serious about securing clients' money.

Ponzi schemes, or financial pyramids

A simple and known for years scheme. But regularly effective, and recently known in Poland thanks to the Amber Gold parabank. The scammer creates an exchange or brokerage house that promises to use trading skills that will deliver fantastic returns. To some it seems a stretch, but the company shows constant profits, subsequent customers are satisfied and eventually even some rational people decide to entrust them with some or even all of their savings. And it turns out that it works: profits are paid, everything goes well. So more people start to deposit larger amounts ... As long as more deposits are received, nothing bad happens. But when the flow of money begins to flow slower, the tap only turns one way. First, payouts are delayed and then there are no payouts at all.

How to Avoid Ponzi Scam

There is no need to dwell on it: it is enough not to be greedy. There are no miracles in the financial market and there are no results constantly exceeding the rational average. If someone can do it, you will probably never hear about him, and he will certainly not want to share the profit. It is the same in the cryptocurrency market. If the deposit on a known exchange in a given cryptocurrency is, for example, 4% per year, and a new one on the same one promises 15%, you can be sure that you will never see the cryptocurrencies deposited there - unless in someone's wallet. In 2019 alone, thanks to Ponzi schemes, 4,3 billion USD in cryptocurrencies were extorted.

Our advice - do not get fooled in the cryptocurrency market

If you don't understand the cryptocurrency market - try to change it first. Read, watch, learn, understand. Then start with small investments to see how the market works in real amounts.

Also, do not invest more than you can lose, so that your standard of living does not change. Even if you really think you can navigate the meanders of the cryptocurrency market.

Choose your cryptocurrencies wisely. Besides Bitcoin, there are already thousands altcoinów - that is, other cryptocurrencies. Worse and better, but there are also some that were created by fraudsters, and the project is aimed only at raising capital from the market and offers nothing that can help the development of blockchain technology or facilitate the functioning of anything.

It is also worth using a trusted and secure cryptocurrency exchange, e.g. Kriptomatthat will protect you from fraud and threats. It won't offer you above-average profits or zero commissions - such offers do not exist in honest companies. The stock market will not ask for a password sent by text message and transferring funds to a new account. It will simply allow you to invest in cryptocurrencies and realistically assess your opportunities in the cryptocurrency market.