Home TechnologyCryptocurrency Invest Smart: How to Avoid Cryptocurrency Scams

Invest Smart: How to Avoid Cryptocurrency Scams

by Monica Barnes

Cryptocurrency refers to a broad range of digital money with a worth that’s highly volatile, which is where the allure comes in for investors. While you can grow your wealth significantly by investing in cryptocurrencies, there’s also a great potential for loss. As with any type of investment, it’s important to research cryptocurrency before investing your time and resources into it. In particular, you should be wary of the most common types of fraud associated with cryptocurrency investing.

Invest Smart - How to Avoid Cryptocurrency Scams

Rug Pull Scams

A rug pull scam is a specific type of exit scam, and all of these types of fraudulent activities can cost you money. In an exit scam, an entity publishes an ICO or initial coin offering to seek investors. Once a substantial amount of capital has been raised, the individual or business entity revokes the ICO without ever releasing their brand of cryptocurrency. They simply steal the funds they raised with the ICO. In a rug pull scam, the new coin is listed on an exchange with the backing company heavily promoting it. This encourages investors to swap the coins they currently hold for the new coin. Once they gain enough in swapped coins, the developers of the new coin remove their product from the exchange and take the investments with them. To avoid this type of cryptocurrency scam, avoid following tips that you receive via phone calls. This is a common way that an exit scam is perpetrated by unwitting investors.

Phishing Scams

Another way that scammers defraud investors is through a phishing scam. In general, phishing involves creating a fraudulent website that closely resembles a legitimate eCommerce site. Once the site visitor enters their financial information into the site’s payment processing page, the scammer gains access to all of their financial data. In terms of cryptocurrency investing, the process is the same except the site is designed to look like a legitimate cryptocurrency exchange. Once you enter your information, the scammer has access to your virtual wallet and all of the coins contained within it. When you visit a cryptocurrency exchange, look for the padlock in the web address bar to ensure that your information will be secure. Additionally, you should never click on a link to get to an exchange site. Instead, verify the web address and type it in manually.

Fraudulent Mobile Apps

Just as there are fake websites, there are also fraudulent mobile apps that seek to steal money from unwitting investors. The problem is that there are also legitimate apps that you can use to invest with the best crypto IRA companies reviewed in the market. The challenge comes with telling the difference between a legitimate app and a scam. Often, there will be slight variations in the spelling and design of a fraudulent app. For example, a fraudulent app might use a different shade of green in the design of its app, or they might use a zero in place of an “o” in its spelling of the company’s name. If you pay close attention to the design of the app, you can usually distinguish between a legitimate app and a scam.

Social Media Scams

There are just as many social media scams that target cryptocurrency investors, so you should be wary of any deals that you see online. A common way that scammers target cryptocurrency investors is by creating a page that offers tips for this type of investing. As they grow a following, the page will seem that much more legitimate. After a while, they will start to offer opportunities to get in on the ground floor of an emerging new coin, and they will only ask for a small investment of coins from any cryptocurrency you already possess. You may even be convinced to invest after seeing that other users have already invested their coins in the new opportunity. Unfortunately, the investment never pays out, and you will probably not get your initial investment back. Before you even decide to follow a cryptocurrency page, research as much as you can about the company managing the page. You should also verify that the page really is run by the company that it claims to represent. If you have any doubts, don’t follow the page.

Each type of cryptocurrency is different in much the same way that each public stock represents a different company. For that reason, you should research each cryptocurrency separately. Knowing specifics about a type of cryptocurrency will help you make wiser investing decisions. As with every other type of investment, doing your due diligence will increase your likelihood of growing your wealth

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