There are a large number of people who still don’t know about cryptocurrency properly. They also don’t have any idea about the existing cryptocurrencies such as Ether, Bitcoin, etc., and always get confused among them. They feel there is still no use for these cryptocurrencies, and they are unaware of where they can be used. But it is essential to provide them with an understanding of cryptocurrency and related scams to prevent them from any loss in the future.
No matter which leading Blockchain development company you have chosen, still, some associated risks and scams can be harmful to users. With the below post, we have come up with a detailed guide about an overview of cryptocurrency and related scams in 2023. Let’s get started-
What is Cryptocurrency?
Cryptocurrency is a kind of digital currency that can be used as an alternative to the payment generated with encryption algorithms. These currencies only occur virtually and can be bought using your PC, mobile phone, or a cryptocurrency ATM. Cryptocurrencies are used for multiple reasons such as escape transaction fees, fast payment, etc. Some people also own cryptocurrencies as an investment. Cryptocurrencies don’t have any central regulating or issuing authority, on the contrary, they use a decentralized system to get help in recording transactions and releasing new units.
What are Crypto Scams?
As the name reflects, these types of scams are related to the cryptocurrency industry. The only difference between other scams and crypto scams is here the scammers are after your crypto holdings, not your cash. In crypto scams, swindlers imitate any new or established venture and offer false offers and fraud crypto tokens or coins. They also generate social media ads, websites, and news articles to make the news viral and get more people. These scammers provide the reason that firm is going to launch its own coin or token to enter the world. They can also trick buyers by creating social media ads, websites, or different news articles.
Other than that, there are various techniques applied by crypto scammers, some are even the same as they use to do fraud in the financial sector followed by pump-and-dump scams including getting investors based on telling them the inappropriate worth of assets. This way, they can get into a buyer’s crypto wallet.
Different Types of Cryptocurrency Scams
Cryptocurrency exchange developers agree on the major reasons to occur crypto scams are irreversibility, decentralization, pseudonymous, and others. Cryptocurrency might be new, but scammers are still using old methods to lure investors. Here are different kinds of crypto scams you should know about if you belong to the industry-
- Phishing Scams
These scams are the older ones and have been popular all the time. In this, the other party gets malicious, or scam links redirected to a fraud website via email from the scammers to capture their personal data including crypto wallet key data. In the crypto digital wallet, users get one unique private key instead of a password but if this private key gets stolen, this can be a huge trouble for them when it comes to changing it.
To update or change it, they are required to generate a new wallet and they need not click any suspicious link irrespective of how legitimate it shows, to save themselves from the fraud. It is why it is important to hire Blockchain developers to create a crypto wallet.
- Rug Pull Scams
Investment scammers use this scam to get funding by driving a new project with the help of non-fungible tokens. After getting the funds, scammers always get disappeared. The programming by software development company for these funds inhibits users to not sell the purchased Bitcoins, hence, users have to put down the worthless investment in the end. These scams are most popular for NFTs and seem to be one-of-its-kind.
- Bitcoin Investment Schemes
The Bitcoin investment schemes claim to gain profits and make a lot of money by having zero risk. Scammers use emails, texts, or calls to process these scams. Scammers here pretend to be investment managers and make people invest in cryptocurrency. They take an upfront fee from them and then, they run away with the fees. Scammers also take people’s personal information to have access to their cryptocurrency.
These types of scams can happen in different ways: they will contact you out of nowhere, they pretend to be a celebrity endorsing a huge financial gain, a love interest from an online dating app who wants to help you in crypto investing, people promising to make your money double, and so on. To prevent these scams, you need to take assistance and knowledge from an experienced cryptocurrency exchange development company while purchasing Bitcoin.
- Romance Scams
Most businesses are now preferring hiring an app or website development company to develop a secure dating app as mainly scams are now taking place through these apps. To complete these scams, fraudsters involve people in a long-distance relationship and gain their trust first. Then, they make them invest in cryptocurrency by getting their money and then get disappeared. These types of scams are primarily related to ‘pig butchering scams.
- Man-in-the-middle Attack
It is not safe to log in to the cryptocurrency account publicly by the user as it can be a way for thieves to steal private or sensitive users’ data. It is very easy for scammers to do data interception send over a public grid comprising crypto wallet keys, passwords, and account data. Using the man-in-the-middle approach, it is a task of seconds for a thief to get the users’ data. They do it by tapping Wi-Fi signals on trustworthy networks which are placed in the nearby vicinity.
The best way to prevent these attacks is to Block the middleman with the help of a VPN (a virtual private network). It helps in data encryption to stop it from being transmitted preventing from thieves stealing the data. It is why it is necessary to hire dedicated developers to create a secure cryptocurrency account to avoid these attacks.
- Ponzi Schemes
Ponzi schemes are all about finding new investors to grab money from them. In this, scammers pay the older investors by getting money from new investors. They lure new investors with the help of Bitcoin. This scam runs in a circle and has no legitimate investments. They promise huge profits to the investors with just a little risk; however, the scheme includes a lot of risks with no guarantee of returns.
- Social Media Scams
It is very common to see fraudulent or scam posts related to buying cryptocurrency on different social media channels. They promise viewers to give Bitcoin giveaways. Here scammers also use the references of celebrities, sometimes, they also use fake accounts of theirs to tempt people with fake giveaways. And when people click on those giveaway links, they get redirected to a fraud website wanting them to get verified to acquire Bitcoin. They are also asked to do the payment. After that, the viewer can lose all his money and crypto data by just clicking on a malicious link only.
To inhibit these scams and verify these links, businesses choose to have a reliable mobile app development company to build a secure social networking app.
In the above article, you have known about different cryptocurrency scams that occur as a threat to your money and sensitive data. After knowing about these scams, you should also know the ways how to prevent and report these scammers. With the growing technology and techniques, there are always chances to come huge risks with them. Not only these, but there are also various other crypto scams as well involving Zelle Scams, Phone Scams, employment offers and fraudulent employee scams, emergency scams, and so on.
With the upsurge in cryptocurrency scams, ventures have been aware to get only secure cryptocurrency exchanges. They only choose to hire cryptocurrency exchange developers with experience and skills to avoid running scams.
Guest article written by: Rohan Singh is a Chief Executive Officer at SemiDot Infotech, Top rated multi award winning custom software development company providing a full suite of services and solutions to small, medium, big enterprises, product companies & new-age start-ups. He has extensive experience working for multinational companies and know what it takes to take a company to the next level. He has a master’s degree in computer science. Rohan finds covering the tech world to be an exciting and engaging experience as each day brings new and ground-breaking technologies to explore and write about.