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bitcoin hanging on a hook

Top Crypto Scams and How to Stay Safe

Watch out! These are the biggest problem-creators in the crypto world!

As soon as the crypto market started to rise, it became a gold mine for scammers who take advantage of naïve and inexperienced investors. The reason cryptocurrency scams are so effective is because they come in all shapes and forms. In this article, let’s unveil the ways to recognize and avoid the most common crypto scams.

Malware and Viruses

Malware is especially dangerous since no matter how 'crypto street-smart’ you are, once you make a mistake, it quite literally hacks your computer. The thing that will start it all is a link sent through an email or in a comment. When this link is clicked, malware will be installed on your computer.

system hacked on screen

This malware is usually a key reader that lets the hackers access your exchange or wallet's ID and password. Once the hacker knows this info, his job is pretty much done. Other sensitive details like your social security number or private key can also be at risk.

Protect your computer from viruses and malware by regularly scanning your computer with an antivirus tool. Moreover, you should be cautious of clicking random links on the internet, especially through an email. Make sure every program you install/download is from a reputable source, and remember to utilize extra security methods such as hardware wallets and 2-factor authentication. 

Airdrop Scams

One of the most common crypto scams comes in the form of an airdrop, yet not all airdrops are scams. In fact, airdrop is a super common marketing technique for companies to advertise their token/services to potential users. Big, legitimate companies like Uniswap, Bitcoin Cash and BitTorrent have offered coins for free to applicants in the form of airdrops. But the issue begins when scammers take on the disguise of an authentic company and create a 'fake airdrop'.

present being dropped by parachute

These 'fake airdrops' usually go like this: the scammers promise people free coins, but ask them to cover the transaction fees. This is obviously a lie, and once people send their 'gas fee' to the scammers' wallets, the scammers will disappear without giving back any free coin.

You can avoid airdrop scams by checking if the news comes from the company's official websites; a random chat group online, for example, is not an official source. And remember that receivers of airdrops never have to pay gas fee (transaction fee). In addition, legitimate airdrops are always relatively small amounts in new coins, not big amounts in established coins like USDT, ETH, or BTC.

Influencer Rugpulls

As frustrating as it is, crypto investors have to watch out for scams not just from random people, but also from famous Youtubers, streamers, and celebrities as well. Influencers would often advertise their coin or crypto project to their fanbase, and this makes the coin rise up in market value.

ragpull with a scale

Conveniently, as an asset gains value, more people are willing to buy it hoping to cash in on the profits. However, as the asset reaches a good enough price, the influencer will sell all of the coins they own, making a ton of money for themselves while crashing the market price, leaving their fans and investors with a huge loss. This process is known as rugpulls or pump-and-dump.

To avoid rugpulls, you should try to stay away from small obscure coins (even if they're endorsed by a famous person) when you're still a beginner. The more time you spend on the crypto market, the easier you will be able to detect scammy projects. Also, if a few wallets hold the majority of an asset's coins, that's a major red flag.

Fake Wallets And Exchange Websites

Fake wallets and exchange websites are another form of cryptocurrency scam that is so simple yet effective. Scammers can create a fake site with similar appearance to legitimate sites whether it be an exchange or a crypto wallet, and they can also pay for ads on Google to make their site appear above the original site on Google search.

personal info being hooked

These sites operate at first exactly like a normal exchange or wallet, but as soon as someone deposits money into them, they will soon realize that they have just sent money straight to the scammers. Similar to this is a so-called phishing scam - an actor impersonates an employee of one of the famous companies like Binance through an email and baits people into entering personal info such as their login ID and passwords.

Avoiding crypto scams like these require you to make sure you're at the exact official web address (like coinbase.com instead of coinbase.org) and to research if a product/app is released by the official provider. Besides, remember that an exchange will never ask you to enter your login credentials through an email.

Investment Scams

Also known as pyramid or Ponzi schemes, investment scams exist in traditional business as well: they work by attracting investors to a 'fake project', then use money from new investors to pay old investors. This way, investors think that the project is going well so they keep investing, and this creates a façade that the company is generating actual revenue. Eventually when investors want their money back, they will realize that there is nothing there.

bitcoin on the top of the pyramid

Avoid falling victims to these crypto frauds by staying away from projects that promise big rewards with little to no risk, that push you to recruit new investors or to invest quickly, as well as those projects with vague/nonexistent business strategies.

Unlicensed Crypto Casinos

Bonuses and giveaways are established casino marketing tactics to gain new customers. As long as players are using the services of a legitimate casino business, their bonuses will also be legit but many scammers have taken advantage of the surge in crypto casinos' popularity to create bonus and giveaway scams.

bitcoin and gambling dices

These scams work as follows - the casino claims to have a license that they don't have and uses pirated games from famous studios like Big Time Gaming, NetEnt, and Play 'N Go to create a facade of a casino players can trust. Then once players deposit money to get their welcome bonus, either the bonus doesn't come or it comes but eventually players cannot withdraw their winnings.

If you're interested in joining a crypto casino, remember to check online reviews and find out what other players have to say about the gambling experience in that specific establishment. The next step is to check the licensing agency to make sure the casino is on their list. Finally, if you want to be extra careful, you should read the casino’s terms and conditions (just beware they're rather long and boring).

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