Top Cryptocurrency and Bitcoin Scams to Avoid 2021

Cryptocurrency and Bitcoin Trading Scams

Top Cryptocurrency and Bitcoin Scams to Avoid 2021, It isn’t only cryptocurrency prices that are skyrocketing recently; cryptocurrency scams are also on the rise. Americans lost over $80 million in cryptocurrency scams between October 2020 and April 2021.

According to figures from the Federal Trade Commission (FTC), more than 7,000 people reported losses — about 12 times more than the same period a year before.

The median loss was $1,900, with people in their 20s and 30s hit worst. These age groups lost more on investment scams than any other type of fraud. Avoid being scammed during trading transactions by being aware of common scams.

Cryptocurrency Scams

Trading Pump-And-Dump Cryptocurrency pump-and-dump scams are unprofessionally executed to make it look like the price is rising quickly. They make false claims and then stop trading until the price has been substantially boosted, sometimes for a week or even longer.

Once the price rises, they either run away with the money or share it with their victims. Their victims get stuck with high interest rates for investing and sometimes get locked out of their accounts.

CoinLoan scams are rarer than pump-and-dump scams, but they are much worse. It usually begins with a company offering a loan.

• The loan doesn’t always exist, and the company buys cryptocurrency and re-sells it after it is repaid.

Fake ICO’s and Phishing

To get your money, you will need to buy a cryptocurrency such as bitcoin or ethereum. If you think this is the right way to invest your money, think again. Cryptocurrency coins are not the kind of investments that you can use as collateral for a loan.

ICO’s are not regulated by any financial agency. Phishing is another scam that you can fall into when you are selling your crypto assets. You will receive a message designed to trick you into handing your cryptocurrencies to someone who claims to be collecting them.

You will then find that the exchange has been hacked, and you will lose all your investment. Cryptocurrency scams might come in many different forms. Sometimes scammers will pose as a supposed regulatory agency to get your money.

Virtual Currency Trading

Top Cryptocurrency and Bitcoin Scams to Avoid 2021. One of the most common cryptocurrency scams that you may encounter during trading is called fake news. Here, the trader makes a small purchase and then sends a private message to the other party stating that the market is moving in the other direction, making them a significant profit.

This information is false, which means that the other trader will be out of luck; they will lose any money they spent on the fake news. A typical example of fake news is a hoax ‘blockchain press release.’

• Another scam is when a scammer presents you with a heavily discounted offer to use your money to pay for shipping.
• Forex Scams is another form of cryptocurrency scam that involves using forex trading. Here, traders use a platform such as FXCM to make trades.

Improperly Marketed Products and Services

Blockbuster salespeople are more likely to get people’s attention, which makes them prime targets for victims. Salespeople generally want to leave with more than just their commissions; they also want to impress, so they promote products or services that are either overpriced or inefficiently sold.

The overly aggressive approach to sales is particularly attractive to younger Americans because they are more likely to make purchasing decisions impulsively. They are also more likely to trust what salespeople tell them without researching the product or service.

Unfortunately, this is often the case. Uninformed investors often make risky investments without doing any research. These investments usually don’t mature until they have been traded for months or years.

How to Avoid Being Scammed and Keep Your Information Safe

Thieves don’t play by the rules. They make their living by exploiting trust. That’s why Bitcoin buyers and sellers must take extra precautions to keep their investments safe.

First, always go with reputable cryptocurrency traders. The Better Business Bureau has created a list of reputable traders with whom to trade and meet. These traders are not connected to the scams you read about in the news.

Real exchanges are more than happy to answer your questions and give you detailed and consistent transaction fees than gambling-like exchanges. Second, check the exchanges you’re using are legitimate.

• Google the company or trading platform where you’re planning to make an exchange. If its reputation is good, it will show up in Google search results.

Know Your Source

One of the easiest ways to avoid being duped is by verifying where your investment comes from. Every transaction requires an exchange that validates and guarantees your virtual asset.

However, be suspicious of any exchanges that offer a 1% return for trade or any other fees on top of trading fees. They are also almost always untrustworthy. If you are using a personal wallet to hold your cryptocurrency, avoid choosing an exchange that charges you a fee to store your coin or even loots you if you try to sell your coin.

• Bitcoin and other cryptocurrencies work by requiring a key to be sent from one user to another, usually in a method called ‘mining’ or ‘mining transactions.’

Bitcoin Scams

One of the most common scams to come under the spotlight in recent years are Bitcoin exchanges, which advertise huge profits. Like a conventional stock market, you can buy and sell cryptocurrencies, but they are peer-to-peer, unlike an exchange.

These platforms are unregulated, meaning traders can get ripped off if a scammer exploits flaws in their software to get more than they should. Investors typically lose their savings when a platform gets hacked or shut down and then exchange into a coin with much lower value, causing financial losses.

According to Tom Robinson, head of investor protection and public policy at the UK’s Financial Conduct Authority (FCA), cryptocurrency exchanges are inherently unsafe.

Mining Scams

Cryptocurrency mining is a way for people to generate bitcoins without having to buy them. Users add computing power to create the equivalent of computational work, which is rewarded with cryptocurrency.

Some users set up their mining rigs in their homes or basements to increase the task’s difficulty. This illegal activity is rising, and some investors have lost their life savings to mining scammers.

Many people have invested in mining farms and never heard from the business owners again. Most victims don’t get their money back, and they’re left without the chance of purchasing bitcoin at higher prices.

• Another scam involves bitcoin ATMs.

Scam Wallets

A scam wallet is like a fake bank account, but it doesn’t hold any money. It only exists to make the users think they’re getting a hold of virtual coins.

According to the FTC, the fraudsters use third-party services like Coinbase or Xapo to create a fake wallet. These are services that have proven themselves to be secure, and users are encouraged to trust them.

Unfortunately, this is not always the case. For instance, the FTC uncovered several scams that duped people into thinking their personal information was stolen. The criminals would post ads on Craigslist, buy digital goods with the money, then disappear.

• Once the victims didn’t send any more money to the new wallet, the fraudsters started using their real identity to commit other crimes.

Conclusion

Cryptocurrency price has been on the rise since the beginning of the year, but as we can see from the chart below, it is not so far from the record high prices we saw last December.

There are legitimate ICOs using blockchain technology that is helping various industries to innovate. However, these scams are causing a surge in prices, leaving investors with losses and many regrets.

Bitcoin is the most well-known cryptocurrency. ETH was recently the second-largest cryptocurrency by market cap. While there are many excellent cryptocurrency and blockchain projects, there are also some very bad ones, as we can see from the chart below.

• Buy cryptocurrency carefully and make sure you only use reputable exchanges, keep the following tips in mind, and invest responsibly.