Some Common Cryptocurrency Scams

Despite so many advantages that the world of Cryptocurrencies provides, whether it is the availability of decentralized platforms, end-to-end encryption, transparency, speed of transactions, etc., it is still subjected to some online scams like hacking, phishing, loss of data, manipulation of figures, etc. We shall discuss some of the major and common scams related to cryptocurrencies.

Phishing Scams

This is a very common scam in which the culprit tricks the victim to get some sensitive information related to their account or wallet, like passwords, and private keys that directly give access to the victim’s account.

The hacker lays a trap for the victim in the form of, let’s say a link to a well-known platform (like Facebook, or Twitter) that would quite convincingly lead you to another link/website where it may ask a few questions some of which may be related to your bank account or wallet. Now, if the victim gives all the relevant information, it enables the hacker to have direct access to your account and rob all of your assets.

In the last decade itself, there have been several such phishing cases including those related to even Google.

Ponzi Schemes

“Ponzi” or “Pontsi” (in Italian) is named after an Italian businessman ‘Charles Ponzi’ who invented this scheme back in 1920. Ponzi schemes are fraudulent schemes designed to attract the victim investors to seize the amount to pay the earlier investors. Companies involved in Ponzi Schemes are mostly focused on attracting new clients. It does not involve any real business chain but depends solely on seizing money and transferring it.

Pump and Dumps

This scam is generally initiated by the shareholders who cannot get rid of the stocks piled up whose market value has drastically dropped. To get rid of this stock, they apply Pump and Dump using stock market operators who help the shareholder to get rid of it.

• PUMP-

They attract the victims by showing them some transactions within their circle and then publicizing these transactions via social media, news bulletins, etc. which makes the trade genuine and successfully convinces the investors that the stocks of the company are gaining value and might be profitable in the future.

• DUMP-

Once the victim investors start investing in that stock the shareholders and market operators make enormous amounts and then start retrieving gradually by showing the drop in market value of the stock, leaving the victims in a state of confusion and helplessness.

There Will Always be Scammers

All kinds of markets have a positive as well as a negative side. It is up to the user’s awareness and experience if he/she can deal with it. Like the thieves, robbers, and assaulters moving around fearlessly in the real world, in the virtual world of cryptocurrencies too we will always have cheaters, frauds, and scammers to loot you. The only way to deal with such cheaters is to be more attentive and believe in the right thing. Also, if you feel that you are being victimized, you can always take the help of cybercops as all of such blandishments are cybercrimes.

Final Thoughts

With the increasing online activities, online scams are also increasing and hence there is a sheer need for cyber cops too. In this blog, we have discussed three of the most common cyber scams, but there are many more to know about which you can browse in detail. This particular blog has been written to alert the traders especially the beginners about such scams. We hope to have done so.