META: If you are thinking of investing in crypto, it would be best to keep a lookout for scams to make sure that you’re not making a bad investment. Stay safe in crypto by researching platforms thoroughly and avoiding fraudulent schemes.

Cryptocurrency is a very new concept, one made up of smart and innovative people doing a whole range of new things over the connected internet. So, it only makes sense that there are a few smart and innovative bad apples in the industry too. As much as crypto is already seen as a way to make money, some see it as a way to extort money.

There are two main types of extortion: either the scammer will coerce the currency out of the victim with false pretenses or they will gain login details and take whatever crypto they can find.

If you are thinking of investing your hard-earned money into crypto, it would be best to keep a lookout for scams to make sure that you’re not making a bad investment. Take a look at our guide to the most common crypto scams.

IMAGE: https://pixabay.com/photos/cryptocurrency-business-finance-3085139/ (Pixabay)

Social engineering

The first of these scams isn’t exclusive to cryptocurrency. Social engineering scams are common worldwide.

In general, social engineering scams are ways scammers convince victims to give up money or login details. The most obvious method is romance scams. If you’ve ever been catfished, you’re familiar with this. Scammers use dating sites and DMs to build long-term relationships with victims and then ask for money. Cryptocurrency makes up about a fifth of the stolen funds in romance scams. Stay safe in crypto by being cautious and aware of these tactics.

There are also imposter scams. Here, scammers pose as celebrities, businessmen, or cryptocurrency influencers to extort money. Giveaway scams involve scammers pretending to collect for charity or offering “once-in-a-lifetime” giveaways on legitimate-looking social media sites. In each case, scammers exploit different emotions—romance, influence, guilt, or urgency.

But it’s not just money or crypto that scammers can take. They often ask for login details to e-wallets or bank accounts, then drain them. They may also blackmail users by threatening to drain e-wallets or expose personal information, like logins to controversial sites.

Protect Yourself from Investment Scams

Crypto is a new concept, and it involves a lot of technology. With new technology, fakes also emerge.

For example, scammers are quickly targeting NFTs and ICOs, two new forms of investment. They find these attractive because people often struggle to understand them, making their naivety a prime target in investment scams.

NFTs, or Non-Fungible Tokens, use blockchain technology to identify cryptographic assets, usually a piece of digital art. Without the NFT technology, digital art is worthless as it’s a form of verification. Whoever owns the NFT is the only owner of that piece of digital art. This has caused NFT prices to skyrocket – and scammers to see an opportunity. They will instead send an unverified piece of digital art once they are paid.

Beware of Crypto Influencers and ICO Scams

Crypto influencers often promote ICOs, or Initial Coin Offerings, as a method of crowdfunding a business. ICOs are in the same realm as stocks, but they allow the business owner to keep their entire share of the company. However, fake ICOs are quickly popping up, often with the help of these influencers, asking for donations and then vanishing with no intention of establishing a business.

The latest type of scam to hit cryptocurrency is the DeFi rug pull. DeFi is short for decentralized finance: the main appeal of crypto being that it is its own decentralized currency that bypasses the need for a bank. However, bad actors have used this important factor of crypto to take money from investors by posing as an influencer and trading crypto for a larger sum of money.

With that in mind, the question has to be asked: is Chainlink a good investment? The answer is yes, but you have to be smart about where you put your money. For example, keep a lookout for…

Beware of Pump and Dump Schemes in Crypto

If you’ve been watching YouTube lately, or you’ve seen The Wolf of Wall Street, you might have heard of Pump and Dump schemes. Once a forgotten aspect of the stock exchange, it is making a resurgence due to the unregulated nature of cryptocurrency. Stay safe in crypto by being cautious and avoiding these high-risk schemes.

In the days of the Wolf, Jordan Belfort, salespeople made cold calls to various potential investors, exaggerating or lying about the quality of the stock, often claiming to have insider knowledge. As time went on this method changed to spam emails, and eventually the practice became illegal – in stocks.

Today, crypto influencers with a following are using it to make a quick load of money. They will create a new coin and hype it up on social media. This encourages their many fans to invest. Once the price reaches a certain point, the influencers sell their shares. Influencers often know that their fans trust them enough to buy anything, even when they say the coin is just a joke, like Dogecoin.

To avoid pump and dump schemes, be cautious of unsolicited investment offers. Stick to coins backed by experienced, qualified teams. Stay safe in crypto by doing thorough research and avoiding risky schemes.