Cryptocurrencies have been given a lot of names over the past decade, from a game-changer, to a revolutionary idea that would turn world economics into a sham that the next big recession will bring. But there’s no denying that it’s making people stand up and take notice, even in non-tech-savvy circles. But that exposure also increases the potential for scams and there are plenty in the market.
Here we will discuss some of the scams that are plaguing the crypto world with the help of some stakeholders who have some skin in the game.
Aritra Sarkhel, Director of Public Policy at WazirX, emphasized the need for research before jumping into the crypto investment arena. With so many influencers online, there is no substitute for ‘DYOR’ (Do Your Own Research).
Sarkhel said, “The most important thing that investors should follow is DYOR or Do Your Own research to understand the crypto asset they want to invest in and the details about the project that is related to it. In addition, see details on the team behind the project, the investors, and the underlying white paper.”
He further pointed out some aspects that will help crypto investors stay away from scams and frauds:
– Research what the community is saying about crypto and founders on Telegram and Reddit groups/forums.
-Check how resilient the crypto exchanges behave when there is a significant drop.
-Please resist FOMO. Don’t just jump in and invest in it just because crypto is trending.
-Don’t rely on random “Influencers” pitching Youtube/Instagram for specific crypto. Do research first. buy another.
-You don’t need to buy the whole crypto. You can buy fractions of crypto. It is like a fractional investment in stocks in the US market.
Understand taxation based on the country you are in.
Kumar Gaurav, founder and CEO of crypto-friendly banking platform, Casa, believes that an investor should be well versed with the fundamentals before becoming an investor. This is what happens when people who don’t understand the basics fall prey to scams.
Gaurav said, “Teaching yourself why bitcoin is created and how it operates will help investors understand the fundamentals of crypto. Want to profit from technology. If you don’t have that ability, I think it’s too early for you to invest. Investing in something you don’t understand will probably make you a victim of a scam. ”
The investor should also be aware of the different types of scams that are currently being used to dupe the hard earned money of the people.
Amanjot Malhotra, Country Head – India, helps point out some of the crypto scams prevalent in the bitcoin market.
These are some of the scams that users should be aware of:
Demand for crypto-only xPayments
If an individual or retail establishment claims that they cannot accept any form of currency other than Bitcoin or Ethereum, it is likely a scam. Bitcoin and other altcoins are a growing asset class, so experts say that trusted institutions are not going to accept crypto.
In general, anyone seeking to pay you in bitcoin might be trying to deposit it and cash in on its skyrocketing value. And unlike banks, blockchain lacks the usual Know Your-Customer (KYC) protocol. This means that people can open a wallet without presenting a valid identity, social security number, or address and contact information. Although the blockchain is public and creates a permanent, open-access record, people can transact on the blockchain more or less anonymously – making it easy to defraud you, take your money, and run.
Anonymous or fake identity
The lack of KYC protocol on the blockchain is a major question mark for its widespread use.
“With a decentralized platform, there is really no security measure to say who is a good actor and who is a bad actor,”
Digital Collectibles & Games
Scams such as the “squid game” scam where sophisticated coders now have the ability to create new games and entire fantasy worlds on the blockchain. And to do it as soon as the next viral Netflix show starts.
An easy way to trick excited blockchain newbies is to buy them a type of newly minted token for the game. If enough people invest in the token and drive up the price through high demand, it gives the original scammer a chance to liquidate all of their holdings and disappear in a move known as “rug pulling”.
cryptocurrency investment plans
Recently a form of live funding for a crypto project has hit the market and we have seen millions of dollars being raised through Initial Coin Offerings (ICOs). But a large number of ICOs are also opportunities for scams. A company or individual can pitch to retaining investors, they have a one-time opportunity to invest in a new form of crypto with a guaranteed 1,000% return. They may then tempt you to deposit your FIAT or bitcoin into a digital wallet with a bunch of new coins that have been compromised in some way, or “pump and dump” by buying the coin and seeing the price of the new token skyrocket. “Do it.
There are a lot of scams happening on dating sites these days. Such scams involve long distance or digital relationships between a couple who are in a romantic relationship in which one party pressures and convinces the other to buy or give money for some new crypto that is actually people There is a way to get them out of their money.
Phishing scams in crypto
This type of scam works very similar to the popular phishing scam where hacker Sen
End email recipients attempt to click on links and capture their personal details – including crypto wallet key information. But unlike most passwords and usernames, you only get one private key in your blockchain wallet. Once the hacker has the key, he can access your wallet and defraud you within minutes.
After the Cryptocurrency Scam: Investing Because of FOMO? You may be a victim of one of these fraud schemes which first appeared on BGR India.