Cryptocurrency is a legitimate investment opportunity. You can make or lose a lot of money very fast because of how speculative it is. However, the bigger risk it carries is scam. As an investor, you should be aware of these crypto scams.

7 Types of Crypto Scam You Should Be Aware Of

Crypto investments are one of the hottest topics in the investment market these days. Investors and traders purchase digital currencies through exchanges with the hope of selling them for a profit. The risk in this is scam. Here are 7 types of crypto scams you should be aware of:

1.      Hacking

In theory, crypto investments should be secure. All the transactions carried out must be through a blockchain. The blockchain routes them through multiple computer systems, with each system checking the transaction against a database.

Hackers have repeatedly found ways to gain authorized access to the majority of the systems. This is through the many aspects of the crypto market such as mining companies and exchanges. Once these digital currencies are tampered with, there is no way of retrieving them.

How can you get hacked?

Cryptocurrency is built in a manner that is highly resistant to hacking, but as a user, you need to take precautionary measures to secure your money by:

i. Secure your computer with a strong anti-virus.

ii. Never share your private key/passphrase or password with any person or organization.

iii. Do not use the same password that you use online. 

If you don’t take these measures then, you can get hacked.

2.      Fake investments

In crypto investment scams, fraudsters set up fake websites for mining or investing in crypto. They utilize different means in luring victims to these sites. In some cases, they send unsolicited messages, offering to help grow their victim’s crypto investments.

In other cases, they share crypto investment tips online, posing as investors. They usually promise huge returns on investments. Be careful of such as they are not legit

These scammers usually comment on YouTube, Facebook comments, Telegram, Twitter. And in most cases they share fake investment links.

3.      Giveaway

The giveaway scam is another popular crypto scam you should know. Fraudsters pose as well-known crypto investors or celebrities offering to help small investors. They offer to add some of their crypto assets to yours and have it multiplied.

The result of this is you losing your digital asset. Your money ends up in the pocket of the scammer and there is no way you can get it back because it is untraceable.

4.      ICO fraud

Initial Coin Offering (ICO) is the launch of a new crypto project. It is a risky investment because it is difficult to predict how the coin will perform. Not only are some ICOs risky, they are also fraudulent.

There are two types of ICO scams. One is a completely fake cryptocurrency, while the other is the spoofing of a legitimate crypto project with an actual ICO. Either way, fraudsters use both scams as a means of swindling their victims.

You can read more about ICO frauds here

5.      Crypto wallets

Crypto coins cannot be kept in the traditional bank. The standard way of storing them is in a crypto wallet. A crypto wallet can be a service, piece of software, or device offered by a crypto exchange. It stores the key you need for accessing your crypto investments.

However, crypto wallets are at risk of being hacked as well. Here, hackers gain unauthorized access to the master keys to your wallet and can help themselves to any asset you have stored in them.

6.      SIM hacking

Hackers can hijack your crypto wallet through your mobile phone. There are multiple names for this including phone porting, SIM hijacking, SIM swapping, and SIM hacking.  Hackers find this method easy.

Firstly, they transfer your mobile number to a new phone. They then use the new phone to reset the passwords to your crypto wallets. Using the new password, they will then empty your account.

7.      Crypto-stealing malware

Malware is harmful software which when installed on your computer can give hackers unauthorized access to your accounts. Malware takes different forms including ransomware, spyware, and viruses.

Additionally, there is malware specifically designed for stealing crypto. These programs can get into your account while you are performing a transaction, steal your entire crypto wallet, or capture your login credentials.

Conclusion

Just as there are scams in other industries, so there is in cryptocurrency. Crypto scam is likely to grow as interest in investing in cryptocurrency grows. However, what is important is that you do not fall victim.