5 Crypto Scams you need to know before Buying Bitcoin

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5 Crypto Scams you need to know before Buying Bitcoin

The cryptocurrency platform has grown at exponential rates over the past few years. The value of Bitcoin alone increased to over $50,000 in 2021 as more people poured cash into the markets. Unfortunately, the number of scams in the industry has also increased.

Interested in cryptocurrency? Before you take the plunge, you should be aware of the different types of cryptocurrency scams and frauds taking place. Often, cryptocurrency technology convinces unsuspecting victims of the legitimacy of their schemes.

The potential of cryptocurrency for scams has become increasingly apparent in 2019, over $4 billion was lost through cryptocurrency scams. many victims of scams fail to recognize the need to watch out for effective tricks such as email.

Here are cryptocurrency scams you need to know before bitcoin or any other cryptocurrency.

1. An Initial Coin Offering (ICO)

It is a fundraising exercise that uses smart contracts and cryptocurrency to automate payments between an organization and its stakeholders. ICOs are used by cryptocurrency companies to raise money from future users. While a lot of great companies have been built using ICOs, many of the fundraising exercises have turned out to be scams.

In the earlier days of ICOs, a study in 2018 was 80% of ICOs were scams have a lot of projects spent months promoting their fundraising exercises. Different techniques were used, including the offer for guerilla marketing. Despite not having working products, many projects were able to raise funds before ceasing communication with their investors.

It is often difficult to distinguish between a legitimate and fake ICO. Even legitimate ICO projects lose the money of their funders s a result of hacking attacks on them. A study in 2018 found that $400 million out of $ 3.7 billion was stolen from ICO projects through hacks.

2. Bitcoin Mining Scams

Bitcoin mining is a process that uses digital power to securely add transactions to the blockchain ledger. Blockchain networks solve complex mathematical problems that help to confirm transactions before adding them to the immutable ledger and other cryptocurrency projects also use similar mining techniques to secure their networks.

The operators of cryptocurrency mining scams try to convince their victims to invest in their mining pool so that they can gain significant returns. The scammers usually stop responding to the messages to their victims after they receive the funds. The criminals behind Bitcoin mining schemes may also try to convince their victims to bring in new investors. These types of schemes usually involve money being taken away from new investors to pay earlier investors until the cycle of payments can no longer be sustained.

3. Cryptocurrency Giveaways and fake websites scams

Cryptocurrency giveaway scams involve the use of social networks to convince investors to send their cryptocurrencies in order to receive a larger volume of tokens such scams can quite impersonate celebrities to convince their victims like Twitter accounts which are also being used to steal money from people expecting giveaways of cryptocurrency.

Fake domains can be used to present web forms as though they belong to legitimate organizations in the cryptocurrency industry. Fake websites have made fake wallets and cryptocurrency exchanges look legitimate. Hackers are able to gain access to the data of cryptocurrency wallet users once they obtain their exchange and wallet information obtained can be used to log into the personal accounts of victims.

A user, believing they are using a legit website, may download software that has malicious code that steals information from their device.

4. Yield Farming Incentives

Yield farming is a decentralized finance innovation that makes it possible to earn returns from staking cryptocurrencies. Yield Farming software is built on Ethereum, allowing people to earn interest from providing liquidity. Legitimate yield farming projects are in the decentralized finance ecosystem but there are also crypto scammers and their malicious code in order to steal funds.

In recent times, scammers will create fake hacks so that they can shift the blame for the loss of money from themselves to unknown criminals.

5. Email Crypto Scammers

In recent years, data leakages and privacy-averse user agreement policies have become prevalent. This makes it much easier for scammers to obtain your contact details from the dark web or from legitimate services that you use. A scammer can pretend to be a service you use and email you to request that you click a link in the email body.

Email scams can be very easy to fall for due to the fact that most people have a lot of trust in the service they use and would not usually expect an email from a familiar service to be malicious.


Furthermore, while cryptocurrencies are changing in the world, there are many people whose lives have been destroyed by scams in this digital investment platform which also has automated many financial processes and put banking in the hands of the people.

The cryptocurrency technology and people behind the platforms you use should also be given a lot of consideration when deciding if you should use a cryptocurrency platform.

5 Crypto Scams you need to know before Buying Bitcoin


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