Scams exist everywhere and are an almost inevitable part of the modern world. From fake fortune tellers to charlatans who prey on naive tourists in major cities, some humans have a penchant for deceiving and swindling others. There are also very old, with all manner of cons dating back centuries.
However, the emergence of the internet gave rise to a whole new class of crypto jacking. No longer did you even need to physically meet with your victims to relieve them of their funds. Email phishing scams, fake romance scams, and fraudulent giveaways reigned supreme, particularly in the early days of the internet. People, however, became more adept at spotting these cons and avoiding them and there was a steady decline in people falling for internet scammers. Then along came cryptocurrency. Because the industry is still in its maturation phase and many do not know enough about it, cryptocurrency became a prime hunting ground for unscrupulous people. But how do these scams work and how can you protect yourself?
Here are some of the biggest cryptocurrency scams today:
Crypto Jacking Scams
Cryptocurrencies are brought into the world by way of crypto mining. This mining process involves the completion of complex mathematical equations by a computer system after which tokens are given as a reward. This process is, unfortunately, very electricity-consuming and uses a great deal of processing power. To get around these costs, some people choose to crypto-jack. Crypto jacking occurs when a computer is infected with malicious software that uses its processing power to mine cryptocurrency or altcoins without the knowledge and consent of the owner. Oftentimes, the computer system becomes slow and can be damaged long term. The malicious software is usually introduced via fake emails or scams which ask the user to download some software unto their system while the crypto-jacking software runs in the background. To avoid this scam, do not download any software from suspicious-looking emails or software from non-reputable sites.
Initial Coin Offerings (ICOs) were the tool of choice for raising funds for new cryptocurrency and blockchain companies a few years ago and many of them raised millions of dollars. At the same time, many of them turned out to be fraudulent or unregistered. Even though ICOs are not as in-demand as they used to be, there are still many scam ones being run. These promise a large turnover of profit for investments and have scammed many people across the globe. Thankfully, these are fairly easy to identify. If you are approached for an ICO, make sure to visit the website of the Securities and Exchange Commission or any other regulatory body in your region. By law, such capital-raising ventures have to be duly registered and meet some minimum requirements to do so. If the ICO in question is unregistered, avoid it.
Wallet and exchange hack
Wherever money is stored, there is the risk of criminals attempting to steal from it. Cryptocurrency wallets and exchanges are no different and there have been many instances of them being bokeh into and stolen from and this is done in a number of ways. One of the common methods is through phishing scams. Phishing scams involve sending fraudulent emails through which access can be granted into a victim’s accounts. Sometimes, the criminals pose as service or product providers (such as wallet providers) in order to gain login details. Other times, they try to get the victim to install software that steals their login data. This scam can be avoided by once again avoiding suspicious emails and not downloading unverified software. Another step is to not store your cryptocurrency on exchanges as they could be lost during a hack.
Cryptocurrency is an innovative new industry that has many money-making opportunities in trading, sales, and investments. However, not every investment opportunity in cryptocurrency is legitimate and like any business industry, scams abound. Many scammers take advantage of people’s ignorance about the industry to con them out of their money. There are a few steps that can be taken to avoid falling victim to these. If you are approached for any business opportunity, make sure the company inquisition is duly registered and licensed to carry out business. Furthermore, make sure that the proposal is realistic. A return of 300% in profit is unrealistic and likely fraudulent. Also, conduct your own research on any proposed business venture and understand how it works before you move forward with it.
Pump and dump schemes
There are thousands of cryptocurrencies in existence and more are created all the time. While some are worth hundreds of dollars per token, some are not quite as valuable. However, the industry is always on the lookout for the next big token, and scammers have taken advantage of this. A pump and dump scheme occurs when the promoters of a new coin buy up the token in bulk to artificially drive up the price and then con others into buying it at the new price. After they have turned a profit, they then abscond with their ill-gotten funds. These are fairly common and can be detected by engaging in cryptocurrency-related forums. These forums have a large community of enthusiasts who analyze tokens all day and some have even developed algorithms to detect whether token sales are legitimate or artificial.
Ransomware is a blackmail scheme that involves both the sometimes hacking of a computer system and the demanding of cryptocurrency. Ransomware criminals work by hacking computer systems and gaining access to sensitive information of the victims. They then demand cryptocurrency as a ransom or they will give self incriminating information to loved ones or employers. In some cases, they do not have this information and simply lie that they do. This can be avoided by installing the proper security measures on your computer symptoms and take precautions to avoid falling victim to phishing scams that can expose your sensitive information.
The cryptocurrency industry is fraught with scams and cons at many levels. The above guide will help you not only to understand crypto jacking and identify them but ultimately help avoid falling a victim. If you enjoyed this article we would also recommend reading our Top 10 Crypto Wallets.
Image via Shutterstock, Writer Tokoni Uti