Common Frauds in Trading Cryptocurrency; How to Avoid Them

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Digital transactions increased after cryptocurrencies gained massive popularity. Stay-at-home policies amid COVID-19 also played an essential role in the grounding of the mainstream economy, and ultimately, the usage of digital transactions. 

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This is because various countries reportedly started printing money to hand out to citizens in the midst of the turmoil, the result was an obvious global inflation. In a bid to escape the raging inflation, investors pulled their hard earned cash from the banks and started placing them in the crypto ecosystem.Here’s why.

The influx of investors into the digital ecosystem attracted many scammers and hackers, like flies to honey. Although the Bitcoin System follows strict regulations regarding safety, scammers still come up with several ways to trick users. 

Here are the common exchange frauds in the digital ecosystem…

Even though cryptocurrencies are new to the business markets, scammers still use older methods like fake emails and donation requests to trick the consumers. 

Here are some of the most common exchange frauds in digital transactions:

Phishing scams

Scammers tend to send fake emails with links to scamming websites. This collects the user’s information regarding his cryptocurrency wallet’s keys.

Although private keys are much like passwords, they aren’t as straightforward. Each cryptocurrency wallet holds one unchangeable private key at a time. In case of losing it to scams, users are required to create a new wallet. 

Middle-man scams

These types of scams require a much more technical approach. Scammers usually attack by intercepting wifi signals inaccessible parameters. Man-in-the-middle attacks usually occur at public locations where personal details are shared over a public network. 

The best way to avoid these scams is to avoid entering personal information while signing in using a public network. Another more practical approach is to use VPNs. Virtual private networks ensure that your personal information stays encrypted as long as you are signed in. thieves cannot steal any of your crypto assets.

Giveaway scams

Giveaways are viral these days. But no matter how popular they might be, not all of them are authentic, especially when sharing your cryptocurrency wallet’s details. Lately, scammers have started creating fake accounts with thousands of followers that post giveaways to scam people.

The links mentioned on the giveaways lead you to fake websites that ask for your crypto wallet information in the name of validation of your crypto wallet. 

Fake crypto exchanges

Cryptocurrency exchanges are used to exchange crypto assets. Most of these exchanges also offer services such as crypto wallets. But not all cryptocurrency exchanges are reliable. 

Fake crypto exchanges may lure the customers into installing and using the applications by offering additional services. But unfortunately, users never know the cryptocurrency exchange is fake until they lose all their assets. 

A preventive measure you can take to avoid such scams is to use cryptocurrency exchanges that are popular among investors. You are also suggested to research the crypto exchange yourself before providing personal details.

New and safer applications and software have been introduced to assist the trade journeys of investors. Among this software, the bitcoin trading software is a notable name. It is famous for automatically swapping cryptocurrencies with other available traders, helping them benefit from the value fluctuations in the currency. Moreover, investors can safely track current prices and trade the currencies on demand.  

How to avoid exchange frauds?

Some common red flags before trusting anybody with crypto assets include:

  1. Grammatical errors and other miscommunications
  2. Suspicious emails and social media posts
  3. Pseudo-celebrities accounts
  4. Unsolicited social media giveaways
  5. Shady websites

Best to avoid any entity with any of these traits.

Conclusion

Scams and exchange frauds are prevalent these days. There are chances of recovering from the loss in case of transaction fraud involving fiat money, as banks are the intermediaries. However, when it comes to crypto exchange frauds, recovery is impossible. 

Look out for scams to stay safe from exchange frauds. Take preventive measures such as using VPNs and private solid keys and only using authentic and well-known cryptocurrency exchanges. 

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