The Scam of “No-Name” Cryptocurrencies
Cryptocurrencies are the future, but scammers are the present. Some go to great lengths to entice investors with fake companies promising great returns for very little risk.
The dream of many scam artists is that they can play off confusion about the science behind cryptocurrency technology to pull in potential investors. The general public still doesn’t understand how cryptocurrencies work. With a general misunderstanding of blockchain, startups can take advantage of public interest in the space.
The scammers pose as crypto experts, of course, by referencing their experience in the cryptocurrency space. One scam artist even used the aliases of “Dana Lohin” and “Darya Linde” on their marketing material.
The Scam of “Mining”
The crypto scam I’ve encountered many times involves enticing someone to send money to a website so that the scammers can get the victim’s currency out of a “mining pool” in exchange for some small amount of cryptocurrency. This “mining” process generates new coins, but it’s expensive and difficult to mine, so it takes lots of money. In my research, I found a few stories about people who got scammed by people pretending to be the founders of mining pools. In one case, the victim wired $4,000 to someone promising to place him in a mining pool. Once the victim had transferred the money, the person who’d promised to help did not follow through.
The Scam of Fake Wallets
If you’re interested in using cryptocurrency, one of the first things you’ll need is a “wallet.” A wallet is basically an online account that stores your private cryptocurrency information. Bitcoin and Ethereum wallets are the most common, but other cryptocurrencies exist. Before you set up a wallet, always make sure it’s the real deal. Make sure to do a Google search and double check that the website has a working email address. Never send any sensitive personal information over email.
Think about the frequency of the transactions you’re about to make. Is it a once-in-a-while decision or are you planning on making the purchase for most of the month? Spend your cryptocurrency in small amounts so you can better budget and stay on top of your finances.
The Scam of Pump & Dump Coins
Crypto developers often use the term “pump and dump” to refer to businesses that promote and sell worthless cryptocurrencies in exchange for investments in a much more valuable coin. These schemes, while not new, can be incredibly lucrative for those who participate. The idea is that those who aren’t familiar with the industry get involved at the end of a sudden surge and begin dumping coins, leaving users with a worthless investment.
Avoid companies that have an easily identifiable “coin” name that is also an easily identifiable brand, such as Bitcoin.
Is Your Company Online?
Some types of businesses operate offline, and are difficult to track, such as products for personal use. Be careful before investing any money in these.
Conclusion
It’s important to remember that there are many legitimate ways to make a living online. The majority of companies in the bitcoin and cryptocurrency space are legitimate and worth considering. For the most part, it’s safer to invest in companies and startups in the crypto sector than the typical investment space. You’re investing in a new concept and the technology around the concept is still evolving. Many other industries, like investing in equity investments, are also volatile and less reliable than digital currencies.