Learning to Identify Cryptocurrencies Scams and how to Evade Them

In the cryptocurrency world, there are endless stories of people getting scammed and robbed out of their cryptocurrencies. The transparency and openness of the cryptocurrency systems sometimes work against the user and protection for our investment. In the digital currency market, users are expected to be smart enough to avoid getting ripped off, but some training is needed for that.

Take a minute to read the next few lines, they should offer you a glimpse of the most frequent scams in the cryptocurrency world and how to dodge them.

Bogus ICOs

Nothing sets the market into a rush like a new Initial Coin Offering. The exercise is meant to collect money while offering new digital tokens that can be retrieved later in some form of traditional cryptocurrency or stored and kept to develop a new market-share. New ICO’s usually gather thousands of user and they are a sure-fire way to get millions of dollars in a moment’s notice.

There have been very few cases of fake ICO’s but this don’t mean that scammers will stop trying. Of all the possible ways to rip off someone online, this one is the hardest to spot. The only way to be sure if an ICO is for real is to check the resume of the people behind it, as well as the companies endorsing the initiative. You should also take a look of the White paper that explains what the endgame of this new ICO is.

Digital Wallets

Almost every user of digital currencies has a digital wallet these days to handle their investment. Unfortunately, scammers are well-aware of this, since this is usually one the easiest ways to attack and rob people out of their cryptocurrencies. The only way to avoid getting scammed on your digital wallet is to use a reputed service that allows double checking of your ID, and doesn’t store any data of your passwords.

Email

Your e-mail direction is also a very vulnerable point of attack for scammers. Those trying to rob you will mask themselves as a service provider asking for your data along a warning that threatens you to lose your currencies if you don’t update your contact information. If a user falls for it they can usually kiss their currency good-bye. A recent scam like this one was pulled recently on users of MyEtherWallet. The only way to avoid this scam is to never hand any personal information, much less passwords over email since no service will ask for this information.

Exchanges Services: Small vs Big

When the time comes to trade your digital currencies for FIAT money, you’ll be offered thousands of exchange services. There is an unsound advice going around preaching that it’s okay to use middle level or low level services. It’s best to avoid them and go with the bigger and established ones if you want to play it safe. Do your research and make the best choice with a big service provider, they are less likely to rob you, but they will take a hefty fee. It’s the price of security.