Over the past 12 months, cryptocurrency investors have seen tremendous returns. Bitcoin and Ethereum have all been 20 baggers in the last year or so, according to Peter Lynch, with some altcoins delivering much better returns. That isn’t even taking into account the meteoric growth of nonfungible tokens (NFTs) in 2021.
Grifters and con artists, like moths to lightbulbs, are attracted to wildly lucrative properties. The cryptocurrency bull market has several distinct sublevels, and the market for scammers is booming. There is no FDIC or SIPC coverage to shield the money from hackers, thieves, and other tech-savvy offenders, unlike funds held in a bank or brokerage account.
Despite the fact that cryptocurrency is a relatively new asset class, you’ll find that all of these scams are recycled variants of old tricks. Here are 3 to be on the lookout for; you’ve probably seen identical models before.
Scam no. 1: Social media scam artists
Scammers will easily get naïve users to take them Bitcoin by using good old-fashioned login hacking. In January 2021, hackers impersonating Elon Musk posted a link to a Bitcoin wallet on Reddit, promising to double any BTC deposits sent to that address. Doesn’t it even sound suspicious?
Unfortunately, plenty of Musk’s supporters would jump off a building if he did it first, so BTC started pouring into the associated pocket. Of course, it wasn’t Musk’s wallet, it wasn’t even Musk’s Twitter account!
Anyone who falls prey to this scam is probably those people who have no idea at all on what they’re doing. However, crypto scammers use social networking to deceive other people into giving them Bitcoin or signing up with a fraudulent exchange. Be wary of someone promising free cryptocurrency on social media at random; it’s almost certainly a scam.
Scam no. 2: NFT Scams
Nonfungible tokens, or NFTs, are one of the hottest investment trends right now, due to the high rates being paid for everything from internet art to LeBron James highlights on NBA TopShot. NFTs are tokens that live on the blockchain that can be exchanged by users or marketplaces.
While the picture or video in the NFT can be readily replicated, the hashtag code that refers to the NFT’s position cannot. When it comes to crypto, though, ownership is ten-tenths of the rules, and whoever has the hashtag has the power. You’ll have a hard time getting your NFT back if your account is compromised and the NFT is passed to an outside customer.
Scammers also take advantage of the potential for big gains by selling bogus NFTs to potential customers. Scams involving NFTs are on the rise; just buy them from reputable sources and use two-factor authentication wherever possible.
Scam no.3: Malwares and Viruses
Scammers don’t have to invent the wheel every time. A simple computer virus or ransomware may often be enough to obtain access to a person’s crypto wallet and move all of the funds out. Victims have little redress for these deals are permanent. Viruses and ransomware are well-known, and most attacks can be prevented with virus detection tools. Always use two-factor authentication to secure your wallets and applications.