The fast-paced cryptocurrency community and marketplace have gained traction of many. The cryptocurrency community has never failed to grab attention. Visit the bitcoin code to get a deep analysis of bitcoin trading. But the more people lean towards this marketplace for making profits and earning a passive income, the more it evokes prospects of risks and threats.
Cryptocurrency scams are currently a significant drawback of this monetary system. One of the prominent reasons behind the bear case of digital currencies is all you need to know about the most common cryptocurrency scams.
- The massive rush into the digital currency marketplace has grabbed the attention of every kind of financial enthusiast. Whether a trader or retail investor, everyone is willing to profit from this industry.
- Most of the time, scams related to digital currencies have a clear objective of stealing the private information of a cryptocurrency user and then misusing it to transfer digital currency present inside the wallet of that user to another wallet.
- A stealth address technology boosts the anonymity of cryptocurrency scams and hacks. Stealth address technology is a one-time address technology. In short, it assigns a different wallet to the users every exact time while executing transactions.
- E-wallet usually store two kinds of alphanumeric code: public, known as a wallet address and private is known as a private key.
- The most common cryptocurrency scams are social engineering-related, decentralized rug pull and initial coin offering.
Types of cryptocurrencies!
Usually, there are two common types of cryptocurrency scams: social and the second being malicious. In the primary type of cryptocurrency scams, the bad actors try to gain access to private keys of a user’s wallet by using social tactics like extortion, blackmailing, romance and many others. On the other hand, the second type of cryptocurrency, scam incur, luring people into guaranteed profits, fake initial coin offering and many more.
The above-listed cryptocurrency scam is the most common one. People usually invest in infamous initial coin offerings alongside decentralized projects to gain more profits. Therefore, sometimes infamous initial coin offerings, NFT games and other decentralized projects are scams. Let’s discuss these types of cryptocurrency scams in detail.
For example, the foremost is a cloud mining scam; the second is Initials coin offering and new non-fungible tokens, decentralized rug pulls including some business opportunities and guaranteed returns.
Cloud mining scams!
Cloud mining scams became popular when google play store banned some cryptocurrency mining applications from the play store. Google play store nearly banned eight mining applications from the play store because these apps were not providing any cloud mining service to the users in return for their money.
Three out of eight mining applications had a paid subscription and lured users to buy their premium services even after purchasing the application. Moreover, these mining applications lure emerging mobile and computer miners with huge profits and a fake dashboard of the hash rate in cloud mining scams.
A non-fungible token is a modernized form of cryptocurrency assets. With the help of NFTs, people usually list their digital artwork on the marketplace and make a handsome amount of money. However, scammers have found some potential ways to scam innocent investors and traders with the extraordinary hype of NFTs. These people create fake hype of the NFT project amongst a targeted audience and sell the artwork at a very high price.
Initial coin offering!
Initial coin offering is another type of cryptocurrency crowdfunding method. IPO and ICO have a similar notion. But in an initial public offering, the prospects of scams are low. However, scammers have been using crowdfunding to fund projects that do not even exist. The increasing scams taking place with the help of initial coin offering was why China banned every ICO. In short, before investing in any of the initial coin offerings, keep an eye upon the development team and white paper of the project.
Decentralized rug pull is another type of cryptocurrency scam. In this scam, the developer, with some influencers’ help, performs the pump and dump scheme. The developer team is not involved in every decentralized rug pull. These are some famous cryptocurrency scams, and you should beware of these scams.