What You Need To Know About Cryptocurrency Scams
Scams are everywhere. From online dating scams to old-fashioned Ponzi schemes, plenty of people are trying to make a quick buck. With the rise of cryptocurrency, there are brand new ways for malicious individuals to work a new scam. Here’s what you need to know about cryptocurrency scams.
The Pay to Win Scam
The most common theme among cryptocurrency scams is the need for you to pay up front before anything happens. The easiest way to identify this scenario is when the solicitor wants a cryptocurrency payment but will not take credit, debit or other forms of money. That’s the dead giveaway.
This scam hinges on the fact the cryptocurrency works more like cash than credit in many respects. Once you give someone your cryptocurrency, they own it. There is no mechanism for you to retrieve it.
Pay-to-win scams usually promise you some way to make a lot of money. You just have to buy into the program or make a down payment or otherwise put money up front before anything good happens. Once you give up the money, you’ll never see it again.
A frustrating variant of these scams is cryptocurrency-based charity. These are normal charity scams, but because they only accept cryptocurrency, they are much harder to track and stop.
Fake Investment Schemes
Fake investment schemes work on the same principle as pay to win scams, but they are far more ambitious. With these scams, the promise is that if you keep investing, you will eventually make a huge profit. These scammers claim to be investors or investment managers. They want you to front cash to them so they can make money on your behalf.
You’ll find that most of these scammers only take cryptocurrency payments, which is already a red flag. Once you give them money, they’ll tell you that another payment will increase your returns. Many will happily lie to you and tell you that you’re killing it with your investments. But, once you try to withdraw on your “account,” they suddenly go quiet.
There are a few ways to check up on anyone who wants to invest on your behalf. First, they need federally regulated credentials. Second, if they’re good at what they do, you’ve already heard of them. Most of all, real investors like to work with contracts and paperwork to protect themselves from lawsuits and regulatory oversight. Anyone trying to play fast and loose with your money is clearly not a real investor.
The third type of scam is quite different. These scammers are determined to mine as much cryptocurrency as possible. They come in two forms. One will try to recruit you with the promise of big payouts. They essentially get victims to work for them recruiting people and hardware for crypto mining that never pays out to anyone except the scammer.
The others rely on malicious software to steal computation resources to mine for currency illegally. They will have you download an app or software that makes mining easy. What they don’t tell you is that they end up with all of the currency when you are finished. You can minimize your digital risk by following cybersecurity best practices and taking a fresh look at online privacy issues.