The threats that accompany this market will also increase in the future with the development of cryptocurrencies. Cyber criminals are also getting smarter thus making it a hard task to know who and what to look out for. In 2024, people have to remain aware of the prominent types of crypto scams and learn how to avoid them. Without further ado, here are the seven most common types of crypto scam and what you can do to guard against them.
1. Phishing Scams
Phishing is one of the oldest tricks in the book yet it continues to be one of the most potent tricks that fraudsters use to steal from people. There are examples of using fake e-mails, messages or even creating web-sites that are completely identical to the genuine resources and require the users to enter the login details.
How to Avoid Phishing Scams
Double-check URLs: Before entering any of your personal details, check the Web site address carefully. Try to search for domain name with small differences.
Use two-factor authentication (2FA): Enabling 2FA puts a strong barrier that will help in preventing bottom callers from getting into the user’s accounts.
Be cautious with emails and links:
Do not always believe in the links that you receive in the unsolicited emails or messages. However, do not use the search engine to look for the link, go straight to the website.
2. Scammers’ Imitation of Initial Coin Offering
Fake ICOs are those that make very high profit earning promises on the investments made, but they are con-operations meant to defraud you. There has been a shift in these cases in the recent past although new investors are at the risk of being conned.
How to Avoid Fake ICOs
Research thoroughly: Majority of researchers agree that investors should always carry out due diligence on the team behind the ICO, the whitepaper, and 3rd party audits.
Check for regulatory compliance: There are various genuine ICOs which are normally required to be registered with different regulatory authorities. Check on their status before you invest with them.
Beware of unrealistic promises: Words such as ‘free’ should trigger alarm and make you wonder what this is all about.
3. Ponzi Schemes
Ponzi schemes are pyramid like investment scams where investors in the scheme are paid with money from other investors not profits from the investment. They always end up in bankruptcy thus resulting in many investors losing their hard earned monies.
How to Avoid Ponzi Schemes
- Avoid guaranteed returns: Be wary of any investment promising guaranteed returns with little or no risk.
- Understand the business model: Ensure you fully understand how the investment generates profits.
- Check for transparency: Legitimate investments will provide clear information about their operations and profits.
4. Rug Pulls
Rug pulls involve cases whereby the developers of a given cryptocurrency project will steal all the money and run away leaving the investors holding worthless coins. This is rife particularly within decentralized finance projects that are mostly found in the Ethereum network.
Nonetheless, learning and understanding how to avoid rug pulls are very important in the current world that is dominated by cryptocurrencies.
How to Avoid Rug Pulls
- Research the development team: Investigate the credibility and reputation of the team behind the project.
- Review the project’s liquidity: Ensure the project has a sufficient and locked liquidity pool.
- Analyze the smart contract: If possible, have a trusted developer review the project’s smart contract for vulnerabilities.
5. Fake Wallets
Fraudsters develop bogus crypto wallets with the aim of getting individuals’ private keys and, consequently, their digital assets.
How do you ensure that you are not duped into buying fake wallets, at a glance?
Download from official sources: Be sure to download wallets only from official site, or the app store.
Check reviews and ratings: As a basic guideline it is always wise to read users feedback and ratings before installing any wallet.
Use hardware wallets: To improve the security of your coins even further you can use a hardware wallet, which stores the keys offline.
6. Social Engineering Scams
Social engineering scams are cases whereby an individual is tricked into releasing information or making transfers. This can be through use of Facebook, twitter, calls or even physically meeting the person.
How One Can Safeguard from Being a Victim of Social Engineering Scams
Be skeptical of unsolicited contacts: It’s always wise to be wary of people you have never met asking to get some personal details from you.
Verify identities: In the event that you have a request from someone purporting to be from a rightful authority, it is important you confirm the authenticity of the claimant on your own volition.
Educate yourself: Inform yourself petr common social engineering tricks.
7. Impersonation Scams
Cybercriminals may masquerade as influential people within the cryptocurrency markets with the aim of swindling people out of their money. This can be in the form of fake giveaways, fake donation requests, among other scams engaged in by the celebrities.
That is how to avoid impersonation scams
Be skeptical of giveaways: Staying away from those ‘offers’ that make you to first send the promoter some cash.
Verify social media accounts: One has to pay attention to the verification badges of the user-profiles and be wary of fake profiles with a small number of followers.
Report suspicious activity: In case you come across any, you should report that particular scam to the running platform to avoid other people from being scammed.
Conclusion
Hence, being alert and CMC aware is the best way to avoid falling for the crypto scams in 2024. The reason is that with time, new approaches to scamming emerge, and following the enumerated guidelines allows you to make deals in the crypto space more securely.
