Cryptocurrency Scams: How to Spot and Avoid Them

With the widespread applications of digital currencies, the world has witnessed a rise in fraudulent players who take advantage of those individuals who are not careful with their assets. In the year 2021, crypto fraudsters were on the rise. However, with the continued expansion of Web3 in 2023, the crime rate has decreased.

When transferring cryptocurrency, it's important to keep an eye on potential scammers. But how to spot crypto scam? This is the common question that every investor has, no matter if he/she is a newbie or a seasonal investor. Therefore, in this article, we will discuss the prevalent crypto scam and how you can avoid that.

Cryptocurrency Scams: Brief Introduction

Scam in crypto can take multiple forms. Just like financial criminals may steal money from your bank account, crypto scammers will go to any length to get your cryptocurrency. Therefore, to protect your crypto assets, it is necessary to learn “how to spot crypto scam” as it will help you strategize your investment and protect you from bearing any type of loss.

How to Spot Crypto Scam

It's easy to find crypto scammers when you know what you are looking for. Generally, a legitimate cryptocurrency provides readily available disclosure, including complete information about the blockchain and its associated tokens. Therefore, the below-mentioned ways may answer your questions about how to spot crypto scam and may help you spot the crypto token scam with ease:

Read the White Paper

Cryptocurrencies undergo a development process. Before the start of this procedure, a white paper document is available to the public to read. If such a document is genuine, it will thoroughly explain the protocols and blockchain and will explain how the entire network works. On the other hand, fake cryptocurrencies don’t have any white paper. If, by any chance, they generate a document specifying the currency, it will not be well written and will not include how they are likely to use the funds.

Identify Team Members

Whitepapers must always highlight the founding members and creators of cryptocurrency. However, in a few cases, such as an open-source crypto project, you may not find any identified developers in the whitepaper, but all the comments and conversations can still be found on GitHub or GitLab. Moreover, a few of the projects use forums and software like Discord to interact with their audience. If you can’t locate any of these aspects and the whitepaper is filled with mistakes, it's an obvious example of a scam.

Free Crypto Giveaways

An opportunity to earn free cryptocurrency should be treated with utmost caution, as nothing is free in this world, not money, nor crypto. But if someone is mentioning that he will provide free crypto giveaways on registering on their platform or by engaging in some activities, remember that you only need to send them your public key, which is merely an address where people may send you cryptocurrency.

But if he is asking for personal and bank information and your private key, then it is a crypto token scam.

How to Avoid Crypto Scam?

After you know how to spot crypto scam, it’s important to know how you can avoid such scams. Therefore, before investing in digital assets, make sure to consider the below-mentioned things:

• Do not take any information at face value. Examine the claims around any investment, especially if they appear too good to be true or promise to get rich quickly.
• Do not believe anybody who contacts you personally and asks for crypto payments or provides you with an investment opportunity.
• Never share your private keys with anybody.
• Do your own research before investing in any cryptocurrency.
• Enable two-factor authentication on each cryptocurrency wallet or exchange you use.
• Always double-check the URL of the website. Scammers trying a phishing scam will replicate the URL of legal sites and swap letters and numbers.
• Reject any offer that requires an upfront cost, particularly if that fee must be paid in cryptocurrency.

Conclusion

The cryptocurrency world can be complex and at the same time it can be volatile.

Therefore, to deal with the intricacies of the crypto industry, it is necessary to learn about the risks involved in cryptocurrency, including how to spot crypto scam. This may help investors to protect their assets and prevent unauthorized access to their personal information. Additionally, by following the measures outlined in this article to avoid scams, investors may safeguard their assets from cybercrime.