Cryptocurrency Scams: How to spot a Bitcoin and Crypto Scammer, Stay Alert!

One of the downsides that accompany most market booms is the criminals looking to take advantage of those ignorant about the market. Similar to fraudsters trying to steal money from your account, scammers look to steal your crypto assets through cryptocurrency scams. Therefore, you need to understand how to spot a crypto scammer to stay one step ahead of their vices.

This article will teach you exactly how. Let’s get down to it!

What are the types of cryptocurrency scams? 

Before we go into the types of cryptocurrency scams, let’s look at the general categories which they all fall into. Crypto scams can be categorised into the following: 

• Techniques aiming to gain access to your digital wallet or authentication data – in this category, scammers look to obtain information such as security codes that enables them o access your digital wallet.
• Crypto scams due to impersonation – in this category, the scammer impersonates someone you will willingly transfer your coins to, such as a trader or investment platform.

Here are the most popular types of cryptocurrency scams: 

1. Social engineering scams

Social engineering scams involve scammers leveraging psychological manipulation and deceit to gain access to vital data regarding a user’s account. Basically, it’s a long game that involves gaining your trust and convincing you to perform certain actions. For example, the scam could be orchestrated to make you think you’re dealing with a trusted individual such as a well-known business, government agency, wallet support agent, friend or more. 

2. Romance scams

Beyond doubt, romance is one of the oldest means used to perpetuate financial crimes and crypto isn’t excluded. Basically, scammers often use dating websites to trick victims into long-term relationships, gaining their trust as a result. Conversations often circle around lucrative opportunities and the eventual transfer of crypto coins after which the scammers completely cut off all communications.

3. Giveaway scams

Another means criminals use to perpetuate scams is giveaways. For example, scammers might pose as celebrities or business moguls within the crypto space to attract attention. Basically, these scammers proceed to make false promises to match or multiply the crypto coins sent to them. Messages are strategically crafted and sent in batches to create a mythical “once-in-a-lifetime” opportunity sense of urgency. They proceed to cut off all communications as soon as they receive the coins. 

4. Phishing Scams

Crypto phishing scams employ the same techniques as regular phishing by targeting the crypto wallet information of victims. Basically, scammers aim for crypto wallet keys through conventional methods like emails with fake links (e.g. a fake email requesting that you reset your Bitmama login password). The individual proceeds to follow the link which leads to a specially created website that is a replica of the original and requests for their private keys or login information.

5. Blackmail and extortion scams

Blackmail is another means used by scams to perpetuate crypto scams. For example, the criminal might claim to have access to sensitive information which the individual does not want to go public and threaten to expose if he or she does not corporate. 

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How to spot crypto scams

Here are some of the ways you can spot cryptocurrency scams: 

1. Thoroughly review the whitepaper

Cryptocurrencies do not just pop out of nowhere but instead go through a development cycle. Before development, a document called a white paper is published to the public. Basically, it describes the blockchain and protocols, and formulas and explains how the network will function end to end. Most fake cryptocurrencies do not do this or tend to publish something that’s poorly written with figures that do not add up. 

2. Verify team members

The white paper should contain the team of developers behind the cryptocurrency. However, there are some cases when the project is open source and does not state the names of collaborators. In such a situation, you can look up the project on GitHub or GitLab. Some also open discord channels for discussions. Not finding any of these could mean the crypto is a scam.

3. How free is it?

More often than not, cryptos with excessive free items or promises to drop coins in your wallet may be an indication of a market inflation scam. Cryptos like this may become worthless after founders sell off their coins and exist.

4. Study the market

You cannot go wrong studying the market. Valid crypto projects will likely not be posting on social media or hyping themselves up as the “next Bitcoin” that you can’t miss out on. This is because crypto projects are basically more designed to be used to leverage blockchain functions rather than a money-making endeavour.

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