What is crypto?
Cryptocurrencies are online currencies created and maintained by a decentralized network of computers.
“Blockchain” is a complex computer network that records every transaction that occurs, making them completely transparent.
There are more than 700 virtual currencies in existence. Bitcoin, the most popular, has the highest market capitalization with $133.9 billion. More than $600 million has been stolen from crypto wallets.
Bitcoins are transactions between two people that are recorded on a blockchain. Unlike credit card or bank transactions, when you pay for something with Bitcoin, your transaction is permanently recorded in the blockchain.
Whether the digital currency is private, public, or a hybrid, the blockchain is considered a public ledger and completely anonymous.
The rise of crypto scams in the crypto environment
There are many reasons to be wary of crypto companies and startup incubators. In short, it’s harder to know what’s legitimate.
A recent report from Dow Jones indicates the Securities and Exchange Commission (SEC) received over 900 complaints from early investors from July 2017 to June 2018. More than a third of the complaints were against crypto startups and incubators.
The level of vitriol and animosity surrounding the nascent crypto industry seems like a calculated move by scammers to capitalize on users’ ignorance. The intense debates over what crypto is for and what it’s not (like bitcoin) make it easy for scammers to create ridiculous ads and messages.
This is not a recent phenomenon. Cryptocurrency scams have been around since the initial bitcoin boom in 2017.
How to avoid crypto scams
Bitcoin scams are an ever-present threat, and everyone is susceptible to them. Scammers don’t just rely on flashy e-mails or over-the-top self-promotion, though. They can also build their brand through physical promotions or physical products.
To avoid getting scammed, experts recommend staying clear of anyone who claims to be a lawyer, a trader, a “trusted cryptocurrency advisor,” or a “founder” of a cryptocurrency company. Those are red flags.
Scammers prey on people’s gullibility. That doesn’t mean you should judge everything based on a scammer’s presentation, but remember that they’re still people. Don’t trust them blindly.
Instead, consider what crypto company a person or organization is promoting.
Scams seem to be everywhere, so keep these scams in mind before you hop on board any site promising “financial freedom.” Like the story of The Universe’s cryptocurrency, the best thing you can do is watch what you click and think through your investment strategy carefully.