MyBroadband hosted Coindirect’s co-founder and Chief Product Officer, Stephen Young, in its exclusive forum. Here,…
The end of the year 2018 cryptocurrency bull run is drawing near and we’re saddling up with layers of security to avoid any potential cyber compromise.
The cryptocurrency space has witnessed a number of scams since the launch of Bitcoin (BTC). But, this does not make cryptocurrencies and the crypto industry a scam – a common preconceived misconception. In fact, many traditional economic industries, including governments around the world, have implemented the use of cryptocurrency and blockchain for practical use cases.
However, cryptocurrency scams are present within the cryptocurrency ecosystem and many large cryptocurrency exchanges have been hit by cyber hacks and phishing sites; for example, the Binance hack and infamous ‘Bitcoin Code’ phishing sites.
By definition, ‘phishing’ is “the fraudulent practice of sending emails purporting to be from reputable companies in order to induce individuals to reveal personal information, such as passwords and credit card numbers”.
Coindirect looks into the different types of cryptocurrency scams to watch out for.
1. Phishing websites
In the case of cryptocurrency websites, scammers duplicate the websites of reputable cryptocurrency companies in order to scam users into investing their hard-earned money and without the option of a refund. Of course, these scammers protect themselves by placing a “Disclaimer” at the bottom of their website. Their “Terms and Conditions” may even include a sentence saying that they are not the legitimate company. But by signing up to the website’s service/s, it’s a term you automatically agree to whether you read the phishing site’s T&C’s or not.
2. Ponzi schemes
For some cryptocurrency investors, it’s still difficult to spot a Ponzi scheme. In lamens terms, if you come across a cryptocurrency project that actively encourages the recruitment of new investors to maximise your profits and promises absurd returns, it’s definitely a Ponzi scheme. And those recruiters should be watched out for on social sites such as LinkedIn – commonly used to scheme crypto investors and enthusiasts into thinking it is some sort of a professional cryptocurrency project.
3. Fake cryptocurrency wallets
Fake digital cryptocurrency wallet applications are common on the Google Play Store. That’s why it is important to opt for a globally reputable online cryptocurrency wallet, like Coindirect, or a hardware wallet such the Ledger Nano S or Trezor hardware wallet. Fake wallets, generally, promise the seed and control of your funds and are common during the launch of Bitcoin forks.
‘Catfishing’ is globally renowned as a synonym for ‘impersonation’. Here, many scammers create fake Twitter and Facebook accounts to ‘catfish’ (impersonate) a reputable cryptocurrency project or the official person behind the project. You can also think of it as ‘phishing’, but for social media accounts. For example, Twitter has a number of catfish accounts for Vitalik Buterin. Scammers have also gone as far as to provide false support services to gain access to investors’ crypto funds.
5. Fraudulent Initial Coin Offerings (ICOs)
It’s not easy to point out a fake ICO, as many generally persuade people to buy into tokens and create marketing campaign hype about it. New cryptocurrency enthusiasts are common victims; seeing it as an opportunity for a new cryptocurrency investment from which they can gain high returns. So, beware of copied Whitepapers, no roadmap, anonymous company teams, ignoring of difficult questions, fast-paced implementation, the inaccuracy of written versus said words and token sales promising high returns from simply hodling.
7. Pump and dumps forums
Telegram, Slack and IRC are the most widely-used social forums for cryptocurrency groups. Although legitimate, they are also forums where pump and dump groups are created. How it works is the price of altcoins that have low market caps are manipulated – members who act fast get a cheap price and latecomers suffer plummeting prices within minutes. The best thing to do is to track the cryptocurrency market yourself using peer-to-peer marketplaces or cryptocurrency exchanges like Coindirect.
8. Cryptocurrency exchange scams
Keep an eye out for cryptocurrency exchanges that suddenly appear out of nowhere without any announcement or social hype to gain user-interest; as well as exchanges that struggle to stay relevant in the market. According to Bitcoin, few of these so-called “cryptocurrency exchanges’ include 01crypto, Btc-cap, Capital-coins, Coinquick, Cryptavenir, Crypto-banque, Crypto-infos, Cryptos.solutions, Cryptos-currency, Ether-invest, Eurocryptopro, Finance-mag, Gme-crypto, Gmtcrypto, Good-crypto, Mycrypto24, Nettocrypto, Patrimoinecrypto, and Ydconsultant.
Coindirect is running an XRP and Cold Storage Hardware Wallet Giveaway
For the month of October 2018, we’re giving away 150 XRP* and one Nano Ledger S hardware wallet*.
Follow the below links for more information on how to enter each competition.
- 150 XRP: https://blog.coindirect.com/ripple-giveaway
- Ledger Nano S: https://blog.coindirect.com/ledger-nano-giveaway
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