The invention of cryptocurrencies has revolutionized the domain of investment. As of 2023, however, there are over 400 million users, making it a fancy technology with great potential for investments. Nonetheless, it also appeals to a good number of fraudsters who come to manipulate unsuspecting individuals. Therefore, it is essential to learn how to identify pyramid and Ponzi schemes and avoid cryptocurrency scams.
All that glitters is not gold. It is a common tactic for scammers to promise higher-than-normal returns with less or no risks. For instance, some fake cryptocurrency income camps such promises can claim that one can make a 100% return within a week. Unlike betting on any sport or game, all investment strategies that have been formed do not and will not promise returns, especially risky cryptocurrencies.
As a report from the Federal Trade Commission (FTC) indicated in 2021, fraudulent schemes that employed digital currency 2021 led to over $1 billion in losses.
Another common strategy is the development of false versions of websites or mobile apps that mimic the designs of well-known cryptocurrency sites. Such fake pages are often professionally made and can bear close resemblance to the real ones with nearly identical web addresses. After investing their funds, all traces of the user are wiped out, and the money is gone.
Various means of advertising can be employed to target the needs of people, and most of them are efficient, but the cost of the service is relatively high. However, many people who do not limit their expenditure in line with this activity and many other causes tend to engage in this advertisement.
For example, in the year 2020, the Twitter handle of Elon Musk was hacked to run a Bitcoin giveaway, which turned out to be a scam that led to the victims losing over $120,000.
In the realm of cryptocurrency, Ponzi and pyramid schemes envisage returns made possible through investments made by new people to pay out existing investors rather than from profits made, if any at all.
These types of fraud usually implode when the turnover of new participants slows down, and therefore, the members are left with empty pockets. For instance, the OneCoin catastrophe is remembered as one of the worst investment frauds, with investors losing about $4 billion worldwide.
Grounded cryptocurrency initiatives often provide articulate whitepapers with visuals that support their aim, technology, and people. A project would be suspect if it offered no such information or provided scant information.
Many people get scammed because they do not know how to manage their emotions. As scamming happens urgently, scammers make use of false offers such as, “This is for a limited period only” or “This is an exclusive offer” to make their victims act quickly.
Encroachments have a slight edge over cautiousness. Detecting crypto scams is very difficult. It is better to know how to disperse fears and be able to tell any of these signs if one wants to enjoy cryptocurrency. Protect yourself from cryptocurrency fraud, and most importantly defeat the urge To chase sticks Remember, knowledge is power, and in case of uncertainty, the safest choice is to abstain from investing. Seeking help from crypto scam prevention during adverse situations is more appropriate.