Cryptocurrency

Crypto scams any crypto beginner should know before starting investing

By Ryan Bradman | January 19, 2022

Table of Contents

Crypto scams. Everyone’s talking about them. But… what the heck is a crypto scam? If you’re new to the world of cryptocurrencies, this term might be one you’ve only heard on TV and social media. And if you know it all, here’s some advice: stop reading this article right now and buy some bitcoin! A crypto scam is any form of fraud that targets cryptocurrency investors with the promise of quick profits. There are many different ways in which scammers try to invest your money. The most popular methods of crypto scams are:

Crypto scams any crypto beginner should know

1. ICO Scams

ICOs are a relatively new form of investment. They’re crowdfunding: you give someone your money, and they tell you they’re doing some extraordinary project, it’s going to make you lots of money, and then… nothing happens. It’s a scam.

2. Bitcoin Investment

With this one, you’re promised that a high-profile investor will suddenly start buying bitcoin. It doesn’t seem like much, but then 1,000 people call claiming to be that investor and everyone want their money back. They offer you a commission if you publish the news “first.”

3. Cloud Mining Scams

This is a common one, too: you buy some bitcoin mining hardware, and it never arrives or simply doesn’t work. Or maybe the website disappears from the internet in a matter of days: another example is Bitconnect. Come to think of it; cloud mining is a general form of misdirection.

4. Fraudulent ICOs

There’s no ICO that doesn’t have a scam behind it. And if there is, they will be the first to announce it. ICOs are built to look like an easy way to make money fast. You open your wallet and send everyone your money, and then… Nothing happens! This is what you get for “investing” in an ICO.

5. Mining Scams

The goal of mining scams is simple: convince you to buy mining equipment from a random person who promises high returns on investment. These people are called “mining hardware resellers.” They make a profit selling clients’ mining hardware to someone else.

6. Phishing Scams

If you follow online broadcasts of cryptocurrency experts, they will all warn you about phishing scams. These messages pretend to be from a significant platform or exchange, leading you to send your login details (which they then use to steal your money). This is a prevalent one, and it’s difficult to avoid.

7. The Recovery Scam

This is another one you’ve probably heard about. It happens when a hacker breaks into the email account of a cryptocurrency exchange and then, pretending to be the company, sends out a message to all their users promising 24/49 hour recovery times of their stolen money. To do this, they will ask owners of wallets to send small sums of bitcoin as proof that they own that wallet. If you fall for this and send them money, same thing again: your money is gone forever.

8. Ponzi Scams

This is one that you can’t avoid. It is an obvious scam since it involves no investment, just a promise of a significant return. You deposit your money with a company, and they promise to “invest” on your behalf for profit. The catch, though, is that their profits are made not from the investments they make on your behalf but from the funds coming in from new customers (and those who invested early on). If enough people start to fall for this, the company will stop investing, and you’ll see your money disappear.

There are MANY more ways for scammers to target people looking to invest in crypto. “Online Casino Scams” are new scams that pose as casino operators and promise increasing profits every week. They follow the same pattern as other scams: they offer easy money and quick returns.

How can you avoid a crypto scam?

The best thing to do is stay away from all these scams. These are the most common types of cryptocurrency scams, but many more are out there. The rule here is simple: if you don’t know what you’re doing, don’t invest in it!

Stick to the proven cryptocurrencies: Bitcoin, Ethereum, Litecoin, and nothing else for now. You can start trading them as soon as you set up your bitcoin wallet and start earning some money by mining or staking (staking means holding coins in your wallet so they will generate new coins).
If you’re looking to invest in new coins, make sure to do your research first. Take a look at our “Cryptocurrencies List” and choose a cryptocurrency that is reliable and that you would be happy to recommend to your friends if they ask you for advice.
To ensure your investment is safe, only deal with companies with a proven track record. Forbes has listed the INX cryptocurrency trading platform as one of the best cryptocurrency exchanges. We advise you not to trade with companies you have never heard about or whose location is a mystery. INX is registered in the USA and operates by all local regulations, making it a reliable partner to trade on.
When you invest in cryptocurrencies, only invest what you are willing to lose. If you’re thinking of investing $10,000 in a Bitcoin or Ethereum investment: can you afford to lose it? You can easily do the math and see how much of your life savings this would be.

Conclusion

Cryptocurrencies are a fantastic investment opportunity. But you have to be smart to profit from them. If you do your research, you’ll find out what these are and how they work, and then you can buy some and reap the rewards! There are many different types of cryptocurrency scams out there, so you must know how to avoid these. Stay away from new ICOs and mining scam companies if they sound too good to be actual. And don’t fall for phishing scams or other financial misdeeds.