How to Avoid Common Crypto Scams

 

Basically, a scam is an act of deceiving someone after winning their trust or maliciously accessing their personal information. Scams are unethical and unacceptable in no means.

Whether you are confused tat cryptocurrencies are reliable or not, there one thing we all agree on that is a coin frenzy like crypto can attract corrupted individuals willing to target on monetary greed. We understand some of the scams and believe traders should take caution and be safe when trading cryptocurrencies.

According to the stats, scams are constantly affecting the crypto industry. One reason may be that crypto market receives many unwary new investors every day. A recent report by Crypto aware disclosed that scammers and hackers scammed more than $2.3 billion in the past eight years. Therefore we ask the question: 

Why there are so many crypto scams?

The main motive behind any scam is to gain financial returns. However, fraud or scams can be in any field or business, but for various reasons, online crypto trading is on the topmost of the list of most expensive scam cases. Know why:

•  Crypto industry is decentralized

As we all know, the blockchain and crypto industry is still in its processing period. Even many countries didn’t yet legalize the use of cryptocurrency. Also, blockchain technology is not controlled by any authorized organization so there is no scope of higher authority to protect. What is actually encouraging scammers to seize the lapse in the distribution of blocks to cheat the less informed traders? 

• Lack of proper advancement in the technology

As I already mentioned, the crypto industry or blockchain is still in their drafting mode, so there is a lot of scope of new technological advancement. So many often scammers find a loophole to scam or hack, as there no sign of tracking and retrieving lost assets.

In regular institutions like a bank, banks work as a middle man and secure funds but in the blockchain industry there is no sign of middleman, yet scammer is free to make their way to the catch.

However, many crypto platforms have or trying their best to make the encrypted technology more secure and keep crooked people away. But unfortunately, the majority of scam happens to naïve people who are not yet settled on a particular platform.

Let us look at the top 3 crypto scams of all time.

• Ponzi Schemes 

Ponzi schemes work like pyramid schemes. These scammers mostly make their way to the blockchain by paying existing members the dividends brought in by the new membership sign-ups. Hence these groups can easily defraud as long as the membership ratio is balanced.

Why do we consider it a scam?

In a standard Ponzi scheme, no products are sold, the members rely on the investment made by their new members. The system crash when the number of new members is higher than the old members.

In the crypto industry, the Ponzi scheme will scam new people to sign up and witness their investment multiply more than ten times and then the members will advise investing heavily to earn quick rewards.

One of the most infamous Ponzi scheme names is Bitconnet. The scheme affected thousands of people who invested everything in it. Eventually, the numbers grew very soon and ultimately the ship sank as the US government banned it. As it breakdown the prices of Bitconnent also ran-down.

Ponzi schemes use online campaigns, online scams and computer programs to get a hand on desperate people who do not suspect.  The government of the United States has clearly legislated to ban pyramid schemes at all levels.

• ICO Frauds 

Before we dig into the details, ICOs are legit and secured investments when the company takes care and sets rules and regulations.

So what are ICOs?

Many of you might know or don’t know that ICO is Initial Coin Offering. By means, it is a type of token offered in the form of a coin by the cryptocurrency platforms are yet to be developed. Many investors buy these token in advance to make their hold on the platform beforehand it is launched.

The fraud schemes start when companies offer fake ICOs. When a company requests potential buyers to buy their tokens in advance, but in reality, there will be no platform to be launched. An ICO is a serious offense in the crypto market, but criminals still practice it.

Because of the fake ICO practice, many governments including China has completely banned ICOs altogether. In the US, the company as to launch ICO with strict regulations tat effect in marketing and overall cost of coin development.

A popular example is the Centra Tech, which was associated with DJ Khaled, who invested $32 billion on their platform. Luckily, in 2018 the company was cared for and shut down for fraudulent activities.

• Phone Porting: 

In our earlier scam examples, we only mentioned the scams that have to affect naïve or beginner people. But phone porting is far more advanced and targets established crypto personalities. The technique is quite an old school rather; it involves taking control of someone’s cell phone line using another phone.

How is it work?

Well, the hacker takes control of your phone remotely and take out all the valuable information stored in the mobile such as contacts, names, passwords, etc. then they personate themselves as you and hack your account with accessing passwords.

Another method includes the scammer calls and hacks the line so they can hear your calls to know the information.

How to avoid phone porting? 

We can be assured that there are several remedies for this malpractice

• Change your passwords often
• Always transfer your phone line to a new line
• Contact your service provider for any suspicious activities

How to avoid scams?

Every problem has a solution. However, a problem so dynamic such as online scams one solution is not enough. It is even more difficult wit blockchain; which is not a multinational business. So here are our few suggestions to avoid being duped.

1. To avoid scams you need to be more cautious, keep all private information safely such as your gains and escapades in the market should always be kept to you. Scammers can reach your social media, email and even phone calls. Keeping it a secret is the best way.

2. Always secure your documents and information with strong passwords. Avoid having the same password in all accounts. And secure your accounts with two-step verification.

3. Ask your service provider to secure your phone line with a private PIN for you; this will prevent access by any third-party scammers.
4. Avoid having business with illegitimate companies. Check the company verification on their portfolio before having a business. Always check for the registration under the responsive regulator in its respective country.

5. Lastly, do not entertain spammy emails. In case you get any fraud emails always delete it without clicking on the provided links.

In the end, always stop and think if the opportunity sounds reliable to you or not. Don’t forget to do your research before committing anything.  Always ask a question and verify the information before having any trade. And finally take your time to make a decision, stay cautious while trading online.

Misconceptions About Blockchain You Shouldn’t Pay Attention

In the past few years, there’s so much as been said about the Bitcoin, Ethereum, Cryptocurrency, and Blockchain. The blockchain industry is moving fast; it’s unstoppable and unpredictable. There are so many things going on at once. And we are still wondering the spectrum of Blockchain and players involved. Furthermore, in the world of digital media and cryptocurrency, there is a trend of phenomenalism, which makes understanding of important issues difficult for some people. That is when the misconceptions spawn up. These views are stands by the general public, but sometimes it goes way too far. Here are a few misconceptions about blockchain.

Many people don’t know or hold an utter misconception about it, where they make baseless comments like Blockchain is used for criminal activities or Blockchain is not safe. If you are new in Blockchain, you are probably wondering whether these rumors are true.

Well, here in this article we are going to break down ten biggest misconceptions about Blockchain Industry.

1. There is only one blockchain: What general public is not aware that there are many different technologies that carry the name of Blockchain. They might come in public, semi-private or private variations. Most of these programmed as open or closed source and used for general to specific purposes.

The misconception takes place because the common denominator is these technologies are shared by crypto. They have some and maintain a harmonious mechanism. Bitcoins blockchain, Ethereum, Hyperledger, Corda, and IBM also the Microsoft’s blockchain, all have distributed ledger technologies.

• Blockchain is only for the finance sector: While the debut time, Blockchain created waves in the finance industry. One reason for that would be its first application in the Bitcoin cryptocurrency. Although after a while, we observed different application areas of Blockchain, finance is deniably evident among them. Outside the finance sector, Blockchain can be applied in real estate, healthcare, and even in the education sector. Besides, Blockchain can be used for personal purpose as well, to form a digital identity. Also, individuals can utilize Blockchain for many other uses, such as keeping proof of medical data. It will also help you to get pharmaceutical exchanges from the companies.

 

• Blockchain and Bitcoin is the same thing: We know that Bitcoin is the most significant utilization of Blockchain. So many people get confused if the two things are the same. To clear out the confusion, we could explain that Bitcoin is a peer to peer payment technology which uses the distributed ledger called Blockchain for the network. Therefore, these transaction histories are saved in each block, which is connected with the previous blocks thus creating a chain. Every block holds the complete record with all the time information about the transaction that happened in the network. The blockchain technology is a fully transparent and permanent program; no one ever can change or remove any record from it.

 

However, Bitcoin is a cryptocurrency that is used for digital peer to peer payment; in this process, no third party like the bank is not involved. Bitcoins are stored in digital wallets owned by individuals.

• Smart contracts as fair value: The Blockchain has amazing utilities; smart contracts are one of them. It is a digital contact that is stored in the ledger and shared between the peers securely. It consists of all the information any regular contract should have, once the conditions are met and agreements are agreed, that contact can stay enact and neutral to avoid any future mishaps. However, many people have this misconception that smart contacts have legal value. Although smart contracts are beneficial when combined with the Internet of things (IoT) but sadly, it doesn’t have any legal value yet. Maybe in the future, we can expect the possibility.

 

• Blockchain is just a storage mechanism: Another misconception about Blockchain that has widely spread that it is a storage system. Many naïve people seem to think it works like a cloud, which is an online storage system. In defense, Blockchain undeniably store data, but it cannot store any physical data such as word or pdf files; instead, it can provide the existence proof of the information. It uses various codes to certify the existence of the data.

 

• Blockchain is for criminals: The most bizarre misconception about Blockchain is that it has an association with criminality. Maybe the decentralization and anonymity can be useful features for criminals. But a lot of you don’t know that most of the public Blockchain is easily traceable. Also, it has some incredible features which help to track any illicit activity on the ledger. Most of the Blockchain offers pseudonymity to help citizens have secure transaction experience in an economically and politically unstable environment. If you can trust banks for your money with all the corruption, Arguably Blockchain will be one of the best transparent solutions to keep your money.

 

• All blockchains are public: Most well-known blockchains are indeed open to the public for good. The accessibility and transparency may vary and can be semi-private or private. On the public Blockchain, everyone can see all the transactions, and anyone can participate at any level of the consensus process. However, in the private Blockchain, the participation is limited by the parties, but with necessary codes, they can enter the transaction.

 

• Blockchain is going to end the Fiat economy: The most unique feature of this revolutionary technology is that it eliminates the financial intermediates. This certainly has opened the door to the new global economy. That makes many people worried this might reduce traditional currency usage. Which may be at some point can be accurate in the future. But not anytime soon.

 

• Tokens and coins are the same things: Many people not related to Blockchain don’t know that tokens and coins aren’t serving the purpose. In the crypto, world tokens stand for store complex level value like property, utility. And coins as only one utility that is used as currency. Also, symbols can capture loyalty points and mostly used in significant investments such as real estate transactions.

 

Blockchain is not reliable: Last but not least the most common myth about Blockchain is that it is not secure or dependable. But in actuality, Blockchain is created to make money transfer more confident than ever, and for that, the technology consists of numerous features to assure that. Blockchain creates a peer to peer ledger connection so that the transaction information stays in between only the parties.

These are the misconceptions about blockchain you shouldn’t pay attention.