Bitcoin was first launched in 2009, and since its emergence, cryptocurrency has gained significant popularity over the years, with more people investing in other digital currencies such as Ethereum, Binance, and even Dogecoin.
According to Justin Asher, head of Marketing and Strategy at upnup, one of the major reasons for the rise in popularity of cryptocurrency has been the ideal behind the digital currency as a decentralised form of exchange. This means that crypto has a form of monetary value which has no ties to and is not controlled by any government.
Asher said, “Today, one in 10 people are investing in cryptocurrency, with around 65% of those investing in crypto having only started doing so in the past year or two.”
“However, as its popularity continues to grow, so does the risk around it as malicious actors seek to exploit any vulnerabilities associated with the rising interest in digital currencies for monetary gain.”
“As more people attempt to make money from cryptocurrencies, criminals and con artists aren’t far behind,” Carey van Vlaanderen, CEO of ESET South Africa, said.
Why are cryptocurrency scams on the rise?
“Fraudsters are masters at using current events and buzzy trends to trick their victims. And they don’t come much more zeitgeisty than cryptocurrency. Headlines and social media posts are partly to blame, creating a feedback loop that only adds to the hysteria over virtual currencies,” van Vlaanderen said.
– Few regulations that govern the cryptocurrency market for investors in comparison to the the traditional stock market.
– Major interest from media makes it a regular trap for phishing and scams.
– High cryptocurrency prices attract consumers that dream of getting rich in a short amount of time.
– Social media buzz around crypto.
– The lure of mining coins for money which phishers use to hook people.
What does a crypto scam look like?
Scammers often try to take advantage of the fact that cryptocurrency is fairly new to the everyday man and prey on people’s lack of knowledge of crypto to make them buy into a scam.
Methods that scammers use to trick people include:
– creating fake legitimacy through bogus websites or crypto trading platforms that imitate authentic sites and platforms;
– investment schemes the scammers will claim are endorsed by celebrities or people that have a high level of authority in the finance sector;
– rug pull scams where investors are unable to withdraw their funds after buying in;
– romance scams where scammers build relationships online;
– phishing scams where people are tricked into sharing their personal crypto wallet information or giveaway scams where people can win prizes if they share their personal details.
How to identify a crypto scam?
Asher said: “The easiest way to identify a possible scam is that they often offer significantly high returns or rewards within a short amount of time.”
“They also often assure potential buyers that they’re guaranteed these returns and entice buy-in by offering free money in cash or cryptocurrency. As the old adage notes, when something looks too good to be true, it usually is.”
What does legitimate crypto buying and investing look like?
People that are looking to invest in crypto should research the site, platform or company they want to invest in to ensure that the backers are legitimate and the crypto is being sold by a reputable firm.
Asher said that simple online searches with the company’s name alongside the words “review”, “scam”, or “complaint” should bring up any information that might point to the trustworthiness or credibility of the company.
Potential investors can also research the names of people associated with the company on LinkedIn to make sure that they are really employed at a company and if their profiles are real or not.
“It is also less risky to invest in very well-known cryptocurrencies such as Bitcoin and avoid lesser-known coins, especially if they are experiencing a sudden upsurge,” Asher said.
“It’s best to start off with small investments until you’re more comfortable with the way everything works. As such, micro-investing is a particularly advantageous option for new and wary crypto investors as it only involves the injection of small amounts of money, frequently.”
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