Scams and Cryptocurrency – How They Work and What to Watch Out for

Cryptocurrency owners number hundreds of millions today, and estimates anticipate further rapid growth. Increasing numbers of people owning cryptocurrencies have led to an increase in scams.

Cryptocurrency scams are prevalent for several reasons. Several steps can be taken to prevent becoming a victim.

Scamming has Become Easy

A fundamental change in scamming is the ease with which scammers can reach millions or billions of people. With the internet and other technologies changing the rules of the game, cryptocurrencies stand out as the leading edge of cybercrime. Scammers profited from their popularity. Two brothers from South Africa, for instance, defrauded cryptocurrency investors of $3.6 billion in 2021.

So how do they do it? Cryptocurrency scams can be divided into two different types.

Fake Coins

One targets cryptocurrency investors, who tend to hold risky portfolios. They tend to be younger investors under 35 who earn high incomes and are employed in engineering, finance, or IT. Scammers create fake exchanges or coins for these types of frauds. “Squid Game”-themed cryptocurrency coin SQUID is one example. When the coin soared in price, its creators disappeared with the money.

One variation of this scam involves a process known as an initial coin offering, promising fast and large profit. But unlike the TV show, no coins are issued. Many coin offerings turn out to be fake. Due to the ever-evolving nature of these new coins, even educated investors can fall victim. As with all financial ventures, you have to research before buying cryptocurrency. Go to https://cryptomeister.com/bitcoin and learn everything you need to know to become an investor.

Deception and Blackmail

The second method used by scammers is simply using cryptocurrency as payment. This scam targets all ages and demographics. 

Ransomware cases, computer repair scams, romance scams, sextortion cases, Ponzi schemes, etc. To hide their identities and evade consequences, scammers take advantage of cryptocurrencies’ anonymity. 

Nearly 98% of ransomware cases demand Bitcoin as a payment method. The United Kingdom’s National Cyber Security Center reports that sextortion scams often ask for cryptocurrency payments. Cryptocurrency is increasingly used in romance scams targeting young adults. It should be a red flag if you are asked to transfer money over cryptocurrency. 

Anyone Can Fall Victim

Due to high levels of vulnerability in this group, more work has been done in the area of financial exploitation to study and educate elderly scam victims. Scam solicitation is particularly susceptible to those with certain traits, which include differences in education, risk-taking, cognitive ability, and self-control.

In addition to older adults, young adults are also vulnerable and becoming victims of crime. Due to the rarity of recouping funds lost to cryptocurrency scams, they are especially painful.