Cryptocurrency is an emerging technology, and it hopes to replace traditional money. Its major appeal is that it is decentralized, which means there is no authority like a bank or a government overseeing the virtual currency.
The idea is that you have complete control over your own money. For example, two people anywhere in the world can directly send each other money without a bank involved.
The technology that powers cryptocurrency is called a blockchain. It is a super-secure online database that is very difficult to tamper with. Rather than a central database that may be vulnerable to hackers, the blockchain database is widely distributed across computers part of that network. And, with all these copies of the database circulating, it's incredibly difficult to manipulate or to take it down.
The Cryptocurrency industry is flying nowadays. It is attracting a lot of excitement, but a lot of scammers as well. Let’s see what you need to know and what you need to avoid, to keep your money safe;
1. Be careful about crypto exchanges;
The valuations for cryptocurrency companies can be wildly high, which is why there's so much buzz surrounding it. But that also makes it a fertile ground for scammers.
To buy cryptocurrency, you have to use real money, and while you don't have to deal with a bank, you do have to deal with a third-party exchange. And there are many examples of these exchanges closing overnight and losing people's money in the process, like Bitconnect, for example.
Bitconnect was once a very popular exchange that wiped out roughly $2.5 billion in value. It has shuttered operations after several accusations that it was operating a Ponzi scheme.
Bitconnect attributed its closing to bad press and attacks on the platform.
2. Do not fall for giveaway scams;
On Twitter, you will also find crypto giveaway scams, like when scammers impersonate a well-known figure and then set up a fake giveaway. They will impersonate someone like Elon Musk, often mimicking the handle, avatar, and tweets of the original account. And then they will use the fake account to con people into thinking that Elon Musk is giving away cryptocurrencies online. All you have to do is send him your own money first. Needless to say, it is not legit at all. If something like this has ever happened to you, you are not the only one.
You can find these scammers on Telegram as well. They randomly pick strangers and tell them that there is a huge giveaway and again, they just have to give them their names and wallet addresses. In summary, if you ever read the term “crypto giveaway”, it is likely a scam you should be aware of.
3. Pump and dump schemes;
Some scams are even more elaborate. Scammers will create fake Twitter accounts to run coordinated disinformation campaigns, all just to manipulate the price of a cryptocurrency. For example, John McAfee, the man behind McAfee Antivirus software, promoted different cryptocurrencies on Twitter all the time. BUT there was something unusual about that one. There are two L's in official McAfee, not one. So, when this fake account promoted a specific cryptocurrency people believed it and bought a lot of the coin. But on Telegram, people were told to promote the bonus tweet and were given specific times to buy and sell the coin. This is a really clear pump-and-dump scheme. This usually happens with new crypto projects, which are not listed on any exchange.
Culled from https://walletinvestor.com by Bolaji Afolabi
Bolaji is the Lead Partner at Globalclique, where he works as a resourceful Technology Expert and a Competent E-Business Solution Architect.