Cryptocurrencies are currencies that are always existing virtually or digitally. The technique used to secure cryptocurrency transactions is cryptography. Cryptocurrencies are not dependent on banks or any financial institutions for the management of their transactions. But by using cryptos, sending and receiving payments can be done without any hassles.
Crypto payments are registered in an online database as digital entries describing specific transactions. The transaction entries are recorded on the public ledger when the crypto fund transfer occurs. The storage of the cryptocurrencies is done in digital or cryptocurrency wallets. The cryptos use the encryption method for the verification of transactions. It means, coding up to an advanced level is utilized for the storage and transmission of crypto data between wallets and public ledgers.
Despite the encrypted nature of Cryptocurrencies, Crypto scams are continually occurring and have increased a lot. Therefore, people must protect their crypto wallets from crypto scammers.
Reasons to go for crypto:
There are several reasons to select cryptocurrency.
- Proof of the fraud:
The confirmed transactions are kept on the public ledger. The crypto owners’ identities are encrypted in the records so that they can maintain them correctly. People who’ve bought the cryptos are their complete owners as it is a non-centralized system. The government or banks do not have any control over the crypto market or your holdings.
More than three billion people have access to the internet and don’t have the right to utilize traditional exchange systems. Instead, these individuals can access the crypto market.
- You own it:
Other than Cryptocurrencies, no other electronic cash system exists in which you own the financial asset and its account.
- Instant settlement of payment:
Cryptocurrency has a good name and value because of the Blockchain technology. Cryptocurrency is in higher demand because it is easy to utilize. To start Crypto trading, only a smart device and an internet connection are needed. With them, you can instantly manage your crypto payments and money transfers.
Importance of crypto:
The importance of cryptocurrencies is as follows:
- With cryptocurrencies, you can deal in it, make transactions, and you are the sole owner of your crypto investment. Banks or governments are not involved in the management of crypto transactions. Since you own your crypto wallet, you are the only one who has access to the crypto.
- With the concept of online transactions, there is online theft too. For eg, While you utilize your debit or credit card for online marketing, you reveal your unique information. There is no way to protect the information that you give out, either before or after the transaction. The situation makes you vulnerable to scams. But in the case of cryptocurrency transfers, except for your name, no other details will be necessary, and you have the freedom to decide what data you want to send the recipient.
- People with internet access who cannot use the standard banking systems can access cryptos.
Crypto trading is nothing but the act of speculating crypto price movements through the contract of difference or by buying and selling digital coins through an exchange. For example, you can purchase the crypto if you believe that its value will increase and sell it if you strongly believe that its value will reduce. In both cases, you need a small deposit called margin to have a total exposure in the crypto market.
Procedure to trade in cryptos:
The process of trading in cryptocurrency is as follows:
- At the initial stage, making a cryptocurrency brokerage account is crucial.
- After signing into the cryptocurrency brokerage account, it is necessary to connect your bank account. Most crypto brokerages provide funding through debit cards and wire transfers.
- Choose the cryptocurrency you feel is suitable for your investment. Most crypto traders choose Bitcoin and Ethereum. These cryptos move more predictably when compared to smaller altcoins. Hence, trading with technical indicators can be more manageable.
- Please choose the cryptocurrency strategy that best suits your cryptocurrency trade.
- You can even try automated crypto trading when you find a crypto trading strategy.
- When trading in cryptocurrency, you can store your crypto funds securely in a digital wallet offered by the crypto exchange, so you can quickly access them, or you could store your cryptos in an offline wallet for added security.
Types of cryptocurrency scams:
Several crypto scams are occurring repeatedly, and some of them are listed below.
- Romance scams:
In the crypto romance scam, the scammer contacts the victim through social media or a dating site and establishes a connection, a trustworthy relationship. After setting up a relationship with the victim, the scammer urges the victim to give money in the form of crypto by faking some touching story. After receiving a payment in crypto from the victim, the scammer disappears.
For example, A meets a scammer online through a dating site. Then the scammer starts building a trustworthy relationship and a connection with A. After that, the cheater fakes a story about her family member being sick. Then she requests A to pay money in the form of cryptocurrency. As soon as A pays the money to the scammer, the scammer disappears. However, after a few days, A realizes he needs access to his crypto wallet. At that moment, he realizes he has lost his money in the crypto romance scam.
- Phishing scams:
In phishing scams, the scammers send emails to the crypto users along with a fabricated link. As soon as the crypto users press on that link, it takes them to a fake website where the cheaters can gather their personal details, such as crypto wallet key information.
- Fake job offers scams:
In the fake job offers scam, the cheaters offer an exciting job and pretend to be the recruiters to the job seekers. But they ask for a crypto payment to initiate their job training.
- SIM-Swap scams:
In the SIM-Swap scams, the scammer gets a copy of the victim’s SIM. Through that, the scammer can access the victim’s phone data.
- Blackmail or extortion scams:
In blackmail or extortion scams, the scammer contacts the victim by mentioning that he has some personal information about the victim. Afterwards, the scammer starts to blackmail the victim into paying them money in cryptocurrency; otherwise, they threaten that the user’s data will be exposed.
Several warning signs or red flags can help identify a crypto scam.
- Any promise of high returns on crypto investment is a red flag because no financial investment can guarantee you any ROI, as the investment market rises and falls.
- In cryptocurrency, any investment opportunity that assures free money to you is not a real investment opportunity.
- The coins showing a sudden price increase with no track record is a fraud scheme.
- In social media, if suddenly the social media influencers you follow are talking about cryptocurrency, it is also a warning signal.
Crypto users should take care of their crypto assets and be aware of the warning signals that denote a crypto scam. They should also educate themselves about cryptocurrency frauds, how they occur, and how one can prevent them.