Ever since cryptocurrencies started to gain any semblance of popularity, people have been screaming fraud by the dozens. The problem with identifying cryptocurrency scams is that most of the world’s population still thinks cryptocurrencies are a scam.
The big problem with cryptocurrencies is the people who adopted it earliest are the ones most likely to rip you off. You either have the extremely smart people who saw the value of Bitcoin have studied it closely enough to be able to pull a fast one on you or you have the criminals who were already doing bad things and see this as a chance to take advantage of stupid people.
As an added issue with security, the authorities don’t have anything to do with cryptocurrency yet. Almost by definition, there is oversight of the transactions that go on using cryptocurrency. This means there’s no one to go complain to if you do get ripped off because it is out of their jurisdiction. Most will view this as a beneficial feature of the system, but for those who fall victim to cryptocurrency scams, it will mean no chance of regaining their lost assets.
Types of Cryptocurrency Scams
Cryptocurrency itself is quite secure, so the two ways it can be used by those with baser motives is either as a complement to other scams or as a means of confusing the victim.
There have been malware and ransomware attacks on computers since the Internet came into vogue. Authorities have done their best to crack down on these, but it isn’t easy to track down the instigators and there’s not a lot that can be done when they do. Using cryptocurrency as the means of payment to the hackers just adds an extra layer of obscurity that can prevent the hacker from ever being tracked down.
The other reason people find themselves caught in a cryptocurrency scam is when they don’t really know what they’re doing. Investing in cryptocurrency spinoffs or funds is where a lot of the trouble will come. This is the same as any other financial scheme that has occurred before, except cryptocurrency is the “obscurant” rather than derivatives or MBS.
Cryptocurrencies are by their nature supposed to be scam-proof. It is when people try to get cute and think they are smarter than the whole system that they fall victim to a cryptocurrency scam. Peddlers of crypto-related dreams know how greedy people can be, and are all too happy to take advantage of that.
The last way scammers can get to a users’ cryptocurrency is in the way less secure “wallet” interface. Wallets are the method of storage for the code that makes up the Bitcoin. Since this is the point where the money is the least secure, hackers have started to come up with schemes to get into people’s wallets. Whether they make up fake wallets or hack the current wallets, it is very possible to get ripped off here. Anyone interested in cryptocurrency should be wary of wallet applications and do proper research on them. Just like you wouldn’t trust just any bank that offered to take your money, you should be sure of the wallet applications reputation before you store your money with them.
Cold storage is one method that has been pushed forward as having absolute security. This is when you take the code offline and store it on a piece of paper or something similar. New issues come with this, but at least you don’t have to worry about having your money stolen by some hacker halfway around the world.
Looking at the Big Picture
An interesting argument has been made that the biggest scammers of all are the ones who hide in plain sight. This is true with cryptocurrency scams as well. They are the hoarders who tell you it’s alright to spend your cryptocurrency and try to convince you that it is worth less than it is. These people must be treated with a particular level of mistrust because they believe in the value of cryptocurrencies like Bitcoin so much that they are willing to compromise their values in order to get you to spend your own.
The whole point of blockchain technologies is that we would be able to scale our ability to trust each other and manage the system in a decentralized way. When business is being done correctly, this is the case. It is when someone tries to get too smart that they are most likely to get taken. It can be said that the average person should avoid putting money into cryptocurrencies, as they are still too unsafe to be trusted, but this is a little overboard.
Right now they should be viewed as a speculative investment rather than a foolproof utility. There is money to be made, but you should never put more money into an investment than you are willing to lose.