What are crypto scams and how can you avoid them?
For the past decade, fraudulent activity has plagued the Web3 space. This has generated uncertainty and scepticism from government bodies, who have labeled the term cryptocurrency as a ‘scam’ with no real utility.
As this space has developed, scams have become increasingly sophisticated, making it nearly impossible to differentiate them from legitimate opportunities.
This article outlines the most common scams within the cryptocurrency space, providing you with the tools to help identify these scams and secure your Web3 wallet today.
Let’s kick off this article with the most common type of scam, malware.
A malware scam involves misleading individuals into installing malicious software, or malware, on their devices.
Typically, this includes an incentive such as ‘free crypto’, insane APRs, or favorable trading conditions, to coax the investor into clicking a link or attachment.
This triggers the malware installation, granting the perpetrator access to all the users’ information and after that, it’s game over.
The investor’s wallet will be drained with their assets a distant memory, leaving them to shake their fist at cryptocurrency and declare it as Public Enemy Number 1.
Next, we explore phishing scams, which are a subset of malware scams and are as old as the internet itself.
Investors will receive an email directing them to what they think is a reputable site but is nothing more than a replica, designed to steal your information.
Little does the investor know, as they type in their credentials, they are actually giving away the keys to their crypto, and maybe their future house.
This may seem like an obvious scam to avoid, but you’d be surprised. Over 300,000 people became victims of this type of scam last year alone.
We then have the phone scammers, or as we like to call them, vultures.
An investor is called by an individual claiming to be from a trusted exchange and is told there is an issue with their wallet.
Panicked, the investor reveals personal information such as their private key and before they know it, their assets have dissipated faster than their faith in cryptocurrency.
Celebrities such as Jake Paul and Kim Kardashian have recently found themselves in hot water for promoting crypto assets that were in fact fraudulent coins.
Investors, unaware that these celebrity accounts had been paid hundreds of thousands to promote the token, piled in. Little did they know, this token was nothing more than an elaborate scam that would leave them penniless.
Generally, a scam of this nature culminates in a lawsuit, with the accounts responsible for promoting this token fined significant amounts. Ultimately though, it is the retail investor that loses out.
Finally, we arrive at rug pulls, the disappearing act of the Web3 world.
Typically, this involves the founder of a new project relentlessly shilling a new token/product to investors, only to pull the rug from under them and disappear with their funds, leaving investors with worthless tokens and empty pockets.
So, given all of these scams, how can an investor move to protect themselves and their wallet?
Staying Safe In Web3
Whilst the concept of cryptocurrency was founded upon ideals of decentralization and transparency, its path to acceptance has been marred by an array of scams as intricate as the technology itself.
So, to stay safe in Web3, I recommend the following advice:
Be Careful When Clicking On Links
First and foremost, users should exercise caution when navigating links, making sure to verify all information first.
Do not click on any links or web pages from random senders or chats. Instead, find the protocol’s social media accounts, which provide official links to their platform and products.
For the majority of protocols, including Kujira, this information is displayed in their Twitter bio, as seen above.
Not Your Keys, Not Your Crypto
Never give any personal information out that could compromise the security of your wallet. If asked, ignore and report the individual.
Keep your private key offline and store it in a safe, secure place.
If It Looks Too Good To Be True, It Probably Is
These types of scams can be incredibly tempting. After all, who doesn’t want to make generational wealth in one trade?
However, these offers are clearly unrealistic, and only a fool (or a perpetual optimist) would fall for such a scam. Here, it is important to stay rational.
Evaluate the offer, ask your peers, and always, always check the source of the information.
By now, you should be able to explain the different types of scams in Web3 and implement practical steps to avoid falling for them.
Next week, we will release an article with a more in-depth focus on general security principles and how to further protect your wallet, so keep your eyes peeled.
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Kujira Academy is a platform that aims to bridge the gap between young entrepreneurs and Web3, providing them with tangible education and career acceleration opportunities. Built by students, for students. Learn more about the academy and our vision here.
To register your interest and become a student of Kujira Academy, click here.
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