Cryptocurrency, otherwise known as a form of digital currency, is a technology that promises to change money and trading forever. According to Forbes, the combination of cryptocurrency and software can lead to exciting initiatives, such as the use of automated trading bots. It sounds exciting, but as with any technological advancement, there are shortcomings. One of these is the various ways in which hackers can bypass security measures of these currency accounts and steal people’s money. A common way in which hackers gain access to your account is by getting your log in details. This is why it’s so important to have different ones for your digital currency and other accounts, as well as using a tool such as Keepass which makes storing your passwords much more secure. But you can do more than that to protect your cryptocurrency. The most important thing is to know about the latest cryptocurrency scams and learn strategies to deal with them so your money doesn’t get stolen.

One of the most common scams involves Bitcoins and cryptocurrency exchanges. These exchanges are basically digital exchanges that let you trade your cryptocurrencies for assets, such as different digital currencies or traditional money. The problem is that some exchanges are not legitimate. They take your cryptocurrencies and run, without offering anything in return. To prevent this from happening, it’s important to stick with legitimate exchanges, such as Coinbase, and to transfer cryptocurrency into cold, hard cash you can stash in your wallet.

Here are other scams you should know about to protect your money.

“Phone Porting”

This is a term used for cellphone identity theft, and it’s a common cryptocurrency scam too. How it works is that fraudsters take control of someone’s phone number through their service provider. Then, they reset the phone password in a different wallet, where they can drain one’s account.

According to the Entrepreneur website, these transactions can’t be reversed. That means, you lose out. To keep your money and transactions safe, you should add a unique verification question and PIN to your account so you bolster its security. It’s also a good idea to change your authentication settings. Instead of receiving authentication to your phone via SMS, you should use a third-party service. A good example is Duo. This authentication service secures your apps and verifies identities of its users.

Malware

You often hear of malware that targets computers and now criminals are using malware to steal bitcoins. This can easily be done by criminals—all they have to do is steal your bitcoin wallet or log-in details. Or, they can infect computers with code. In fact, just a few days ago, thousands of websites were infected with code that caused web browsers to mine digital currencies. Malware scams involve software that basically infect computers and then forces them to mine (or release) cryptocurrencies.

To prevent bitcoin malware, you should adopt the same precautions you use for rejecting regular malware. Boost your computer’s antivirus software. It’s also important to use two-factor authentication to protect your login details.

Request To Invest Money Into An ICO

Recently, Facebook announced that it would ban cryptocurrency adverts from its site due to how they’re not acting in good faith. This isn’t surprising when you consider scams that can easily find their way to you via the internet. One of the recent ones was a scam started by Prodeum, a cryptocurrency startup. It had a lengthy white paper that stated plans to build fruits and vegetables on the Ethereum blockchain. Although confused with Bitcoin, Ethereum is an open software platform that allows developers to build and use decentralized applications. Anyway, Prodeum requested investors to raise millions of dollars in an ICO. Prodeum collected money then disappeared, removing its website.

This is proof of how cryptocurrencies often fall victim to scams. According to Ernst & Young analysis, over 10 percent of the $3.7 billion that was raised to date (Jan 2018) through ICOs has ended up being lost or stolen.

Before investing any money into an ICO, you should be sure that it’s legit. If the entrepreneurs & developers are anonymous, that’s a red flag. Other warning signs include impossible-to-achieve (to good to be true) goals in their white paper. That grandeur is all part of their deception.

“Pump And Dump”

According to a Business Insider investigation, “pump and dump” scams are when investors create high – but fake – cryptocurrency values by planning a huge purchase of coins. These manipulation scams are popular, helping traders to make a fast profit at the expense of other investors. How it works in action is that traders use a messaging app through which they send out the fake prices. Their plain is to boost the cryptocurrency price by organizing potential buyers who’ll act on it. When the price increases, they attract others to buy into it, sort of like an auction. Then, they sell the coins to get a profit—and laugh while would-be investors reap losses.

A messaging app. that’s been used in this type of scam is Telegram. Although it’s revered as an alternative to Whatsapp, it’s becoming a common app. for cryptocurrency scams. According to Buzzfeed, some scammers have even created fake celebrity endorsements of their crypto products on it to lure people to take the bait!

Another way in which these “pump and dump” schemes work is that a fraudster will buy shares of a penny stock, boosting the company or fantastic deal they’re offering via emails or online. As an interested buyer, you might buy some shares, falling into the scammer’s trap. This increases the stock price, which is when the scammer will sell all his shares. The stock then drops and causes the victims to lose lots of money.

Such manipulation should be illegal, but as the Business Insider article explains, cryptocurrency markets aren’t regulated in most of the world, making them fair game to fraudulent activity for now.

To avoid these scams, it’s important not to fall for investments that sound too good to be true, with the shares being very budget-friendly. It’s good to note that these scammers can reach you in various ways, such as on social media, in emails, or even by calling you on the phone—so beware.

“Hardware Wallet” Theft

A hardware wallet is a physical gadget that stores your private keys, making you feel safer about storing your bitcoins. But, some of these gadgets have vulnerabilities which makes it easy for hackers to use them to steal your money. Some scammers will even try to sell you these hardware wallets! Without your knowledge of it, they have a modified seed phrase (or phrase that enables them to access your money) that’s hidden under a scratch card. When you scratch the card and get your seed, you set up your wallet without realizing that you’re using a fraudulent seed. You do all the hard work for the scammers and they gain access to your money in a flash.

When getting a hardware wallet, always do so from a trusted source, such as KeepKey and Trezor. Avoid buying hardware wallets from sites such as eBay, even if their manufacturing companies seem legitimate. Rather stick to the company website stores to further increase your security.

Fake Cryptocurrency Wallets

If you usually use phone apps, beware of malicious apps that pretend to be crypto wallets. Two of these apps were recently discovered by users on the Google Play Store. How this scam works is that fraudsters create fake apps pretending to be a real cryptocurrency wallet company. They might even use the company’s logo. You send your cryptocurrencies to the addresses provided and they get stolen.

It’s not always easy to know if the app is legitimate or not, so that’s why it’s always important to download cryptocurrency apps from the official app stores to ensure you’re getting the right one. If you’re not sure about an app, listen to your gut. For instance, if they have permission requests that just don’t seem to be realistic or necessary, don’t download them to your phone or remove them from your phone if you were already installing it.

Pyramid Schemes

Some cryptocurrency companies give you the chance to trade your digital currency as well as gain commissions for tasks—wait, what? There have already been examples of this. For instance, OneCoin let members sell educational training supplies in exchange for coins that later would get transferred into a currency. The scam? People would agree to the deal but then be left with OneCoins that couldn’t be exchanged anywhere.

Similar scams have been found operating out of other companies, such as MiningMax, which offers members commission if they refer other members to the company. It’s important to note that you don’t have to work to buy your coins—you should just enter payment info and buy the coins without any extras. Anything that suggests you have to do something should be seen as a warning sign that you’re dealing with a dodgy company.

Fake ICOs Pretending To Be Honest Companies

Another way you can be scammed is when fraudsters hack a legitimate ICO and try to get money from their investors. The investors are more likely to hand over money to this ICO thinking that they’re dealing with an authentic one. The fraudsters create fake social media accounts or websites of the company, as well as send their investors emails that try to lure them with “pre-sale” or other offers. This is known as “ICO spoofing” and 300,000 investors have fallen prey to it in 2017 alone, according to a report by Chain Analysis.

It’s important to keep your money safe, so always make sure you do everything you can to avoid ICO scams. If the team profiles aren’t easy to find, this is a warning sign that the ICO’s not legit. The same goes for any companies that don’t have social profiles. Another important tip is to check for the ICO’s smart contract. This is basically a computer program that allows for the transfer of digital assets. If you can’t get hold of the smart contract, that’s a problem. You want to align yourself with an ICO that seems trustworthy, and hallmarks of trust lie in an open source and verified smart contract.

Phishing Scams

Some cryptocurrency scams make use of phishing. This is when fraudsters send emails that seem to be from a valid company to potential targets. These emails tend to request your personal details, such as credit card information.

How phishing works when it comes to cryptocurrency is that you receive an email informing you that you’ve been given bitcoins. You have to click on a link to collect them. Once you punch in your username and password on the fake wallet site, your funds are gone. By handing over your login details, you’ve really handed over your digital funds.

Other scams linked to this include fake donation pages. You’ll be asked to donate to Bitcoin for an important charity or cause, click on the link and voila—you’ve been the target of criminals.

Always do your research into the companies sending you these emails before you click on links that can put your computer and money at risk.Make sure you only use exchange companies or wallets that are professional—search them for any reviews online to find the best ones. If a company offers really low fees or special deals, this should make you suspicious.

One of the most important ways to keep your digital currency safe is to treat it in the same careful way that you treat cold, hard cash. In a Rutgers University study published on Science Daily, it was found that some Bitcoin users had misconceptions about their privacy and anonymity. Researchers found that they trusted Bitcoin’s privacy and security measures more than they should. As with any digital currency, it’s important to understand that criminals are always finding new ways to target victims. Therefore, it’s important to stay on guard and protect your money as much as you can, whether it’s stored online or offline.

The increase in popularity of cryptocurrency has led many people to embrace it. But, as with any technology, the more people use it, the more criminals find ways to steal people’s money. The above cryptocurrency scams are some of the most popular doing the rounds now. Knowing about them and how to prevent them, you can ensure greater security of your digital funds.