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Follow us on Twitter or join our Telegram. Since the introduction of bitcoin inthere have been a poloniex bitcointalk gaw of scams in existence. Initially, the criminals behind these operations sought to poloniex bitcointalk gaw on a lack of understanding of the underlying principles of digital currencies, as well as financial products, to defraud people.
However, as the cryptocurrency market grew and crypto-literacy advanced, the types of scams increased both in frequency and sophistication. In this guide, you will learn about the five most common scams in the cryptocurrency community you need to be aware of. Ponzi schemes were among the first kind of cryptocurrency scams witnessed in the cryptocurrency space. Using this method, the schemes are able to stay in operation for a long time, in turn convincing their users that they are in fact a legitimate operation.
High Yield Investment Programs HYIPs are a type of Ponzi scheme where people are encouraged to join a program with the promise of guaranteed high returns. In reality, however, these platforms are using the joining fees paid by new users to placate the older participators.
Bitcoin HYIPs will almost also have an attractive referral package to incentivize users who attract new users into the program. This is done to ensure that there is new money coming into the platform to propagate the deception. In addition, users will find it quite difficult, if not impossible to withdraw their bitcoin holdings from the platform as there are usually some barriers put in place.
While MLM multi-level marketing is a widely considers a legitimate marketing tool poloniex bitcointalk gaw regulators, bitcoin MLM scams are distinguishable because they do not offer an actual product or service. Instead, they work by offering a portion of the joining fee to anyone who can convince a new user to join the platform. While this is a tool most Ponzi schemes will use in addition to other tricks, it can function on its own in order to defraud users who are new to bitcoin and do not fully understand how digital currencies work.
Lastly, another poloniex bitcointalk gaw of Ponzi scheme poloniex bitcointalk gaw criminals use so as to make away with your bitcoin is through fake cloud mining sites. Cloud mining refers to the process through which a person buys a crypto mining contract at a large mining operation, which will then share part of their mining returns with the cloud mining contract holder.
This way the individual does not have poloniex bitcointalk gaw manage the logistics of physical running a mining operation but is still able to benefit financial from cryptocurrency mining. Legitimate cloud mining platforms do exist but it is important to conduct in-depth research before buying a cloud mining contract at a particular provider in order to avoid getting defrauded.
Examples for fake cloud mining operations that turned out to be simple Ponzi schemes are Gawminer and ZenMiner led by Joshua Garza. These companies were investigated by the SEC for fraud and Garza was found guilty of defrauding investors of substantial amounts of money.
Garza lured people into buying plans on the mining platforms but the companies did not own the mining rigs sufficient to mine the amounts of bitcoin they were claiming to and thus were unable to keep paying poloniex bitcointalk gaw when new people stopped signing up. Phishing email scams refers to the process through which a criminal will send out what looks like a legitimate email that contains important information.
This information is then used to defraud their victims. Phishing scams are prevalent on the Internet but more so within the cryptocurrency space. This is because on most cryptocurrencies, once transactions poloniex bitcointalk gaw done they cannot be refunded as well as due to the pseudonymous nature of the most digital currencies, which makes it easier for cybercriminals to get away with their crimes.
Scammers will send out emails from addresses that closely resemble legitimate addresses from bitcoin wallets or exchanges, usually changing only one letter in the address. This email will inform users of supposed malicious login attempts and urge the recipients poloniex bitcointalk gaw use the links contained poloniex bitcointalk gaw to change their account information on the platform.
They then proceed to take the cryptocurrency held on that platform. The most recent example of this is the Bee Token phishing scam where scammers sent emails out purporting to offer bonuses to people who would participate in a pre-sale of their token. Phishing scams also exist in the form of fake websites. Tricksters will make web pages that are similar to legitimate digital currency exchanges or wallets poloniex bitcointalk gaw the intention of using login information to rob users.
In order to ensure they are visible to their would-be victims, the criminals will usually buy Google adverts. This way the fake page is the first result that comes up when a person searches for their wallet or exchange.
To avoid this, always double check the web address of the page you are on and ensure it has the correct URL. It is also advisable to follow the service provider on Twitter or other social media channels so as to get real-time updates of poloniex bitcointalk gaw relevant happenings. Fake mobile applications are yet another method that fraudsters will use in an attempt to steal cryptocurrency. Cybercriminals poloniex bitcointalk gaw an app that upon a cursory glance appears poloniex bitcointalk gaw be the real mobile version of a poloniex bitcointalk gaw cryptocurrency wallet or exchange.
This is because it is poloniex bitcointalk gaw believed Google and Apple thoroughly vet apps before letting them into their stores. However, poloniex bitcointalk gaw have been a number of fake cryptocurrency apps that have defrauded users. These applications often used use the logos of the wallet and provide very realistic screenshots, leading to users depositing funds in the address of the wallet.
The scammers poloniex bitcointalk gaw replace the address the wallets use with their own leading to the unsuspecting poloniex bitcointalk gaw inadvertently sending their crypto holdings to the wrong address and therefore losing their coins.
An example of this was the fake crypto exchange Poloniex mobile app on the Google Play store that has defrauded users of their altcoins. Poloniex does not have a mobile application, which cybercriminals saw as an opportunity to capitalise on. There are also other mobile wallet applications that were downloaded over 20, times before Google took them down from its app store.
To avoid falling prey to this kind of scam, make sure to download the mobile versions of the wallet from the link provided on the poloniex bitcointalk gaw website. It is also important to stay informed of current happenings within the cryptocurrency space and new trends in cryptocurrency phishing scams.
Initial coin offerings ICOsalso known as token sales, token generation events and crowdsales, are an innovative new way for startups to raise capital to fund their endeavours by issuing a new digital token to early backers.
Due to the fact that ICOs have been known to raise substantial amounts of money combined with the loose regulation within the ICO space, it has become an attractive market for cybercriminals.
Scammers will create an offering that seems legitimate enough so as to attract funds from investors who believe in the future growth of the fictitious company. Examples of ICO scams would be Confido, an ICO that purported to be developing a smart-contract platform, which disappeared with about USDof investors money and the most recent examples of the Prodeum and LoopX ICOs poloniex bitcointalk gaw trolled its investors after exiting with their funds.
To keep yourself from becoming a victim poloniex bitcointalk gaw an ICO scam, make sure to conduct in-depth research on the ICO before investing. Reddit and the BitcoinTalk Forum are good places to start if you are looking to figure out the legitimacy of a project as other community members will most likely already have done some research, which is often shared on these platforms. Ponzi Schemes Ponzi schemes were among the poloniex bitcointalk gaw kind of cryptocurrency scams witnessed in the cryptocurrency space.
Phishing Emails Phishing email poloniex bitcointalk gaw refers to the process through which a criminal will send out what looks like a legitimate email that contains important information. Fake Exchanges and Wallets Websites Phishing scams also exist in the form of fake websites. Fake Apps Fake mobile applications are yet another method that fraudsters will use in an attempt to steal cryptocurrency. ICO Scams Initial coin offerings ICOspoloniex bitcointalk gaw known as token sales, token poloniex bitcointalk gaw events and crowdsales, are an innovative new way for startups to raise capital to fund their endeavours by issuing a new digital token to early backers.
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