The use of cryptocurrency is a rising innovative and convenient way of investing your savings that has caught the eye of many people around the world. Unfortunately, this includes scammers whose primary mission is to obtain your personal information in order to gain access to your finances. If you plan to invest in cryptocurrency, can you ensure that you are protecting yourself and your finances form scammers? What type of cryptocurrency scams should we be aware of? Scammers use a multitude of tactics in order to gain access to our finances. Here are a few examples of common cryptocurrency scams to be on the lookout for:
Scammers will typically use emails to lure investors to a seemingly professional website where they can find information about “investments.” After the targets make their investment with cryptocurrency, the scammer will cease communication with the investor or take the website down entirely. Once the payment is made, there is no getting it back. It is vital that if you intend to put your money towards investments that you use credible websites. Do your research before giving out any of your information.
Sometimes, cryptocurrency can be earned through an action called “mining,” where people will be given a series of complex mathematical problems to solve using their computers. Typically the hardware needed for such an activity is expensive and requires a large amount of electricity. Scammers are trying to capitalize on this by creating fraudulent mining software, selling said software for a much lower cost, and using that software to steal cryptocurrency from miners.
Scammers will often claim to have created a new cryptocurrency that is expected to be the next big thing. They will convince others to invest their money into this new currency, but then they vanish with all of the funds they have collected. Through the use of convincing marketing and advertisement, scammers are able to raise money from investors, pocket the money, and disappear with all the funds.
How can we protect ourselves from these scams?
- Protect your information: You will need to create private keys in order to invest in cryptocurrency. If an investment site asks for those private keys, it is likely fraudulent.
- Ignore cold calls: If you are suddenly contacted about investing in cryptocurrency, the call is likely a scam. Do not give away any personal or financial information.
- If it sounds too good to be true, it probably is: Many cryptocurrency scams offer high returns from your initial investment that are too good to be true. Watch out for companies offering get-rich-quick investment opportunities.
- Ignore social media ads: Scammers will often take to social media to promote their fraudulent investment opportunities and lure in potential targets. Always think before you click!
At Robins Financial Credit Union, our mission is to enhance the financial well-being of our members and community. We honor this commitment by providing educational content to help you make the most of your finances. Read our other blog articles to help you gain the financial knowledge you need to succeed.