How to protect yourself from scams in the cryptocurrency era

Bitcoin and hundreds of other cryptocurrencies are hot commodities right now. Everyone wants to deal with them, but with soaring prices, many people cannot afford to buy and invest out of their own pockets.
So they do the best thing they can think of: scam and steal these valuable digital currencies from other people. In this guide I will show you some of the most common scams pulled off by these scam artists and how you can protect yourself from them.

Bitcoin and cryptocurrencies are not scams

Before I learn about the main scams you should be aware of, I should point out that these scams all come from outside individuals and not from cryptocurrencies themselves. You might hear someone say that cryptocurrencies are nothing but a huge scam, but that is 100% false and we will explain why.

The technology behind cryptocurrencies is called blockchain. It is an incorruptible digital ledger that records all transactions in the network. No central body controls it. It is transparent and anyone can track any transaction that has occurred in the past.
No one can alter a transaction recorded on the blockchain, because that would mean altering the rest of the transactions or blocks following that particular transaction, which is virtually impossible to do.

The blockchain is so secure that many banks and startups are experimenting and starting to implement blockchain technology because they have seen how well it works with Bitcoin and cryptocurrencies.
Now that you know you can trust the technology behind cryptocurrencies, let’s talk about the most common scams that many people fall victim to.

Scam No. 1 – Fake bitcoin exchanges

There are many reputable bitcoin exchanges in existence today. The largest and most popular platforms that have been around for a few years are Coinbase, Kraken,, Binance, Changelly, Bitstamp, Poloniex, and Bitfinex. That said, we cannot vouch for any company, even if it is well known in the industry.
You will have to do your own research by researching the company’s history, user reviews and decide for yourself if you want to spend your hard-earned cash with them.

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When Exchange Rates are Too Good to Be True

Because of the highly volatile nature of cryptocurrencies (prices can rise and fall with huge differences in a matter of hours!), many unsavory characters on the Internet are exploiting this volatility. They take advantage of unsuspecting beginners who cannot tell the difference between a legitimate exchange and a fake one.

These fake bitcoin exchanges can easily create nice-looking websites and impress people with their seemingly sophisticated look. They attract people with their promises of below-market prices and guaranteed returns. In short, they appeal to people’s greed.

Imagine how ecstatic you would feel if you discovered a website offering bitcoin at prices 10% or 20% lower than Coinbase or Kraken. If these big platforms offer 25,000 for 1 bitcoin and this other site offers it for 22,000, wouldn’t you jump at the chance?
You would save a lot of money (ā‚¬3,000 per bitcoin!) and you could use your savings to buy even more bitcoin. Now that’s the greed game! They know that people want to buy more bitcoin at the best possible price. And who can blame these poor victims? If we didn’t know better, we too could fall for the same scam.

Selling crypto through paypal

Another method used by these fake cryptocurrency exchanges to steal your bitcoins is to offer to buy your coins at higher than market prices, then send the equivalent dollar amount to your PayPal address.
The unsuspecting bitcoin owner thinks he is getting the better end of the deal because he will get more money for his bitcoins and receive the cash immediately in his PayPal account.

So he enters the amount of bitcoins he wants to sell, confirms he is satisfied with the equivalent dollar amount, types in his PayPal address so they will send him the money, and then waits. And he waits. And he waits again.
He will contact the website but, of course, they will not respond because they have his bitcoins (remember that all bitcoin transactions are final and irreversible once validated).

At this point, he will realize that he has just been scammed. He may report the site and write negative reviews, but ultimately who is he trying to fool? These experienced scammers will simply open a new website with a new domain name and wait for their next victim.

The key thing to do is to stay away from exchanges with rates that are too good to be true. As they say, if it’s too good to be true, it probably is.

Scam No. 2 – phishing scams

Phishing scams are rampant today in many ways. Have you ever received an e-mail from your “bank” asking you to verify or update your account information to make sure your information is always up to date? And that you have to click on the link in the e-mail to update your data?
Many people know that this type of e-mail is nothing more than a scam. Modern e-mail services send these unwanted e-mails to the junk mail folder anyway, so you don’t see much of them nowadays.
But with Bitcoin and cryptocurrencies being so new and all over the news right now, scammers are trying to find a way to steal your cryptocurrencies by gaining access to your digital wallets!

Email phishing scams

This is perhaps the most common online fraud, in which scammers will send you an e-mail that appears to be from your online wallet service (this is why we do not recommend storing large amounts of virtual currency in online wallets).
In the e-mail they will ask you to click on a link that will take you to a fake website. It will be identical to the website of your exchange or wallet. Of course, it is not the same because the domain name will be different.
For example, if you use, the scammers will use a similar misspelled domain name such as
:ā¦ Binanseā¦
or something similar
In addition, a security feature called SSL will most likely not be installed, which means that the domain will start with HTTP and not HTTPS (modern browsers such as Chrome and Firefox should warn you whether it is a secure site or not)

If you fall for this phishing scam and access the fake wallet site, then the scammers will be in possession of your real wallet login information the moment you enter username/password or any authentication code! They can easily lock your account and will then have the freedom to transfer every single bitcoin you own into their wallets.

Malware scams

In this type of scam, the scammers will ask you to click on a link via e-mail, banner ads, forum ads, or any other place where they can post a link, which will download a type of malware onto your computer.
Often these malware are keyloggers that record everything you type on your computer and send the information to the scammers. So if you access your online wallet, such as Coinbase, scammers will be able to see your username and password and can then access your account and easily steal your cryptocurrencies!

To protect yourself from these types of scams, it is critical to never click on links from untrusted sources. including links found in text messages.

If you do not recognize the sender or the website domain name is misspelled, you should report the e-mail and/or leave the phishing site immediately.
Also, consider using offline storage methods, such as paper wallets or hardware wallets, so that even if scammers were to access your online wallet, they would have nothing to steal.

If you don’t know which wallet is best for you, read this guide to find out – Cryptocurrency wallets, which ones are they and which one should I use.

Scam No. 3 – Cloud mining scam

Cloud mining is a popular method of becoming a cryptocurrency miner. You no longer need to invest in your own supercomputer and join a mining group to solve complex cryptographic hash problems. There is also no need to worry about expensive electricity bills.
Simply sign up for a cloud mining service (also known as a mining farm), rent mining equipment and receive payments proportional to your subscription.
Although some cloud mining companies are legitimate, there are many websites that promise unrealistic returns for derisory amounts, whose sole purpose is to steal your money.
Some common signs to look out for when trying to join a cloud mining service are the absence of an information page, a terms of use/service page, a physical address and/or a contact number.

They may also not have a secure domain (without HTTPS before the domain name). These details are very important to figure out which site is a scam and which is not. You can Google reviews and look at their website to see if they are legitimate or not. Most of the time, these sites are anonymous, with no names or faces behind them.
Some may seem legitimate at first, but it is good to take a closer look at what your investment will bring you. You may pay to sign up for a contract that will cost you a few thousand dollars a year, but what will you get in return? You will have to do the math yourself and calculate whether you will end up in the black.

The key point is that before you spend your hard-earned money on local currency, you should at least make sure you are dealing with a legitimate company and not an anonymous scammer who will leave you in tears.
Do a lot of research, read reviews and browse crypto-mining communities to find information on the best and most reliable cloud mining companies.

Scam No. 3 – Ponzi Scams

Ponzi scams are probably easier to spot than the other scams we have covered so far in this guide.
This is because Ponzi scams are well known for providing amazing returns on investments without any risk to investors. People get scammed all the time in these types of scams because they want guaranteed returns on their investments.
With Bitcoin and cryptocurrencies, any company that guarantees exponential returns on any investment should be considered a potential scammer. The cryptocurrency market is very volatile: one minute the price could be at an all-time high and the next it could be down a few hundred or thousand dollars.

Because of this volatility, you should never believe anyone who tells you that they guarantee you a return of even 1 percent on your investment every single day, or whatever the scammer’s terms are.
Because Ponzi schemes rely on new members, i.e., victims, to pay back early investors, they usually offer incentives to members to recruit new people to join their network.
It is very common for scams of this type to offer some form of reward for affiliates. If you recommend someone to invest in the “company,” you are rewarded for your efforts.

Some Ponzi schemes guarantee daily profits forever. If this sounds too good to be true, then it certainly is. No one even knows if bitcoins will be around that long, and guaranteeing daily returns is simply folly.
A smart investor will quickly realize that offers like these are nothing more than scams designed to siphon off your hard-earned money.

In fact, many of these scam sites prefer bitcoin payments because they know that bitcoin transactions cannot be reversed or cancelled once sent! In any case, whether they request fiat currency or cryptocurrency, know first to whom you are sending your money.
If you know that the company’s offers are too good to be true, then you should run in the opposite direction. Sometimes it doesn’t even make sense to look for reviews on the Internet when it comes to scams like these, because most of the “reviewers” are those who got into the business early on, and thus have already received some return on their investment, or it is the scammers themselves who write hundreds of positive reviews about them.
And usually, when these users leave reviews, they include their affiliate link, so you know right away that they have a vested interest in leaving rave reviews for a company that they may, or may not, know is a scam.


Hey, I'm a crypto lover and the chief editor at Cripto Exposed. I've been passionate about blockchain and cryptocurrency for years and am always looking for new ways to explore this exciting space. I'm committed to writing only the most up-to-date and meaningful stories related to crypto and blockchain-related trends. If you want to stay in the know on cryptocurrency, follow my pages! Let's continue the crypto revolution together. #StayCrypto

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