Beware of these Cryptocurrency Frauds and Risks

Bitcoin Photo by VIPDesignUSA -

Cryptocurrency has been around for a while. However, its trade has transformed into a frenzy last year, particularly in the second half when the value of Bitcoin went through the roof. This craze regarding Bitcoins has made headlines worldwide and paved the way for the inception of many new cryptocurrencies in the form of an ICO (Initial Coin Offering).

In this section, we have already discussed the frauds and scams associated with a new cryptocurrency being introduced into the market. Here we will further expand our discussion to the scams related to the currently established cryptocurrencies.

Let’s take a look at some of these different types of frauds and ill-practices involved in the environment of cryptocurrency.

Phone Porting

In simple words, phone porting is the identity theft of someone’s cell phone. It is usually carried out by tricking the network provider to give the control of a cell number to them. Phone porting has been occurring for a very long time. But according to the statistics provided by the Federal Trade Commission (FTC), the instances of phone porting or cell phone identity theft exponentially increased in recent years.

In the span of four years (from 2013 to 2016), there was an increase of more than 250% in the cases of phone porting. And there is a strong connection between this hike and cryptocurrency.

Cryptocurrencies are usually operated and transacted through digital wallets. By assuming the cellular identity of the victim, scammers can reset the setting of the wallet and swindle the digital account. It is worth mentioning that transactions in the domain of cryptocurrency can’t be overturned and investors can lose their entire digital assets.

Therefore, it is important to protect yourself from phone porting, especially if you are dealing in cryptocurrency:

  • You can make your cellular account safer and secure by adding a layer of a PIN and unique question verification.
  • Another thing you can do is move to two-step authentication. It involves SMS verification from third-party accounts (usually Google’s).

Counterfeit Digital Wallets

Even though cryptocurrency exists in a digital realm, it needs to be stored somewhere. And for that matter, digital wallets exist and subsequently, fake virtual wallets are surfacing. Recently, in one such instance, investors have lost around three million dollars to a fake digital wallet.

In this elaborative plan, scammers persuade investors to submit their confidential keys and seeds for the purpose of wallet generation. But as soon as the users provide them with the information, the digital assets in their wallets were transferred to some anonymous addresses. Due to the increased anonymity associated with the transactions of cryptocurrencies; there is no way to recover the losses.

To make sure that you are not falling prey to a scheme of fake digital wallets, keep in mind these tips:

  • Only select those virtual wallet providers who have an authenticate experience of working in the field. You can also seek guidance from experienced investors of the currency.
  • To make things foolproof, you can switch from online to offline. Hardware wallets are also available for the same purpose. They remain safe from the malevolence of online thefts and scams.

Specialized Malware

Malware is not a new thing in the digital realm. Soon after the inception of the Internet, Internet criminals from all corners of the world started looking for ways to beat the system and rob people of their personal data. Unfortunately, this became a reality in the virtual world.

According to an August 2018 report, malware has infected over 811 million computers. But now, this malicious software has also been developed to rip off the cryptocurrency investors. Malware works in several different ways to carry out cryptocurrency theft:

  • By stealing login credentials
  • By corrupting the entire wallet
  • By disrupting the transactions

In order to protect your cryptocurrency station from this specialized malware, these measures must be taken:

  • Installation of an updated and effective antivirus
  • Activation of two-layered firewall
  • Protection of login credentials by password managing software and two-factor authentication

Cryptocurrency is relatively new for investors, therefore many people have become a victim of the scams associated with it. By keeping in mind the above types of cryptocurrency frauds and the methods of preventing one, you can make your digital investments safe and profitable.

Posted On January 22, 2018