28 November 2020

How to Avoid Bitcoin Scams and Frauds

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Cryptocurrencies, crypto assets… What exactly do these terms cover and what are the risks we are facing when entering the cryptocurrency market.

Cryptocurrencies are not necessarily regulated. There may be no legal framework that protects consumers from purchasing goods or services through cryptocurrency, and digital exchanges may operate without complying with applicable laws.

The value of a cryptocurrency depends on the public interest in it. It’s based strictly on supply and demand. The media coverage of a cryptocurrency can have a large impact on its value over a short period, without any official body or mechanism overseeing this variation.

Keep in mind that the risk is very present in virtual currencies. The main risks of trading cryptocurrencies are the risk of volatility, legal risks, and scammers.

Here are some important things to know about crypto, the blockchain technology to stay safe from bitcoin scams and frauds.

Crypto scammers 

Bitcoin was initially conceived as an instrument of exchange in the digital world. The more people get interested in this type of currency, and more scammers will work on the possible ways to misuse it. They usually offer exceptional investment opportunities promising to multiply your investment practically overnight. Runaway if these fraudulent individuals or suspicious companies promise big payouts in a short time making ungrounded claims about their business success.

Cryptojacking 

Cryptojacking is a fraudulent activity aiming to misuse your computer or your smartphone to process the power needed for crypto mining. Of course, they are doing this without your knowledge or permission by putting malicious codes into your computer software. You can fall victim to crypto-jacking just by visiting a suspicious website or a platform.

Usually, they have flashy designs and pops up in the form of aggressive ads, but can also be more sophisticated to look reliable. In case you notice that your computer or phone work slower, stay out of the power quickly, crash with no obvious reason, you might have fallen a victim of this type of scam. What to do if it happens? The basic advice would be to consider adding an adblocker, using antivirus and don’t click the suspicious links.

Anyway, before visiting unknown websites and installing new tools and software, read brokers’ reviews. This is important since many websites won’t let you use their services if you blocked their software installment.

Avoid crypto scammers – Learn about the online broker 

Always check that the financial intermediary with which you wish to operate is not on the blacklist. You should do your own research and gather as much information as possible about the trading platform such as legal status, registered office, financial strength, etc. Checking public information on crypto brokers may be a kind of protection for you.

Understand the blockchain technology 

Before investing in Bitcoin, Ether, Ripple, for example, it is important to understand the technology behind these virtual currencies. Not only should blockchain technology no longer hold any secrets for you, but you should also know what the characteristics of the crypto assets you want to buy are, know their strengths and limitations.

One of the main and most appealing features of cryptocurrencies is the anonymity of transactions. However, transactions can be published on a public list of recorded transactions generated by blockchain technology. Depending on the cryptocurrency, information can comprise the amount of the transaction, and the digital wallet’s address.

Your crypto wallet can have two types of keys: the first key is “public”; it certifies the existence and uniqueness of the virtual currency unit;

The second key is “private”; it is equivalent to a secret code that the owner stores in his digital wallet.

When making a payment, the owner of a cryptocurrency unit validates it with his private key. This transaction is then submitted to a network of miners. They certify the ownership of the cryptocurrency units, thus validating the transaction and the transfer to the new owner.

Conclusion 

Trading cryptocurrency can be profitable which has been proven so far. That’s also the reason why you should be cautious when entering this market. You must get to know how the crypto works and what are the risks. If you are suspicious about some platforms or individuals, don’t hesitate to report to the authorities. It’s important in order to prevent others from falling victim to fraud.

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