It was in December last year when Bitcoin – perhaps the most well-known cryptocurrency in the world – reached its highest value at $19,000. Before that day, cryptocurrency had been all over the news, both for the right and the wrong reasons. Cryptocurrency is being tagged as the next big thing in financial trade. But at the same time,cryptocurrency scams abound as fraudsters try to trick people into buying digital coins.
A month before Bitcoin’s value record in December, an escrow-related cryptocurrency start-up called Confido was in the news following the company’s sudden disappearance, along with $175,000 worth of assets. After Bitcoin’s success, LoopX – another cryptocurrency start-up which promised profits to its backers every week with the help of an advanced Trading Software – was caught up in a scandal when it unexpectedly shut down after raising $4.5 million in assets.
Such issues are casting doubt among buyers and sellers about the security and trustworthiness of cryptocurrency. And rightfully so – the technology has a long way to go before finally becoming perfect. Combine that with criminals taking advantage of people’s wealth (or greed), and we’ve got a recipe for disaster.
The novelty of cryptocurrency is one of the reasons why cybercriminals are utilizing it. Not a lot of people – not even the very people who are involved with it – fully understand how it works.
The fraudsters can also use anonymity to their advantage. Many cryptocurrency companies work on some level of privacy, but this also means that they can quickly run away from their responsibility if they’re found to be conducting fraudulent practices. It doesn’t help that many countries still don’t have a regulatory body for cryptocurrency organizations (or aren’t sure which existing bodies apply).
Sadly, it is the legitimate cryptocurrency organizations that are receiving the backlash from these scams. There are still companies that offer safe trading; the trick is for buyers to have a keen eye on how to avoid falling victim to these tricksters.
That’s where the following infographic from Noah Coin comes in. While regulators scramble to catch up with the reality of cryptocurrency, the best defense for legitimate buyers and sellers is to be aware of the red flags of cryptocurrency scams and educate themselves to know which deals are for real and which ones are trying to steal from you. Here are seven tips to spot the rip-offs.
Infographic and text via Noah Coin