Unlike physical cash or coin, cryptocurrency or digital currency exists electronically. There is usually no tangible bill or coins unless you employ a service, such as crypto exchange, to cash in your digital currency for a physical token without any intermediary. You can get cryptocurrency via an online brokerage service or exchange platform.
Some people, called miners, earn digital currency through crypto mining. It is a complex process, which requires expensive and advanced hardware to solve complicated puzzles and mathematical algorithms.

If you want to invest or use digital currency, it becomes necessary to understand how it is not the same as cash or other payment methods. Plus, it is also crucial to identify cryptocurrency scams or compromised crypto accounts.

Cryptocurrency Scams

The unregulated and comparatively new cryptocurrency world attracts fraudsters trying to execute possible crypto scams. Investors and traders need to make sure they have the safest possible journey throughout. For this, they need to know what cryptocurrency scams are and how they can avoid them.
Remember, not every failed cryptocurrency is a scam. You can even lose your hard-earned cash if a successful digital coin does not do well because of natural causes. Some cryptocurrencies lack the design to fleece individuals, especially when a coin enthusiastically goes through social media promotion. If a virtual currency attracts you, make sure you be circumspect and do your homework in the form of thorough research.

Types of Cryptocurrency Scams

While cryptocurrency scammers continue to try new ideas, some of the known cons include the following.

1. Phony Investment Schemes

Some scammers introduce bogus investment schemes aiming to cheat people. They promise users massive returns against their investments. Some cryptocurrency scams also claim to have celebrities and successful traders endorsing the plans to attract innocent people.

2. Fake Cryptocurrency Exchanges

These cryptocurrency exchanges may look like legitimate and genuine companies, though they tend to go away overnight. Of course, they do not disappear without taking their customers’ funds with them.

3. Ponzi Schemes

These schemes promise the user enormous gain upon their involvement. Ponzi schemes ask users to recruit their friends, colleagues, family, and familiars to register with them. The owner of such a scheme takes money from new members and uses it to pay off old members. Ponzi schemes usually collapse when they do not find new members to meet their payment requirements.

4. Exit Scams

Exit scams are when a company asks the consumer to pay for a product it hasn’t delivered. For cryptocurrency scams, it often pretends to be a company that raises money through an ICO or initial coin offering. This exit scam shuts down when the ICO is in the process or right after it concludes.

5. Right to recruit

Some schemes ask you to pay in digital coins, giving them the right to recruit people on your behalf. They offer you massive rewards paid in digital currency for recruiting people. The more digital currency you give them, the more they guarantee you will make. But these are fake promises and guarantees, which ultimately lead you toward the loss of money.

Spotting a Cryptocurrency Scam

It is vital to spot a potential scam to have a successful and scam-free journey throughout the crypto world. Consider keeping a level head for your investments. If a scheme, an offer, or a company sounds too good to be true, it could be a crypto scam. So be careful and double-check the things.
If you are getting attracted to a social media account, claiming to have a famous person endorsing its product, make sure to find out whether it is true or not. Similarly, if you come across a website or a document full of mistakes or typos, you are most probably facing a crypto scam. Make sure you research the crypto product you are interested in and review any complaints against it.

Learning how to trade cryptocurrencies is undoubtedly fun and anyone can learn it. You can begin without having to spend a lot of money, but once you have some wins under your belt, it becomes easy to justify making bigger investments. However, you shouldn’t forget that while you can make money with cryptocurrencies, caution should still be exercised. This is particularly true when you are new to the world of cryptocurrency and are just starting out. So, what should you do? Here are some of the essential things to do:

Secure your email address

You have to be your own custodian when you are trading cryptocurrencies. This means that you should keep your accounts secure and this begins with your email address. It is a very vulnerable place because if your account is compromised, then all will be lost because the cybercriminal will be able to access all exchange accounts you may have. It is best to use a strong and unique password that you don’t use elsewhere. You should also enable 2FA authentication for your email and skip SMS-based 2FA because this is easily stolen.

Look for a reputable exchange

Not all exchanges are the same. You cannot trust just anyone with your funds. Any crypto veteran can tell you about the horrors of unprofessional and poorly run exchanges. A number of these made off with clients’ funds and they never got them back. You undoubtedly want to avoid such a scenario and this can only happen when you find a well-established platform for your trading. It should be trustworthy and shouldn’t hide its team.

You can check reviews, or find forums where people are talking about crypto exchanges. These users will definitely inform you if anything shady is going on with a particular platform you are interested in.

Know about proper wallet safety procedures

Most people who keep their coins on the exchange end up losing them. When trading, you should only keep those coins on the exchange that you plan to use and transfer everything else to a private wallet, or a safer cold wallet. Take steps to protect this wallet and never share your private keys or recovery phrases with anyone.

Learn about technical and fundamental analysis

You don’t have to be an expert, but you should know the basics of both technical and fundamental analysis. Take some time to understand how the market works and what you can get from the asset you want to trade. Sure, people do make money via assets they don’t plan to hold, but they know when to exit a trade and you should know the same.

Have reasonable goals

If your aim is to become a millionaire within a week of crypto trading, then it is time to wake up from this dream. Always establish reasonable goals and consider losses a learning experience. While it is acceptable to have a goal of making a certain profit from an investment, you should bear in mind that traders make their money via small price bumps instead of big ones.

Be careful with what you don’t know

While learning about technical and fundamental analysis is important, you should only use them within your own abilities. It is best to begin with the basics and not try to use any complicated methods that you don’t understand. If you feel lost, then you can find numerous tutorials on blogs and YouTube that can assist you in understanding the various aspects of trading.

Listen to others’ advice with a grain of salt

Lots of people will want to give you advice when it comes to cryptocurrency, but always take it with a grain of salt. You should do your own research and make judgments yourself about when to buy and when to sell. There is no harm in listening to outside opinions, but only follow them after doing some verification.