Bitcoin. Ethereum. Tron. Ripple. Neo. Cardano. Monero. These are not merely random names. They are in fact the most common cryptocurrencies in the market. As the new year began, many wanted to join the bandwagon and hitch their cart to the moon. But, alas, this has also opened doors for hackers and scammers to cheat gullible and ignorant individuals. With this blog, we shall flash back into the past scams and learn how to prevent future entrapment.
- Mt Gox:
How can we begin a list on the biggest scams in the cryptocurrency world and not start with Mt Gox? A cocktail of corruption, lack of cyber security and fraud lead to the collapse of one of the biggest cryptocurrency exchanges in its time. Based in Tokyo, it was synonymous with all things Bitcoin. On paper, it was the biggest Bitcoin trader, with majority share of upto 70% Bitcoin trading done under its banner. It is going belly up was quite a huge shock for the investors. A little local government pressure is something that even the most whistle clean companies face, but when you add a giant like US on top of Japan’s regulation, the heat got a bit intense. Then came along the hackers. Overnight they breached the firewall in place of the exchange and made away with an alleged sum of 744,408 Bitcoin. Mt Gox did recover a partial sum of the lost amount but then, they eventually gave up finding the remaining Bitcoin. There are many investors that still demand accountability from Mt Gox but alas, the mighty crash hard!
- Bitcoin Gold Wallet:
Guess there is a little bit of Goldfinger in all of us. Why else would people fall for an outright scam? Bitcoin is a decentralized currency that is virtual. Adding gold and marketing it as the future of digital wallets was more than enough for scamming people of their hard earned cryptos. Overnight a site popped up that tackfully marketed itself in the small adspca that was on the official page of Bitcoin Gold.( a fork from the original Bitcoin ) this site claimed to give away Bitcoin Gold Wallets. Many believed that it must be a mere higher end security category for the safekeeping of their Bitcoin. All the site wanted in return was the private wallet addresses which they claimed were for safe keeping. One would think that alarm sirens would go off in people’s minds upon reading this. But, at least $30,000 in Ethereum, $72,000 in Litecoin, $107,000 in Bitcoin Gold and more than $3 million in Bitcoin was stolen from the addresses that people voluntarily gave on the site. Mybtgwallet.com was a site that just struck gold with the right branding.
- Phishing Scams ICO Edition:
Another very common manner of duping potential investors from their hard earned savings is with the help of ICO. ( Initial Coin Offerings) are the current and the latest trend in cryptocurrency swindling. It is also very to undertake. Create a ICO with a vague Blockchain technology algorithm behind it and release a white paper. That’s it. Market it for free on social media platforms and watch people come buzzing in to invest. Everyone is looking for the next best thing. The next superstar that shall touch the moon and take them along for the ride. Once sufficient funds have been generated, their exit strategy is simply claiming that they were hacked into.
Now that you know of what happened in the past, it is time to learn how to prevent making those same mistakes in the future. Keep these points in mind before you give out your wallet ids or decide to invest in any cryptocurrency.
- Read the Whitepaper: Every Token, ICO and Coin that is released is backed by a white paper. It is a document that has the entire plan of the company. The future milestones it wants to achieve, the amount it is going to invest and other details. It may seem cumbersome but, if simply reading a document red herring a scam, then that is the easiest way out!
- Research the team: Every company that works on Blockchain Technology has to have a team of highly competent developers and strategists. These men and women would obviously have a resume that backs their claim as being the smartest to be working on said platform. With the help of social media, one can easily verify their credentials.
- Keep Updates: Many businesses in this field have a very strong social media game. It is prerogative that you keep yourself updated with them in realtime before you invest in them. This shall help if any scammers claim to counter the said company’s growth and market themselves. (as in the case of mybtgwallet)
- Spot Fake Twitter Scam Artists: Impersonators of Elon Musk, Vitalik Buterin, and John McAfee create Twitter accounts and then use them to dupe users into sending them small amounts of cryptocurrency. The bid that they throw out is requesting a fraction of their cryptos in return for a larger sum. Recently, Ethereum founder Vitalik Buterin debunked rumors and false claims that he was giving away Ethereum. In return, Twitter is now working out on a protocol with which they ca ban scam pages from their site. A step taken in the right direction we believe.
- Protect your wallet at all costs: Do not under any circumstances give out your crypto wallet. In Fact with the abundance of crypto exchanges that are being hacked into, it is always advised that one uses Cold Wallets as much as they can.
There you have it folks. Due to some miscreants, the whole of cryptocurrency market gets a bad name. It was after much awaited delay that Bitcoin and Blockchain Technology had become popular terms. All we need to do is learn from past mistakes and be alert in the future. Surely, with time, cryptocurrencies will no longer be considered a Ponzi scam.