Hi All.
Increase in the popularity of crypto currencies attracted lot of investor but also lot of scammers too.
Below is the common traps/scam in crypto currencies that should be avoided and safeguard your crypto investment.
1. Free Bitcoin generators: I came across the variety of sites that say that they have find security flaw in bitcoin code/or bugs in mining pools and they are able to generate the BTC for free. You put your bitcoin wallet address and they will generate from 1 to 3 BTC within minutes.The real scam starts now, when they say to send .2 BTC to them as miner fees to claim your generated BTC. I never tested them but it is clear scam when someone is asking you to send BTC to give you back the BTC. Why do not they send that generated BTC minus miners fees in BTC instead of asking first to send miner fees?
2. Cloud Minings:There will be variety of sites that promise you to provide hashpowers to generate/mine bitcoins,litecoins/ethereum and in return of some 30 to 40 Dollar packages. These sites will be newly created and offering promising returns.But they last for few weeks only(A quick cash grab and shutting down the business). Even the sites that were existing for years , not all investors are happy.So investing in Cloud mining as a newbie is a big no.
3. Fake Twitter/social Media accounts:a.) These fake account impersonate a famous personality in crypto world (like John McAfee) and will ask you to donate some small amount of BTC to them and in return they will promise greater amount of BTC(Like you send me .02 BTC and in return this impostor promise to send .2 BTC).
b.) Sometime it will be fake account of some popular website/exchange to scam the users.
4. Scam airdrops.Although airdrop looks safe bet but in scam airdrops you will be requested to give some donation to receive the airdrops (like .01 Ethereum). Be careful in these airdrops and do not send your money to them.
5.) Scam coins and ICOs.
Although a full proof method cannot be guranteed to identify the scam coins and scam ICOs, but still following point can be taken into consideration before investing.
a.) Developers promise very high returns on investment, Giving too much referral bonus or whole setup look like a ponzi scheme.
b.) Coin/Token is ready without any whitepaper or poorly written whitepaper.
c.) Coin is not solving any problem or implementing any new idea.
d.) Website look poor, Hosted in free platform like "Wix" or there is no https for website.
e.) Dev reserved too much coins for them, or too much premined or any other scheme that is giving undue benefit to development.
f.) No source code available.
g.) Roadmap putting emphasis on listing coin in exchanges instead of doing some real development.
h.) Team members are not known at all
6.) Do not beleive others without DYOR .It is quite possible that person advising about coin/token is associated with pump and dump, or getting some personal gain like referral bonus so it is better to do your own research.
7. Precautions while buying coin/token in Exchanges.a.) If you have no intention to trade your coin in near future then it is best deal to transfer your coin to your own wallet.
b.) If coin is forked recently then also check that exchange is having coin from new fork.
c.) Do check if exchange wallet is available or in maintainence mode before buying coins.
d.) Check the exchange withdrawal fees beforehand the purchase of specific coin.
e.) Send small amount to your wallet to verify transaction instead of sending all coins in one transactions.
8. Password security.Create strong passwords by using combination of letters (uppercase/smallcase) numbers and special characters.If possible then use 2FA authentication.
9. Phishing attacks.Do not open the suspicious links. Bookmark the original links, instead of searching the internet for link of sites.
10. Wallet safety.
a.) Do not give your wallet private key to anybody.
b.) Always backup your wallet.dat in some external device.
c.) Private key of wallet should be safely stored in some other place or external device. Do not save private key in same device (In case of Trojan or virus attacks). Save your key in other device/place because if you forget your key then you will lose your investment forever.
d.) Keep your wallet locked if possible offline too.
e.) If you (and you only) do not own the wallet private keys then it is not your coins.
f.) Make sure that you downloaded the wallet from official site.
11. While copy pasting your wallet address , recheck the address that is pasted is same what you copied. (you might be affected by Coin RPG malware)
12. Do not trade without Escrow with individuals.
13. Pay attentions to the Escrow email address and try to deal with them
publicly instead of telegram or gmail/other email.14. If you got message to call on the support number of the site then first verify the number from the official site. It can be scam attempt
as discussed in this topic.Last but not the least,
Never invest the money that you can't afford to lose.
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