Unfortunately, the growth of cryptocurrencies has led to many unscrupulous people trying to take advantage of this. As such, anyone who owns cryptocurrency or is thinking about investing in it should be aware of the best ways to avoid crypto fraud. This involves taking a few key steps before making an investment and knowing some common scams to avoid.
Before you invest in any cryptocurrency, do your research on the crypto itself as well as the exchange you will be purchasing it from. You should do this anyway so you can pick strong projects to invest in and reduce your risk of losses while maximizing profits. It is also very useful for countering scams, especially in the case of ICOs.
It is relatively easy for a dedicated scammer to set up an online presence and website announcing their great new project and an ICO. They could fill a website with information but have no intention of following through. The ICO could either sell you a coin that will suddenly drop in value or be unexchangeable in the future. Or it could just take the funds you send to buy tokens with and never give you anything in return.
Remember that crypto transactions are final so if you make a contribution to an ICO that is secretly a scam, you cannot just reverse the transaction. Similarly, take the time to do your research before you decide to use an exchange or store your crypto in a particular wallet. Either could steal your funds.
Avoid this problem by always doing your research. Make sure that there is a real community behind the project or exchange and that you can find information about it and the team members.
Anytime you are asked to download something related to cryptocurrency, be skeptical unless it makes logical sense, such as a crypto wallet. Even then, use some common sense. It is very easy for someone to claim to have a wallet or a mining program that is easy to use. You then download it and suddenly your computer is infected with malware. Or with a fake program that will just collect your private keys and use the information to steal your crypto.
As with ICO and exchange scams, the best way to avoid this problem is to never download anything from a crypto-related source (or another source) unless you trust that source. If, for example, you want a desktop crypto wallet that requires a download, research the various wallet options to choose a reliable one. Then, ensure you download it from the official site, after confirming it has an SSL certificate.
The bottom line is that the most important way to avoid crypto fraud is to use caution and always do your research. Never send cryptocurrency to a wallet address without confirming it is legitimate and do the same with exchanges. Do not send someone you do not know cryptocurrency. Do not believe that someone online is who they say they are without proof. With a bit of caution and some basic cybersecurity measures, you should be able to avoid crypto fraud.