Cryptocurrency is the hot new trend in investing, and much is still not understood about this buzzy, volatile digital payment system that does not rely on banks to verify transactions. This has created a fertile environment for scams, according to a new in-depth investigative study by Better Business Bureau.
Cryptocurrency is a form of digital money whereby encryption technology can enable anyone anywhere to send and receive payments. It does not exist in a physical form such as paper money, but as lines of computer code, supported by a decentralized computer system known as blockchain and stored in a “crypto wallet.”
Reports from victims of large financial losses to cryptocurrency related scams are skyrocketing. In 2021, BBB received more than 2,400 complaints with monetary losses of nearly $8 million involving cryptocurrency companies.
Cryptocurrency has some key traits that make it attractive to scammers. Cryptocurrency market offers new opportunities for tried-and-true investment frauds such as Ponzi schemes and fraudulent initial coin offerings, particularly given the development of new currencies and the lack of protections that government regulation has made available to more traditional investors.
Here are tips to avoid cryptocurrency scams. Guard your wallet. If you buy cryptocurrency, the security of the wallet is of prime importance. If you lose the key, then your funds are gone permanently. Be careful if someone asks you to pay with Bitcoin or another cryptocurrency. No one with the government will ever ask for this form of payment. Beware of fake recovery companies. Scam companies sometimes claim that they can recover stolen money – for a fee. These are usually scammers. Be wary of celebrity endorsements. Be careful about claims made on social media. This is the most common place for people to encounter investment scams.
