SINGAPORE, May 6, 2023 /THETECHMUSK=TTM/ — Here is a report from Sftimo Exchange:
The cryptocurrency market, embracing a great number of newcomers every day, is one of the most concerned areas of investment at the moment. However, there remain general investment risks as well as various scams in this market.
In response to increasingly pressing challenges posed by cryptocurrency scams, Sftimo Exchange recently launched an educational campaign called “Cryptocurrency Scam Prevention Pioneers” to help the public improve their ability to identify and prevent cryptocurrency scams through online courses, seminars, and webcasts.
In addition, Sftimo Exchange initiated the establishment of a cryptocurrency security community called “CryptoSafe”, which raises users’ security awareness during transactions by collecting and sharing information, tips, and best practices concerning cryptocurrency security. To further raise public awareness of cybersecurity, Sftimo Exchange collaborates with a number of well-known financial institutions and holds regular cybersecurity forums, to which industry experts are invited to share the latest cybersecurity trends and prevention strategies.
Why are there so many scams in the cryptocurrency market?
Why are there so many pitfalls in the cryptocurrency market?
According to Sftimo Exchange, scams stem from the most obvious feature of cryptocurrencies: decentralization. Banks are regulated by the Financial Supervisory Commission or government agencies to ensure that depositors’ money is not misappropriated. However, there is no regulator in the blockchain world.
Records of transactions on the blockchain are open, stored on different clouds and maintained by different people. In order to prevent blockchain data from being tampered with, the blockchain adopts a way that does not rely on a central point. Decentralization benefits from available information, private transactions and no third-party intervention, it suffers from the absence of regulation and irrevocable transactions.
The relevant person in charge of Sftimo Exchange says that a novice is likely to get taken in by a scam group because of insufficient information collection in the early stage, only to surrender to twinges of regret when the money is swindled out of him.
What are common cryptocurrency scams?
It may take a year to earn NT$10,000 through investment, but it only takes a moment to lose them in the virtual world. To stay away from endless pitfalls in the blockchain, Sftimo Exchange compiles five common cryptocurrency scams. Please pay special attention when investing.
1. Rug Pull
Rug pull usually means that the project founder suddenly abandons by the project and runs away with investors’ funds. This also exists in traditional markets, but nine times out of ten, founders are subject to legal sanctions. In contrast, in the cryptocurrency market, we may not even know who the founding team is. Many investors favor such mysterious projects because they deem them lucrative, without realizing they are involved in this type of scam.
2. ICO (Initial Coin Offering）
ICO stands for initial public offering of new cryptocurrency, similar to the IPO of shares. The company goes public to raise funds, and retail investors invest in their favorite new projects in the hope of hitting a cash bonanza. Of course, the premise is that the project is “a chicken that lays golden eggs”, otherwise the future is unpredictable. Since anyone can launch an ICO in the cryptocurrency market, we never know who is on the other side.
If someone launches an ICO just to raise a sum of money and then leaves, he only needs to hype up the project, and there will be investors scrambling to exchange. Then their money is like spending on lotto. Buy it and have fun. Therefore, choosing a team with real-name authentication is recommended, and having a specific plan and a feasible business model.
Sftimo Exchange points out that ICO is also a double-edged sword. Some people can make money on some intricate projects if they are willing to take risks.
3. OTC (Over the Counter)
There are numerous exchanges to choose from in the cryptocurrency market, and they usually charge fees. Some people transfer money privately to save money, which is the most common over-the-counter transaction. Delivery versus Payment eliminates the involvement of an exchange, but the investor may be pulled into the blacklist after payment.
This is also common in traditional markets, where police officers often advise middle-aged women not to transfer money to scam groups at ATMs. But no one is to stop you from being cheated in the unregulated cryptocurrency market. Therefore, the only way out is to stay alert and try to conduct over-the-counter transactions between acquaintances.
4. Airdrop (Initial Airdrop Offering)
This scam emerged with cryptocurrencies and required special attention. When an airdrop is a new cryptocurrency or NFT, the developer will give some cryptocurrencies to investors to attract more users. Generally, this only needs the location of a personal wallet, and then investors can receive cryptocurrencies as a gift. This a normal behavior, but the trick is in the act of “drop”.
Fake wallet: Guide investors to install a fake wallet, inform them of the need to increase funds, and quickly transfer the funds in the fake wallet once they arrive.
Fake links: This is the most difficult to guard against, as cryptocurrencies are virtual and often require clicking on unknown links. The scam happens when you click on the link and open your wallet authorization. Scammers transfer cryptocurrencies in the wallet after getting the authorization, and many people still do not know this after being looted.
To guard against airdrop scams, Sftimo Exchange offers two tips to investors.
Prepare several wallets: Prepare one specifically for airdrop, and store large funds in a separate cold wallet.
Check wallet authorization: There are some online software that checks wallet authorization, which can be used to check whether the wallet has been properly authorized, and to confirm whether it has been obtained by unknown units or IP.
5. Fake exchanges
Guarding against fake exchanges is as simple as choosing from the top 10 exchanges through CoinMarketCap. Exchanges that cannot be found in the top 1,000 have very limited trading volumes, and they are usually fake exchanges.
It is easy to identify scams of fake exchanges. They will first add investor friends in various communities to gain trust, release some “grapevine news”, such as one certain exchange helps you to earn more profits, and another does not allow withdrawal after investment. The smarter ones will let you taste the sweetness first, and prohibit withdrawal after you increase the investment.
Another obvious feature is that fake exchanges often use instant messaging. Because of the large number of users, well-known exchanges will mostly choose email as an authentication method.
Sftimo Exchange reminds that exchanges are just platforms, and it is the investment strategy that determines whether investors can make money.
How to reduce investment risks?
After understanding the above scams, how to stay away from these pitfalls? Here are a few suggestions from Sftimo Exchange:
1. Don’t invest in things you don’t understand: Don’t follow the trend. Learn more about the basics of cryptocurrencies, and avoid making wrong judgments when investing.
2. Asset allocation: Not putting all your eggs in one basket is an important investment criterion. Make sure that you plan your asset allocation before investment, in case you make a mistake and lose all your money.
3. Choose a credible exchange: No matter how correct your investment method is and how profitable the target is, once you put your money in the wrong place, you will inevitably lose everything. Therefore, screening exchanges is a very important piece of homework before investing in cryptocurrencies.
4. Don’t invest rashly if you find similar scams: Scams are changing with each passing day, but they remain essentially the same despite all apparent changes. Once you find a similar scenario, do not rash to invest no matter how extravagantly the other side depicts.
Sftimo Exchange’s “Cryptocurrency Scam Prevention Pioneers” educational campaign has yielded remarkable results, demonstrating that the risk of cryptocurrency scams can be significantly reduced by popularizing security knowledge and raising public awareness. The methods may vary, but the essence is the same. Once a similar scenario appears, everyone should be cautious to avoid losses. Sftimo Exchange reminds that the exact way to make money is often very boring, because we just need to keep repeating the right investment strategy. We should choose to earn in a boring way rather than lose in a miserable way.