Top 5 Risks and Scams Associated with the Cryptocurrency Market

The crypto market is booming since the evolution of Bitcoin and other means of virtual currencies. This has directly impacted the way people develop relations with business entities, buy products and perform online transactions.

According to the Global Payments Report, digital wallets are the most popular payment method of 36% of online buyers worldwide. With the pandemic underway, people tend to prefer cashless methods for transactions which directly impacts the payments market, and as a result, more people are turning to cryptocurrency.  

The cryptocurrency market has seen immense growth since 2017 when the price of Bitcoin topped $20,000 due to an influx of consumer interest. With the advent of digital currencies, online shopping has been totally revamped. Digital currency corresponds to any type of electronic cash stored on online databases with non-tangible attributes. With virtual currencies being in popular demand, the crypto market revenue as of May 2020 was recorded at 265.55 billion US dollars.  

Cryptocurrency Risks and Scams

The crypto market has been under a lot of pressure by regulatory authorities since it is an attractive spot for cybercriminals to launder money. Due to the peer-to-peer nature of crypto transactions, maintaining a regulatory framework becomes a challenging task. Not only that, the lack of a central banking authority adds fuel to fire.

This creates potential loopholes in cryptocurrency exchanges which are difficult to counter. Wall Street Journal proposes that almost 4 billion US dollars were lost in cryptocurrency scams with the situation expected to become worse in the coming years. Below are listed some of the frauds and risks in the cryptocurrency market:

Phishing Websites

On the internet, there exist websites which are a perfect imitation of genuine web platforms. Although they may seem real, end-users should always confirm the authenticity before performing transactions. If you visit Amazon, and it takes you to a payment page with a suspicious link, it’s an imposter website and not the one you were looking for. Cybercriminals use witty methods to trick customers into giving away their identity information for illegitimate purposes. They then use it to buy goods and for other personal gains. 

Social Media Scams

The next time you get a connection request from your favourite social media celebrity or influencer, make sure their profile is verified. Crime and fraudulent cases over social media platforms make up almost $3.25 billion yearly. These days, fake celebrity profiles are taking social media by storm and are getting worse by the day. Even though social platforms readily take down impersonation accounts, it does not mean they do not affect the community. Automated bots on Twitter, Reddit and other social platforms are busy posting fake offers with impossible results.  

Cryptojacking

If you aren’t aware of cryptocurrency mining yet, you need to watch out for potential scammers looking to take over your crypto wallet. Cybercriminals use complex hacking mechanisms to accumulate a large number of stolen credentials. Although the value generated against each identity isn’t that much, it still makes a handsome amount due to being substantial in individual quantity. 

Due to improved ways and means being adopted by fraudsters, there has been a massive 450% increase in cryptojacking over the past year. The situation gets even worse because cryptojacking anonymously carries out data breaches from the victim’s system until enough damage is done. 

Non-compliance

One of the biggest problems with cryptocurrency is that it is not regulated by a central banking authority. This gives crypto transactions to be performed without external interference or monitoring, and criminals exploit this vulnerability. By transferring dirty money over multiple platforms, and using mixing systems called tumblers, crooks bypass financial regulatory frameworks. The fact that current cryptocurrency regulations are ineffective makes the problem even more challenging.   

In July 2020, the 5AMLD implemented by the European Union (EU) published laws and regulations for making crypto exchanges more transparent. This act significantly impacted the way the crypto market performed its day to day operations. The directive focuses on providing clarity in crypto transactions. 

Illegitimate Apps

Fake apps created for illicit purposes are surfacing on Google Play and Apple Store to mine crypto wallets of users. Even though these platforms take necessary action and take them down readily, they still pose a significant threat to customer safety. Bitcoin News states that on a daily basis 10,000 bitcoin users install illegitimate mobile apps from the internet from app platforms.  These apps aim at tricking individuals to invest their cryptocurrency assets into illegal platforms and acquire huge sums of money from them. 

Conclusion

To sum it all up, cryptocurrency users should keep an eye on potential scammers and suspicious entities which are always in pursuit of taking over their identity information to use it for their personal gains. The next time you perform a crypto transaction over a platform or app make sure to watch out for these scams to keep your digital wallet away from pesky criminals.