Blockchain technologies have drastically changed the digital world, bringing data storage security to the new level. Anonymous and uncontrolled networks for transactions or any other vulnerable information have been made possible by the cutting-edge data distribution. While blockchain is immensely popular and sometimes even overrated, this technology still faces some issues due to the immature and inexperienced user community. Without saying, this sets the stage for numerous scam schemes. Our aim is to make the cryptocurrency fraud list of the 5 most common risk factors of blockchain projects. We strive to ensure the security of your crypto interaction by raising your awareness of swindler strategies and market volatility.
1. ICO Cryptocurrency Scam
Initial Coin Offering works similar to IPO. Blockchain startups launch ICOs for fundraising purposes. People invest money in promising cryptocurrencies and become the first blockchain network members. It gives decent technologies the opportunity to be lean and agile nowadays. However, investing your money in every single brand new ICO with favorable investment conditions is only an excellent idea in theory, not in reality.
You see, blockchain market is an independent and uncontrolled scope. No government can interfere in the network. At the same time, no authority is here to secure your investments in case of cryptocurrency fraud. Anybody can announce an ICO, promise more than beneficial terms and then vanish when a big enough sum of money is accumulated.
What is the solution? Always double-check the blockchain projects you are going to invest in. Monitor the news about this cryptocurrency and immediately bail if you are not entirely sure about its reliability and future.
2. Cryptocurrency Exchange Scam
As with any "real" currencies, Bitcoin, Ethereum, and other altcoins have their market price and can be exchanged. Cryptocurrencies still can't really boast of universal coverage nowadays. Therefore, funds withdrawal requires you to convert your "coins" into actual currency. And this is where the tricky part comes in.
Blockchain technologies ensure user anonymity, which means every network participant gets zero information about the others. The only thing you know about other users is their wallet IDs, which are random character combinations. It seems like a no-brainer, but there is a tremendous potential to get scammed while exchanging funds. Once you've sent your money to someone, you can instantly bid it farewell, and the honesty of the person you're trading with is a matter of luck.
Nevertheless, in order to create a safe exchange environment, the blockchain community has created global cryptocurrency marketplaces to reduce the exchange fraud impact on the market. Make sure to use trusted exchange service providers to minimize your scam risks.
3. Fake Digital Wallets As Cryptocurrency Risk Factor
Another common cryptocurrency scam scheme is the fake wallet services. For instance, the fraudsters offer to proceed your Bitcoin transactions via their blockchain web wallet. Even if you are smart enough to use Coinbase or Blockchain, sometimes it's not enough.
Online criminals know what they are doing. Just like in case of fake MyEtherWallet, blockchain scammers create wallet apps identical to original ones (mobile, web or desktop) and boost their ratings to get high search results. MyEtherWallet’s forged twin was the top 3 IOS app in the finance category, and about 3000 people got scammed because of it!
A simple to follow but easy to forget rule is to use download links only from the original website and ignore any other wallet download offers.
4. Cryptocurrency-Stealing Malware
Malicious software is a common thing on the web. Careless internet surfing, a couple of malware downloads, and your devices are not entirely yours anymore. Damaging private content is one thing, but when it comes to money security, the consequences can be colossal.
This is how malware can affect your blockchain experience:
- Steal login data;
- Steal wallet files;
- Interfere in your transactions in scammer's favor.
One way or another, careless behavior inevitably gets you in trouble. Keep your antivirus software updated and consider multi-factor authentication to keep the cryptocurrency scam chances low.
5. Blockchain Security Breach and Dilution
This investment risk factor is the most discouraging one, as you can hardly have an impact on the volatile nature of blockchain networks. As new and unrefined technologies appear, criminals do their best to benefit from it. Geniuses behind cyberattacks steal millions, if not billions of dollars by bypassing the security of the system and taking cryptocurrency from networks. It leads to an immediate price drop and overall panic. You can't really predict when and where the next security breach will take place. However, experienced and mature blockchain developers are more likely to build a product that withstands the attack and keeps your money safe.
Another matter is the so-called "blockchain fork". Unable to resolve a dispute on the technical organization, cryptocurrency networks divide into independent parts to continue their development in the preferred way. Of course, such an occurrence can't leave the network and its value unaffected, which is often not a promising perspective.
The Bottom Line Of Cryptocurrency Risk Factors
Is cryptocurrency fraud chance a valid reason to give up on this technology? Definitely not. Blockchain is the most trending IT-scope now, and it won't stop growing in the future. Assess your risks thoroughly, rely on professionals, and your cryptocurrency experience will remain stable and beneficial.
We at Axisbits are doing our best to ensure the final project is safe and reliable. Trust our experience and protect your website from falling victim to scammers - reach out for a custom solution now.