If you’ve been investing in cryptocurrencies for a while, eventually you’ve heard of a friend who fell for a scam and ended up losing money trying to invest in cryptocurrencies. There are over 10,000 cryptocurrencies on the market and a few thousand – if not millions – of NFT collections. In this universe there are many robberies and scams, so we have specific names for each one of them, let’s understand what each one is, how they work and how we can avoid them.
What is scam?
Scams are more linked to fakes, they are related to fraudulent and deceptive action schemes that aim to obtain financial advantages, as well as rug pulls that are discussed below. At first, the most traditional type of scam is when a company or user presents an investment proposal that promises great returns in a short time. In general, they are characterized by many promises, little information and little professionalism. Among the main types of scams we have:
false entries
Copies of cryptocurrencies to be released. Scammers release these copies to try to trick investors who intend to buy the token at its launch and buy the wrong token.
Fake NFT collections
It can be done at launch or not, they are copies of NFTs collections that are not the real ones, that way people can buy the collection believing it’s real and lose a lot of money or even have their wallet hacked.
fake cryptocurrencies
Similar to NFT collections, a cryptocurrency that is a copy of a real one and you buy it by mistake believing it to be the real one. In addition to the fact that after the purchase it is difficult or impossible to sell them, you can also have your wallet hacked by accessing the fake cryptocurrency website.
fake websites
As stated in the previous topic, fake websites are intended to convince you to connect your wallet to their website and give them permission to transfer your cryptocurrencies to them without you noticing. Usually scammers do this by sending hundreds of worthless tokens to your wallet and by searching for these tokens and accessing the site you take the hit.
What is rug pull?
Rug pull is when the creators of the project attract investors, make promises and then take all the money and abandon the project. They drain all the money from the project as much as possible and disappear, leaving the project to die. Usually, when the price hits a certain ceiling, developers will quickly withdraw money from the ecosystem and disappear altogether. We have two types of rug pulls, the “Hard rug pull” and the “Soft rug pull”. While the hard rug pull, the project developers increment the stealing smart contract and prepare to steal as much as possible from the start. Soft rug pull works differently, it occurs in a subtle way, creators build the project, grow it. However, they exploit the project and steal gradually, either promising donations but stealing, or withdrawing funds from the company and damaging the project in the long run.
How to avoid?
In the end we have some methods that will help you to avoid suffering any of these thefts. In this way, it is good to avoid clicking on links that send you on social media, whether they are with promises, with sweepstakes or just inviting you to something. It is very common and you will get dozens of messages like these as a scam. It is also very important to avoid connecting your cryptocurrency wallet to unknown websites or copies of real websites, be very careful that you always access official websites. A great way is to always look for cryptocurrency links or contracts on larger sites such as coinmarketcap, coingecko, among others. In this environment, attention and care is extremely important. That way, you need to always be attentive, get used to always checking and never trusting, it’s a phrase often said by investors in the middle.