Cryptocurrency exchanges work in the same way that any other exchange does which is to say that users buy and sell currency to one another.
As no user is going to expect less than market value for their cryptocurrency, this is a red flag that something fishy is going on. The other red flag you should be aware of is if you come across an exchange that is offering to buy your cryptocurrency directly through PayPal.
This is also not how exchanges work. If you buy into a particular exchange using your cryptocurrency then that cryptocurrency doesn’t leave your possession until someone else has paid for it through legitimate channels.
These types of scams have you enter your PayPal details and then tell you to send your cryptocurrency to another address, typically found on a QR code so it is especially easy for them to change it when the jig is up. Of course, once you send off your Bitcoins the promised payment will never materialize and you will not be able to get in contact with the exchange directly.
In general, it is never a good idea to sell your cryptocurrency outside the boundaries of a reputable exchange.
Fake wallets: Spotting a fake cryptocurrency wallet can be more difficult than spotting a fake exchange simply due to the fact that they store your cryptocurrency as opposed to buying and selling it which means the fraudulent part is generally going to come in the form of malicious software that will attack your phone or computer in an effort to steal your personal data.
Officially sanctioned wallets can typically be found on the primary website for the cryptocurrency in question. The easiest way to determine if a given wallet is fake or not is to listen to your instincts and consider if anything about the website seems off.
Additionally, you are going to want to avoid websites whose URL does not include HTTPS at the start as this means it is not secured which means you wouldn’t want to enter your personal detail anyway.
Before downloading the wallet of your choice, you are going to want to ensure that you entered the URL correctly as similar, but misspelled URLs often lead to fraudulent sites.
Furthermore, if the wallet you are planning on using isn’t online and is instead a file that you download you are going to want to ensure that you scan it for known malware before you install it to your hard drive.
If you don’t have virus software on your computer, you can use the site VirusTotal.com to check it for you.
Finally, it is always recommended that you choose a wallet that the cryptocurrency community that you now belong to approves of to see if other people have had success when using the wallet you are thinking about storing your hard-earned cryptocurrency in.
Phishing scams: Another scam that you are likely to see a lot of is the cryptocurrency phishing scam. This scam involves the scammer trying to trick you into thinking they are an authority from either the website for the cryptocurrency you are using or from the exchange you are a part of.
They will generally tend to recommend that you visit some website which will then proceed to ruin your day. The most common version of this scam involves sending you an email requesting your presence, though popup advertisements may work the same way.
Either way, the end result is either going to infect your computer with malware or end with the scammer trying to steal your cryptocurrency directly. If you receive an email that doesn’t seem entirely on the level, the first thing you are going to want to do is to never take the bait.
This can be easier said than done, however, as the email may very well appear legitimate either because the exchange you use has had their database hacked or because the scammer has gotten a hold of your email address via other nefarious means.
Regardless, the best practice is going to involve never opening any proffered attachments or clicking on hyperlinks in emails whose sender you cannot verify.
If you have legitimate business with the website in question, instead of responding to that email, visit the site directly and look for contact details before asking a real person about it.
Another common tactic that scammers use is to create an official-looking hyperlink but this can be countered by looking at the URL it is sending you to by simply holding your cursor over it and looking at the web address that pops up. Finally, you will always want to verify the address of the person who sent the email.
While it is possible that the address is fake or was spoofed, this will often give you an idea of whether or not it is on the level.
More than anything else, knowing that these scams are out there should make it much easier to avoid them. When it comes to dealing with fake online advertisements, it is important that you are careful about the sites you go to online.
The most common way that unsuspecting users get pulled into these types of phishing scams is by doing an online search for something related to cryptocurrency and then clicking on the first link that comes up without even really looking at it.
This is a poor choice, however, as this first link is almost always going to be sponsored content and just as frequently lead to a scam of one type or another.
You can avoid this risk completely by simply knowing where you are going online and entering the URL in question directly.