Have you ever been scammed by a company that promised to help you invest
in cryptocurrency but instead, took your money and never delivered anything?
At least This Author has!!
If you're new to the world of crypto I’m gonna say it's pretty complicated.
Just 14 months ago, I set up my,very first, Metamask wallet and then deposited some BNB.
In contrast! Today I’m actually writing on Block-Chain and WEB 3.0 but back then, I knew absolutely nothing about how many scams there were out there.
I lost a decent amount of money probably somewhere around seven thousand dollars due to certain scams that I fell prey to.
Welcome to my blog for crypto education here I explain topics of the cryptocurrency world, using analogies, stories and examples so that you can easily chew them.
Let’s begin the drill of pouring education.
Shall We?
In this blog post! I'm going to explain some of the most common crypto scams including one that's so new you probably haven't even heard of it, yet, and of course how to avoid them.
So let's dig into the 7 worst scams in the crypto world!!
1. Wide Web 3.0 Trap:
Wide web 3.0, you might encounter, is any website asking for your private keys.
Do you remember the first time you set up a crypto wallet?
You probably didn't know if you were even doing things correctly and everything was complicated.
Well, at least it was for me!
Scammers take advantage of this all the time. The trick is very simple they ask you for your personal information specifically for something called your private key.
Now it's sad!!! How many scammers out there take advantage of someone's lack of knowledge and then try to get you to tell them your seed phrase. By doing this,
they are getting access to all of your crypto funds!!
Some of these scammers might say things like
“ Hey! I want to send you some crypto money, what's your key bro?”
or even something like
“Hey! you just won 1 whole Ethereum tell us your seed phrase so we can deposit the funds into your account?”
They’ll try every trick possible to fool newbies into giving them access to their funds.
When it comes to crypto you get two keys, a private key that you should never share and a public key that is kind of like your email address this one you intentionally share many people confuse these which leads them to get scammed.
You can learn more about both of these through my informative blogs on asymmetric encryption which is a complicated topic that I break down so simple , your grandpa could understand.
2. Bot for investment
The next scam we have is number two asking to invest for you as a trusted creator so, the second trick is something that might be used to;
if you've looked down in the comments sections below of some of youtube videos or if you're in any crypto discord or telegram servers scammers will create a bot that seems official or try to personate a project ,specifically a team member ,in hopes of scamming you.
3. Doubling game
One of the most common scams is the way that they ask for a hundred dollars and then they'll turn it into two thousand dollars for you and give it back.
Once you reach out to one of these fake accounts , a scammer will send you a dm,moments later saying that they're a project team member and that they can assist you they often change their username or their profile picture to impersonate a real team member on discord or youtube .
4. for the case discord
you can do something really simple you can check the actual discord handle and check if it matches the information of the impersonated team member for example mine is practical psychology 9608 and no one can copy that discord handle for youtube
it could be something as simple as just clicking on the account and seeing that they have zero subscribers or no videos uploaded remember no legit project team
Tokens burn forever
now another scam well at least it's kind of a scam is that token developers will implement something that is called a burning feature they will say every time this token is traded a portion of the trade is burned forever
so an example of this is that if you were to send 100 tokens to your friend five tokens would be burned forever or at least sent to an account that nobody has access to this makes you believe that one day
there won't be very many of these tokens out there and if you buy now and then just hold the value of your tokens should automatically increase
well let me tell you something if my dog ate something that one day turned his poop orange that might be the entire day in his whole life where his poop was orange but just because it's scarce and it only happened once doesn't mean it has value nobody's gonna want my dog's orange colored poop for it to have value other people have to want that orange poop for it to have value
keep this in mind with tokens that have a deflationary feature especially if that's all that they offer scam number four
6. playing with mind
Is something that I saw a few days ago here's the setup someone contacts you and says
something like this; ‘hey I live in china and they just made crypto illegal so I want to get rid of my wallet so I don't get in trouble here's my seed phrase you can donate the money or do whatever you want with it and maybe have some for yourself”
Then after that message, they will send you a real seed phrase to an actual account with actual money in it
The one that I saw had three thousand dollars worth of tether but here's the trick to get the tether out you must first have some Ethereum in the account to pay the gas fee so if you're kind of smart you'll think hmmm!??
I’ll just send it to my account to do that you have to deposit like 50 Ethereum so you can transact the money out of the account well it happens to be that the fee to transact a token is like fifty dollars while the fee that sends Ethereum is like ten dollars so you deposit fifty dollars and then immediately the scammer sends the money to their account profiting forty dollars when I say immediately
I mean fast like within ten seconds they have a computer running a program that checks if there are funds in that account and then automatically sends it to their Ethereum account so there is absolutely no way for you to get the three thousand dollars out of there.
Now the sad part of this is the blockchain is available for everyone to see so you can look at the account on etherscan and see that 30 people were scammed around 2800 in total and if we get enough comments below maybe I'll explain it in more detail
but in short, if someone gives you their seed phrase and the wallet has money in it do not deposit money for any reason whatever money
you deposit in there consider gone I'm also going to say technically if they were in china and they didn't want to be connected to the account they wouldn't have to give it to someone Ethereum accounts don't work like that it's just bad logic scam!!
7. Contract bug
number five is a smart contract bug so another trick that scammers use which you may not even be aware of is a bug where people can buy a token but then they can't sell it
now I know what you're thinking how is this possible? well, there are three ways of doing this:
· first !!
when the developers are creating the token they simply disable the approve function in the erc20 token contract meaning decentralized exchanges cannot get your approval for putting the token to be sold
· the second way
is to add a rebase function into the token contract so at the moment you try to sell the token you'll lose 99 of it.
· third
they could easily write a few lines of code that prevent the token from being sold to a dex only bought or supplied this means a lot of money coming into the project and none is going out making it perfect.
the situation for scammers to run away with all their money technically they could make it so when you sold your token the money you would have received goes to the developers also
now to sum this up I'm not saying you should learn how to read smart contract code but I will say before making any buy over a thousand dollars you should find a friend who can be your mentor
8. fishing on the fake website
number six is fishing on fake websites.
the next technique is something you need to be careful of and keep an eye out for whenever you discover a new project or you browse using a new device or a computer.
some scammers will create a website that is an exact copy of a specific crypto project that you want to invest in and they'll do it with the same user interface and the same information on it
the only things different from this fake website to the real one are two things ;
1. number one is the domain because scammers can't use the same domain as a real website they will actually create a new one that is almost the same as the real one for example scammers could create a fake whiteboard crypto website switching it from the dot com to the dot org dot net dot phi dot x y z or any other top-level domain they could also add an s to the end like whiteboardcryptos.com or move the e whitboardcrypto.com anyways the idea here is that they change this little detail so people don't realize they're on the wrong website
2. the second thing they change is the smart contracts and this is the scammy part the scammers could change the code of the smart contract so that if you were to interact with it they could get access to your funds in your wallet leading you to lose all your money they can make this contract do anything which is why it's really important to only connect to applications that you trust personally
something I do to make sure I always click on the right link is to go to trusted websites like coin gecko or coin market cap you can also check the official project's Twitter account to find the right links and then bookmark those links so you always use the correct one
9. fake icons
scam number seven is fake icons so you know how Kickstarter projects or any crowdfunding projects get the money they show their product that's yet to be manufactured and then people fund the project in exchange for a great deal maybe they'll get two products for the price of one or maybe a special edition version in crypto we have something similar and it's called an icon or initial coin offering and it works as a way to gather a lot of money from investors so that they can start the project
well fake icos is a really easy way for scammers to present a project to investors with absolutely no intention of actually creating it and then just run away with their investors' money
how it usually works is that scammers present a nice innovative revolutionary project to the investors they then ask for money to kick off their project and lure inexperienced investors in with a juicy ROI like a hundred percent or a thousand percent and this leads to the investors giving their money but then the scammers just run away with it and because many projects in the crypto space are not regulated unfortunately the scammers pretty much get away with it
a good thing to do before investing in a crypto project is to look for legit white papers a project's timeline or good tokenomics to back your investment don't just look at the great user interface or the juicy ROI
10. hidden whales
scam number eight is called hidden whales
you know how I always say to be careful with projects with low liquidity or a low market cap?
because they can easily be manipulated by a whale
well a whale is anyone holding a high percentage of the tokens out there and because of this they can sell all their tokens at once causing a crash anyways since this is kind of obvious and since scammers are aware that people will look at it before investing money into a project scammy projects have now found other ways to hide the fact that they hold most of the token instead of having one wallet with all the money they simply split it between multiple wallets
for example, if the total liquidity of a project was half a million dollars and maybe the tea was holding fifty thousand dollars which would be ten percent of the entire project they would then split the money into ten different wallets each wallet holding five thousand dollars this way they make it look like a safer and legit project
now I do wanna say here you can easily check the early transactions of a project's initial tokens but it is a lot more work required by you and
I've noticed that a lot of projects have started doing this because people won't do any more work other than just look at the token holder's page on etherscan they'll simply look at it and say that there's no single whale wallet and then they'll invest here's a tip you can check the blockchain
you can spend an hour just looking around and seeing where the early money is going
it's very easy it's very simple it just takes some
but I just want you guys to be aware that this stuff happens again the simplest way to make sure devs do not hold most of the token is to simply look at the first transactions and where the money originally got distributed if the first transaction is sent to a lot of multiple addresses this is not a good sign
11. psychological game
scam number 9 is psychologically making you think that a smaller price is easier to be able to hit a higher price now this one is technically not a scam but it's kind of tricky when a project launches the tokenomics are established by the project's team developers get to answer the questions;
· what is the max supply of the token
· what's the initial price of the token yes they can set that and
· who gets the early tokens
all of this stuff is decided in advance
now, something quite a few scammy projects do! is simply print a very large amount of tokens that way the price stays low even if there's a lot of money behind the entire project between you and me owning 100 tokens at one dollar each is the same as owning a hundred thousand tokens worth a tenth of a penny right well in people's mind having more tokens with a low price is way more tempting psychologically because it makes them think with a price this low it'll easily double or triple or 10x or maybe even 100x in value along with this they also get to feel like they're owning a ton of tokens for these investors
it's cool for them to say that they own a billion tokens but in reality, going from a tenth of a penny to a dollar is just as difficult as another token going from one dollar to a thousand dollars
so this trick is really about making people think their gain opportunity is higher than it is which makes people invest more in the token so make sure you don't invest in a project only because the price of the token is low because if you do it might be a game of limbo and you're gonna see how low it can go
12. gambling with your trust
the last scam is something we saw with the latest hottest scam the squid games token these developers capitalized on the fact that a show called squid games became very popular and they rode the hype train using the same name so that that way they could get a lot of attention but this is not the trick
I'm wanting to talk about creating a false sense of safety they created a fake team yeah you heard me right they created around 10 fake profiles with fake bios to make it seem like the project had a great and solid team behind it they went so far as to add computer generated pictures of people, in fact, people that did not even exist just to make the project seem more legit the only thing
I want to say about this one is that crypto scams are getting more and more persuasive so you'll have to work a lot harder when deciding on a project
wrapping this blog up if you're wanting to invest in a project
there are only things that I suggest you do is to go to a website called rugdock.io what this website does is analyze projects and if there are any obvious possibilities of exploits or scams in the contract code they'll let you know how high of a risk it is to invest in
one more thing I do is research the project a ton before investing I suggest reading the white papers and the tokenomics
you know the basics but there are a few more advanced things
that do
I created this cool ultimate research pdf which is a step-by-step guide that shows you exactly how to look into a token and technically it's only available to whiteboard crypto club members but
I'll be sharing some ideas from it in a future blog
till then!! Stay
