Do you ever wonder why people trade cryptocurrency? It’s not necessarily because it’s the latest and greatest investment opportunity, rather many people trade it for one reason and that’s to try to make money. Unfortunately, a lot of people get scammed when it comes to trading cryptocurrency and it doesn’t matter whether you’re buying your first Bitcoin or you’re a seasoned trader looking to profit from this volatile market.
There are several common scams that people often fall for when trading cryptocurrencies such as Bitcoin or Ethereum. Here are 5 common scams you should avoid if you want to start trading digital currencies:
Black-market Marketplaces.
Black marketing is the sale of stolen or unregistered assets without the authority of a government or law enforcement agency. It’s a common practice among organized crime groups and terrorist organizations. Many people are led to believe that trading on black marketplaces such as LocalBitcoins or TradeFortress is a legitimate way to make money in cryptocurrency.
However, these types of websites are not recognized as legitimate financial institutions and are subject to a lot of regulatory risks. You should never buy or sell cryptocurrencies on a black market website such as LocalBitcoins or TradeFortress because you could fall victim to another type of fraud like money laundering or even terrorism.
The only sure way to make money trading cryptos is by working with reputable and tested online exchanges like Bitcoin 360 and BitcoinX.
The “Get rich quick” Scheme.
Once you get involved in trading cryptocurrencies, you’ll inevitably come across people who are looking to convince you to invest in their schemes that promise to make you rich quickly. Unfortunately, most of these schemes don’t work and you’ll end up losing all of your investment.
The “get rich quick” scheme is quite a complicated concept and it’s best to avoid it if you want to make money in the long term. There are plenty of legit ways to make money in cryptocurrency these days and you should consider following one if you’re interested in making an income from the digital currency market.
Ponzi Schemes.
Ponzi schemes are illegal and you shouldn’t fall for any sort of scam that claims to be a legit Ponzi scheme. A Ponzi scheme is a business model in which new investors are promised high returns on their investment and existing investors are promised regular payments as a reward for their support.
Unfortunately, most Ponzi schemes don’t work and the majority of them end up being pyramid schemes. These are illegal and you shouldn’t fall for any sort of pyramid scheme that you hear about floating around on social media.
Embezzlement Scams.
Embezzlement is the theft of money from one person and the delivery of that money to another person as a personal benefit. It’s one of the oldest types of fraud and it still exists in the modern world.
Embezzles typically take advantage of people who are poor and unaware of the dangers of financial fraud. Be wary of anyone trying to sell you investment advice or any other type of support that promises to help you make money in the long term.
Falsified Transactions.
Falsified transactions are when someone makes up a transaction to get money sent to them. This is one of the most basic types of fraud and it happens when someone uses a false identity to make a purchase or send money. Falsified transactions are common in online trading platforms where you make trades without actually sending the money. If someone finds out that you’ve been making false purchases or payments, they could report you to the authorities.
Final Words
There are plenty of scams to be aware of when it comes to trading cryptocurrencies and you should question anyone who approaches you with offers to buy or sell cryptocurrencies. Before you start trading, carefully research and analyze any potential investment opportunities and make sure you are well informed before making any trades. If you’re unsure whether something is a scam or not, stick to the basics and don’t get involved in any transactions that you’re not comfortable with. If something doesn’t make sense to you, stick to the basics and ignore other claims that someone may be trying to sell you.
