How to avoid cryptocurrency scams – Times Money Mentor

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As public interest in cryptocurrency investing has soared, so have cryptocurrency scams. 

Between 2020 and 2021, the amount of crypto held by the average investor climbed more than 15%, the Financial Conduct Authority found. But investors’ Fear of Missing Out on this hot new sector has attracted scammers large and small.  

In this article, we will show you:

• How to spot common cryptocurrency scams a mile off
• The key ways to avoid fraud and keep hold of your crypto
• The safest crypto wallets to store your wealth

Is crypto safe?

Even seasoned investors often ask: is cryptocurrency safe? 

Just as with any other popular investment, there are always thieves looking to profit from investors’ eagerness to earn, and their lack of expertise.

Cryptocurrencies – particularly bitcoin – are hot news. They have produced returns that S&P 500 or FTSE 100 investors could only dream of. 

This naturally attracts scam artists. And it can be a bit tricky to weed out the conmen from those who are just competent.

This is because cryptocurrency is a complicated idea, and much of the industry sits in a regulatory grey area. 

Cryptocurrency is provably secure, mathematically. Transactions involving digital currencies are stored in blocks that are linked together in a chain.

Once a block has been added to the end of the chain, it can’t be removed or undone.

All the computers that secure the network share a golden copy of the correct ledger of transactions. They are rewarded in a blockchain’s internal currency, such as bitcoin or ether, for keeping it safe and up to date. 

But that’s not the question that most investors are asking. Crypto has been widely used as a payment method for scams, misdeeds and ransom demands.

The most notorious example is the NHS ransomware hack of 2017. This led to the UK’s emergency health services being downed as part of a global cyber attack.

Clearly there are risks and dangers for the uninitiated.

Find out more: Cryptocurrency trading for beginners

Spotting a cryptocurrency scam

The following list covers the main types of cryptocurrency scam. As with any investment decision, the best way to protect yourself is to:

• Never take any information at face value.
• Remain curious. 
• Always do your own research before making any financial transactions.

Coinbase scams

Trading venue Coinbase* is one of the world’s most recognised cryptocurrency brands. The exchange went public on the Nasdaq stock exchange in America in April 2021. 

But its popularity has led to it being used in SMS and email phishing scams.

These types of fraud aim to get the potential victim to click on a dodgy link. Visiting that shady website lets thieves plant malware or other computer nasties on their…