Steemit Crypto Academy |Season 3 week 6 - Crypto Scams and how to avoid them

Hello friends in the accademy, i hope you are all doing well? Am glad to be part of this interesting class by our dear professor @yohan2on. Bellow is my homework.

Question No. 1

What are Crypto scams?

In recent times, crypto investments have proven to be the hottest investment. On a daily, new investors join the platform. These investors buy and hold these funds through different exchange platforms such as Binance and coinbase, hoping to sell when they are at profit.

Crypto trading is a legitimate investment but with high risk and high returns. Part of these risks has to do with the something to do with scams. These scams are Masterminded by hackers who have evolved from time to time with the tricks in their quest to swindle investors. Bellow are different forms of crypto fraud.

##Different Types of Crypto Scams

a. Fake Crypto Wallets:-

Since we can't store our coins in the bank alongside our Fiat and other treasures, we store them in a wallet.

What is a crypto wallet?

A crypto currency wallet is an app that allows crypto currency users to store and retrieve their digital assets. ... When a user acquires crypto currency, such as bitcoins, she can store it in a crypto currency wallet and from there use it to make transactions. Wallets (where we store our keys and coins) may also be at rest and subject to hacking especially the online wallets.

source

Fake Crypto Wallets therefore are those wallets hackers have gone to plant I the internet (Google play store) when people download and store coins in them, the hackers athomatically has access to these coins.

b. Sim Hacking:-

This happens when the hackers gains access to your wallet throu your sim card. They can achieve this by transferring your cellphone number to their own controlled phone, from where they will impersonate you by sending a password reset to your network and with the new password gain access to your wallet.

c. Cryto Pump and Dump:-

This type of fraud have always been there before the years if Cryptocurrencies. It has to do with a scheme, where a few investors invest very large sums of money in a coin that is not a very good cook. With a Avery low market capitalization. After which, they will inflate it's initial price then, they will encourage the general public na also invest in the coin at the new price they had fixed. By now, one would think the coin is doing so well and may decide to invest.
All if a sudden, those initial investors will suddenly sell off their coins at a profit (The large initial stake) then, coin which may actually be a shit coin will drop back to it's actual value, leaving the sequent investors at a huge loss.

d. Email Scamming:-

This is also an old scamming method that have existed before the boom of Cryptocurrencies. Here, the hackers send send out links that appears to be from the crypto companies. When you receive such emails, you are advised to go through it very well before clicking on them. When a trader clicks on this link, the hacker gins access to your wallet.

An example of crypto scam is the story of BITCONNECT.

BITCONNECT is a company that entered the market with it's Initial Coin Offering (ICO) in late December 2016. It was very surprising how it made it to be the best performing currency by the end of 2017 on the coinmarket cap. The mysterious manner at which it climbed should raise suspicion and send a red signal to prospective investors but no.

Regardless, some some people who are grounded on how the crypto market works labeled it a Ponzi scheme but the gullible investors whose eyes were fixed on their juicy offer didn't listen. To read more on this scam, here is the link

Question No. 2

To what extent have Crypto scams affected the Crypto space?

Crypto scams have affected the public in many bad ways, regardless, there are a few positive impacts like; invention of high security measures and the fact that investors now need to do their fisibilit study to determine where and when to invest. Regardless, for the purpose of this question, I will dwell more on the negative effects of crypto scams. They are as follows;

• Bad Public Image :- when one investor is scammed, he withdraws from all crypto related activities and goes goes home telling his family and friends to desist from involving self's with Cryptocurrencies. This happens mostly if the person is a new entrant.

• Ban By Government:- Because of the reoccurring scams recorded all round in the crypto circle and in other works of life, government in some countries have banned the operation of Cryptocurrency in their countries. This this is the situation of things in my country, Nigeria.

• Discourages New investors:- when People hear of these scams, they scamper for safety and sty away from a crypto related investments. They even like it to punzi schemes like MMM.

• Government Regulations:- In countries where Cryptocurrencies are allowed, their government have also places strict rules in place to check excess so as to reduce fraud to it's minimum. This contravenes one of the principles of the blockchain (no third parties).

• Have Rendered Many Investors Bankrupt:- I can only imagine the number of people affected by crpto scans and the percentage of the damage it caused. Am certain many new entrants who did not diversify in their investments (invested all their savings in one currency) have been left bankrupt.
  

Question No. 3

Will regulations in Crypto add value to the Crypto space?

Regulation will certainly have a double effEct on Cryptocurrency. Let me explain with this table below.

S/N	Advantages	Disadvantages
1	Regulations will be good because it will only allow certified coins/companies to operate	It will eliminate the original idea of a decentralized system
2	It will help boost the confidence in the general public and in turn result to a boom for the sector	Identities of participants will be revealed, which goes against the white paper of the beginning
3	It will guarantee investors capital	It will cause control/regulation to price of coins, which should not not be. This is because, volatility is an integral part of Cryptocurrency.

Conclusion.

Yes! It's true that Cryptocurrency is the present and the future. We are therefore advised to be mindful of scammers while we invest our funds. - Verify all links before you click.

• study the coin very well before you invest.