What are Cryptocurrency Scams? Top 3 Crypto Scams of 2023

• Crypto Scams are popular in the crypto market due to the absence of regulators
• Popular crypto scams are phishing scams, rug pulls, and scam coins

In cryptocurrency, the number of scams reported every year is enormous. Hence one should always analyze the asset carefully before investing in the asset. The reasons why cryptocurrencies are so prone to such scams are vast. The main reason for such scams is the absence of authorities actively working towards identifying such scams. 

For example, in a centralized exchange, scams are uncommon since many authorities work toward identifying such scams. But as we all know today, the crypto market is in its nascent stages, which means that before a regulatory body shows up in the market these scams need to be identified by the individuals themselves. 

Another big reason for the vast number of scams in the market is that crypto transactions are irreversible if fraud takes place. This doesn’t even allow to get the users’ assets back, even if they report the scam.

This has resulted in various scams in the crypto world. Here’s a list of some popular scams which took place in the crypto market. And how you can avoid these scams by identifying them.

Popular scams

• Phishing scams

These scams are common in the crypto world as well as in centralized finance. Here, the scammers get the users’ email IDs, who then receive a mail with a link. If the user clicks on the link, then the scammers get access to the user’s crypto wallet. Then they gather all the useful information of the user. 

The best way to avoid this is by not opening spam mail, and if the mail contains details like that you have won a lottery and you can redeem all the money by clicking on the link below, most such emails are phishing scams. They often contain grammatical errors. The only way to avoid such scams is by identifying them.

• Scam coins

They are the most common way of scamming people. Even most of the new cryptocurrencies currently running in the market are just scam coins. The developers of these cryptocurrencies have launched these cryptocurrencies just to loot the investors, and they also fulfill their intention once they get enough investments to do so. These coins have no potential in them. This can be easily analyzed by their white paper and by analyzing the hot holders of the coins.

These coins have a very less no. of wallet holders. Most of the supply of these coins is limited to some wallets, which are the developers of the projects. If you find any such coins, then you should always avoid investing in such coins as there are higher chances that they are the same coins.

• Pump and dump scams

These scams occur because of both developers and big investors. They provide large investments to the projects, but due to the small size of the project, these investments rapidly raise the product’s price. Once the project’s price is pumped, this attracts the attention of all investors. They invest in the project. Once the project gets enough investment, investors exit the project by dumping it; this results in a rapid fall in the prizes.