London, UK, 5th Feb 2022, Binary News Network, A cryptocurrency is a digital medium of exchange, created and maintained by its owner(s) in order to facilitate peer-to-peer transactions and verify the transfer and creation of values. The most well known and highly capitalised cryptocurrencies are Bitcoin (BTC), Ethereum (ETH), Ripple (XRP). The technology which cryptocurrencies are based upon is called a blockchain. A cryptocurrency is based on a blockchain. All participants of a certain shared ledger (for example, folks who own BTC) have access to it and can see what’s going on in it but cannot change the data which is already written in the ledger.
FinancialCentre Broker Elon Gold says that the blockchain is a magic protocol that guarantees consistency and immutability of data in a shared ledger. If there’s a consensus between the participants who own the aforementioned digital currency, any suspicious transactions can be fixed automatically. The working mechanism of many cryptocurrencies implies mining which is another important feature.
Cryptocurrencies are decentralised. There is no central authority issuing them or controlling their value – they are created and maintained by so-called miners who do this work by solving certain mathematical problems (so-called mining). For creating new units of a certain cryptocurrency, the miners use computers, that is, resources (CPUs, GPUs, etc.), to solve certain mathematical problems.
Given that cryptocurrencies do not exist in the physical world and are by their nature decentralised, they are generally thought of as global currencies. Mr Gold says that in practice, cryptocurrencies behave more like an asset class that follows the same economic laws that govern fiat currencies. Just like fiat currencies (e.g., US dollar), cryptos can be exchanged for another currency and fluctuate according to market forces and geography (i.e. the market where the crypto is being traded and the demand for that specific cryptocurrency).
Crypto scams are used by malicious individuals to obtain the cryptocurrency of others. They do this either by tricking other users into sending them crypto, hijacking their computers and stealing their funds, or using phishing tactics to fool you into giving up your private keys and/or seed phrases.
The amount of cryptos that have been lost to scams at the moment is unclear, but it’s a large number. In order not to become part of it. It is important to know that most scams are not advanced computer hacks or masterminded plans. Most cryptos are lost simply because people do not pay attention. They rush things and make hasty decisions without thinking them through.
Mr Gold said that many times, crypto scammers use pure social engineering techniques (e.g., phishing) to obtain your private keys, seed phrases, passwords to your online wallets and other access credentials. This is why it’s important to familiarise yourself with the many ways in which your funds can be stolen and what steps you should take in order not to become a victim.
Just recently, a man from the UK was scammed, and he had to lose all his life savings. In 2020, he had a breakup that made him turn towards a dating app. He got to know a lady from Hong Kong named Jia there. Jia coaxed him to believe that she was a crypto expert who knew all the inside information needed to increase his wealth. She made him invest in crypto software and warned that any delays on his part could lead to losses. By the time he realised he was scammed, he had invested in cryptos worth 2000,000 USD.
Mr Gold said that this is a classic scam, and it’s only one among many of its kind. The lady who tricked a man here was a scammer herself. It is always better to stay away from strangers and not to take their advice when it comes to cryptos or anything else for that matter.
Some security tips
There are several things you should keep in mind when making crypto transactions. First, always double-check the address to where you’re sending the money. This is why it’s important to use only wallets, which give you full control of all private keys. Second, always confirm that the amount you’re transferring is correct. Never give out your private keys and seed phrases to anyone, even if they say it’s just to confirm that you received the funds. This is how your cryptocurrencies can be stolen in a matter of seconds.
Mr Gold said that another important thing is to keep in mind: never download any software from an unofficial source (e.g., the developer’s site). Just like any computer software, crypto wallets can be downloaded from their official websites. Remember that cryptocurrencies are still a relatively new phenomenon, and there are many scammers who are trying to take advantage of you. It is important to go into it with your eyes open and to always remain critical about everything you come across.
If you have been scammed, don’t keep quiet about it. You can contact the police in order to get help and justice. In many cases, scammers target only people whom they know will not speak up and report them. If you report the crime, it might prevent the same scam from being used on other people.
Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.