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It’s also a good idea for beginner crypto investors to stick with the two most popular cryptocurrencies - Bitcoin and Ethereum - which have a longer record of increasing in value than other new altcoins. Sticking with beginner-friendly crypto exchanges like Coinbase and Gemini is one way to avoid risks that come with smaller, niche exchanges, experts say. “With a decentralized platform, there’s really no safeguards in place to say who is a good actor and who is a bad actor,” Padilla explains. The lack of KYC protocols on blockchain is a major question mark for its widespread use, says Jonathan Padilla, former PayPal head of blockchain strategy and CEO and co-founder at Snickerdoodle Labs, a California-based blockchain data security company that’s looking at using blockchain to give consumers ownership of their cookies and browsing data. Though blockchain is public and creates permanent, open-access records, people can transact on blockchain more or less anonymously - making it easy to trick you, take your money, and run. That means people can open wallets without having to present valid identification, a Social Security number, or an address and contact information. And unlike banks, blockchain lacks common know-your-customer (KYC) protocols. In general, anyone demanding you pay them in Bitcoin might be trying to hoard it and capitalize on its skyrocketing value. dollars through normal means like wire transfers, checks, credit and debit card payments, and cash. Bitcoin and other altcoins are a burgeoning asset class, so experts say credible institutions aren’t going to accept crypto and not also accept U.S. If a seemingly credible person or retail establishment claims they cannot accept any form of currency other than Bitcoin, it’s likely a scam. With cryptocurrency scams on the rise, here are some patterns to look out for: Demanding Crypto-Only Payments That’s a huge jump over the 570 cryptocurrency investment scams and $7.5 million in losses during the same months just the year before. What Are Some Common Cryptocurrency Scams?Īlmost 7,000 people lost upwards of $80 million in crypto scams from October 2020 through March 2021, according to the Federal Trade Commission (FTC). Investors claim the developers disappeared after the currency skyrocketed in price and seemingly cashed out with more than $3 million. Consider a recent “Squid Game” scam in which investors allege a new SQUID cryptocurrency token and related immersive online game were actually just an elaborate scam.
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The high-tech nature of crypto will attract sophisticated scammers capable of pulling off “Olympic-level” hacks and schemes, Quigley said during a panel discussion hosted by blockchain firm Light Node Media last month. Quigley, a prominent investor and co-founder of the WAX blockchain.
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With the rise in popularity of crypto and blockchain technology, there will be an influx of unprecedented cryptocurrency scams, according to William E. For more information, see How We Make Money.Ĭryptocurrency has captured America’s attention this year - and “Olympic-level scammers” have taken notice too. Some links on this page - clearly marked - may take you to a partner website and may result in us earning a referral commission. We want to help you make more informed decisions.