6 Ways to Identify Digital Currency Scams

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Digital currency sounds a bit like magic: It’s intangible, it can be used in more ways than one and it has the potential to be worth something in the future. But digital currency also carries with it all the risks of new technology, and that means there are plenty of people out there who would happily take your money for nothing—or even worse. So what’s a savvy person to do? You’ve got to learn how to protect yourself before you start investing in digital currency or even just using it for everyday transactions. In this post, we’ll walk through some of the biggest scams to look out for so you can avoid becoming their next victim (or at least avoid looking foolish).

Educate yourself about digital currency and stay on top of news.

Digital currency is a new technology that can be difficult to understand. There’s a lot of misinformation out there, and many scams targeting people who don’t have a good understanding of how digital currencies work.

It may seem like you have to know everything about digital currency before you begin investing or trading in them, but it’s actually simpler than that: If you educate yourself on the basics and stay on top of news about digital currencies, this will help keep you safe from most scams.

Buy currency from a reputable exchange.

You can avoid a scam by using a reputable exchange, like Coinbase or Gemini. You should also check the reputation of the trader you’re buying from (and vice versa) before you make your purchase. A good way to do this is by looking at their reviews on websites like Reddit or Trustpilot.

Another way to ensure that your cryptocurrency is authentic is by checking its history on blockchain explorers such as Etherscan.io and Blockchair.com/explorer/@your-wallet/. These sites show all transactions made with a particular address over time, which helps identify any discrepancies in activity between wallets that could indicate someone else has been accessing them without permission.

Know the signs of a pump-and-dump.

A pump-and-dump is an illegal practice where a person or group buys up large amounts of an asset, increasing its price, and then sells it for a profit.

This can be identified by these signs:

  • ▪ A sudden spike in trading volume (if the trade volume on the exchange involved is 10 BTC, for example, and suddenly there’s 100 BTC)
  • ▪ A sudden spike in the price of an asset (if it was worth $1 yesterday and today it’s worth $10)
  • ▪ A sudden spike in the number of tweets about a particular asset (if there were 5 tweets last week about this altcoin and now there are 50 tweets)

Be wary of promises of high returns.

Being promised high returns on your investments is a red flag, whether it’s from a traditional investment firm or an online platform.

In the case of digital currencies, there’s no way to guarantee that you’ll make money through them. Even if you invest early and choose wisely, you could still lose all your funds when the price drops—and it has been known to drop quickly and dramatically.

Be cautious with charity donations.

  • ▪ Don’t donate to a charity you don’t know.
  • ▪ Don’t donate to charities that ask for donations via email.
  • ▪ Don’t donate to charities that ask for donations via text.
  • ▪ Don’t give money through social media accounts, which may be fake and are often not associated with the referenced charity at all.

Stay informed about the latest scams.

To stay safe online, you should always be on the lookout for scams. The best way to avoid being taken in by a scammer is to know what they look like. To make sure you keep up with the latest scams and scams in general, check out our blog regularly. We’ll have posts about new digital currency scams as soon as they come out!

Learn how to spot scams so you can protect yourself, your money and your identity.

An easy way to protect yourself and your money is to learn how to spot scams.

  • ▪ Identify the warning signs of a scam. If something seems too good to be true, it probably is. Scammers often promise high returns on investments in short periods of time and ask for upfront payment or money transfers before you receive anything in return. They may also use fake websites and emails, which are designed to look like authentic websites or official communications from businesses or government agencies.
  • ▪ Don’t give out personal information online unless you know who you’re talking with—and never over email! If someone asks for your Social Security number, bank account numbers, driver’s license information or other sensitive information via email, text message or Facebook Messenger chat box—don’t respond! No legitimate business will ask for this type of information through electronic means because it isn’t secure enough; all they really want is access to your hard-earned cash!


Now you know how to recognize six digital currency scams. With a little knowledge and common sense, you can protect yourself from digital currency fraudsters and keep your money safe.

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