Cryptocurrencies open up new opportunities for making money. But risks are also involved in this process. In a decentralized and poorly regulated world, fraudsters feel like fish in water. Let's break down the main types of cryptocurrency scams so you can avoid the typical traps. 

How Scammers Earn Money

Scammers aim to trick people into investing in fake or risky projects and then steal those funds. There are several common types of cryptocurrency scams:

• Phishing. Sending emails purportedly on behalf of well-known companies. The emails ask for login and password or cryptocurrency wallet data for "verification" or "security update." In fact, the data gets to the scammers. For example, a "manager of crypto exchange X" may write to you asking for your personal data under various pretexts.
• Fake ICOs. Launching a crypto project without a real product or technology. Fraudsters create a beautiful website, write a whitepaper, gain followers on social media, and promise a high yield from tokens. And after raising funds during the ICO, the team disappears.
• Pyramids. Investors are promised income from attracting new participants to the system. At the initial stage, they get profits. But then the system collapses, and the pyramid founders run away with the money.
• Fake crypto exchanges. Fraudsters copy the design of real exchanges or create fake platforms to steal funds from users' wallets and bank cards.

How to Recognize a Cryptocurrency Scam

In order not to become a victim, you should be vigilant and pay attention to the signs of dubious offers and projects. These are the main ones:

• Unrealistically high profitability. For example, they guarantee 500% profit per month when investing in some "super profitable" startup. If you are offered hundreds of percent profit, it's probably a trap.
• Lack of technical documentation and details about the project. The whitepaper of any serious project describes the technology, principles of work, and economic model. If there are only general phrases, then, most likely there will be no real product at the output.
• Anonymous team. The names and contacts of developers should be public. If they hide behind pseudonyms without any data about themselves, there is a high probability that they are just fictional characters.
• Aggressive advertising on social media with the promise of easy money. If your social media feed is flooded with posts about supposedly profitable investments in new projects with the promise of quick enrichment, most likely it's an attempt by scammers to attract gullible users.
• Offers with a time limit, creating the illusion of scarcity. For example, today is the last day when you can buy project tokens at a 50% discount. Or they promise to double your deposit within 3 days. This creates the effect of a lack of time to check on the project and encourages you to make hasty decisions.
• Requirements to make a deposit or pay an entry fee to get bonuses and privileges. After transferring funds, you most likely won't see any bonuses.

Overall, if the terms look too good to be true, it's probably a trap. Be careful and scrutinize all the details of offers before investing.

How to Avoid Cryptocurrency Scams

To minimize the risk of encountering scammers, remember these tips:

• Keep your private keys in a safe place offline. Never share your keys with anyone. They give you full access to your funds. If you lose your keys, it's almost impossible to regain access to your wallet.
• Use only trusted exchanges and wallets with a positive reputation and reviews. Avoid little-known platforms; they have a higher risk of encountering fraudsters.
• Study the project before investing. Go through their whitepapers, roadmaps, social media pages, and reviews. That's how you can identify potential scammers.
• Never invest large sums in new assets at once. Start with small test purchases. Diversify your portfolio to reduce risks.
• Download crypto wallets only from official resources. This reduces the risk of downloading a malware-infected version.
• Enable two-factor authentication for accounts on exchanges and wallets. This will protect you from hacking, even if your password is leaked.
• Trust your gut. If the offer looks too good to be true, most likely, they are scammers. It's better to refuse dubious offers.
• Use sites for verification. If the project has open source code, you can check it for scams via Github, Scamadviser, and others.

By following these tips when working with cryptocurrency, you minimize the risks of encountering scammers and losing money. Be vigilant and do everything to protect your investments.