As you know, the digital currencies are based on the Blockchain, a revolutionary technology that is changing the world of money and the world in general. The main principle is that it is possible to carry out extensive business activity even without the supervision of any central entity, and in particular to transfer funds – in digital currencies – from person to person without an intermediary such as a bank, which in practice also carries out supervision. The digital registration of the transactions is carried out without revealing the identity of the parties to the transaction, and under the cover of anonymity, dubious parties may misuse the Blockchain.
It is important to emphasize that this technology has significant advantages, but also a notable disadvantage: the trade is not subject, at least at this current point in time, to any regulation, and is largely based on trust – and there are always those who will abuse the trust, or at least try to do so.
One of the salient characteristics of cybercriminals, including crypto crooks, is sophistication. Accordingly, quite a few methods have been developed to defraud investors in cryptocurrency. One way, quite common, is fundraising without a real venture behind it. This refers to issues that are based on digital currencies, i.e. ICO (initial coin offering), or IEO (initial exchange offering). The “company” that carries out the IPO presents investors with apparently promising ventures that will provide a huge return, raises the necessary funding in digital currencies – and disappears with them.
A similar scam method is the promise of an existing product for payment in Bitcoin or other digital currencies. Sometimes fake social media accounts are used, including impersonating famous figures to add credibility to the offer. One of the famous examples of this is a tweet by “Elon Musk” who promised to donate 250 Ethereum for every transfer of 0.1 Ethereum. In this case the loss was indeed minimal, but of course it is important to be careful about it.
Dubious trading arenas are another minefield that you should of course stay away from. The problematic trading arenas are exchanges that apparently allow trading in the cryptographic currencies, when in practice it is a scam. Another technique is to announce an unknown digital currency as the “next thing” in the crypto market – that is, one that can be bought today at a zero price and enjoy an extremely high return thanks to the early identification of the opportunity.
Another common category of DeFi scams is phishing – a scam aimed at obtaining the user information of a person who owns a digital wallet, and using it to empty it of the cryptocurrencies it contains. Phishing will usually be carried out from an address very similar to an authentic address of a reliable body, so that the appeal will look convincing, especially if you don’t delve into it.
There are also less sophisticated fraud methods – for example, sending a message to a person stating that there are screenshots of him browsing a porn site, and demanding the transfer of digital currencies in order not to publish the embarrassing information. In such a case, the choice to demand a ransom in cryptocurrency is intended to obscure the tracks of the extortionists.
In the end, the common denominator of almost all successful fraud attempts is the very human dream of getting rich quick. In this context, it is important to clarify that although there are quite a few attractive opportunities in the field of cryptocurrency, it is always worth remembering the rule of our Sages, “respect and suspect” – ancient wisdom that is also suitable for the most innovative market.
Another very important recommendation is to buy and sell Bitcoin, Ethereum, USDT and other digital currencies only through a reliable company. One good indication is a license from the Ministry of Finance, and another good filter is to look for information about the owners and managers of the company, and thus understand whether they are serious professionals who help you enter the new market in a safe way. In general, it is recommended to look for as much relevant information as possible regarding any transaction in digital currencies, and if there is a suspicious sign, including a faint sign, to give up – there are enough real opportunities in the crypto market.
USDT and USDC are two types of stable coins, which are cryptocurrencies pegged to the value of a specific asset, in this case the US dollar.
When it comes to investing in cryptocurrencies, the question of how much money to start with is a common question. After all, the crypto market is known for its volatility, and it's natural to want to be cautious when entering into this type of investment.
Day trading, swing trading and long-term investing are three popular types of trading that are commonly used in the cryptocurrency market. Each of them has its own set of characteristics and is suitable for different types of investors and different market conditions, of course an experienced investor can also combine them all.
