Crypto Scams: If you’re new to the world of crypto I’m gonna say it’s pretty complicated. just seven months ago, I set up my very first metamask wallet and then deposited some ethereum contrast that today I’m actually writing smart contracts but back then I knew absolutely nothing about how many scams there were out there in fact I lost a decent amount of money probably somewhere around five thousand dollars due to certain scams, that I fell prey to the cool thing about the blockchain is that the information is available to everyone.
So, technically I could even share the transactions with you where I lost the money.
WAY TO AVOID CRYPTO SCAMS
The most common crypto scams including one that’s so new you probably haven’t even heard of it yet and of course how to avoid them so let’s dig into the top 5 worst scams inside the world wide web 3 that you might encounter.
1. Any website asking for your private keys
Do you remember the first time you set up a crypto wallet you probably didn’t know if you were even doing things correctly and everything was really complicated well at least it was for me scammers take advantage of this all the time the trick is very simple they ask you for your personal information specifically for something called your private key?
Now it’s really sad to me how many scammers out there take advantage of someone’s lack of knowledge and then try to get you to tell them your seed phrase by doing this they are actually getting access to all of your crypto funds some of these scammers might say things like hey I want to send you some money what’s your key
or even something like hey you just won one whole ethereum tell us your seed phrase so we can deposit the funds in your account they’ll try every trick possible to fool newbies into giving them access to their funds when it comes to crypto you actually get two keys a private key that you should never ever share and a public key that is kind of like your email address this one you intentionally share many people confuse these which leads them to get scammed.
you can learn more about both of these by watching our video on asymmetric encryption which is a complicated topic that we break down so simple your grandma could understand the next scam we have is number two
asking to invest for you as a trusted creator.
2. Asking you to invest for you as a creator
You’re in any crypto discord or telegram servers scammers will create a bot that seems official or
try to impersonate a project specifically a team member and then they will do you so that they look
official and they do this in hopes of scamming you in some way one of the most common scams
is the way that they ask for a hundred dollars and then they’ll turn it into two thousand dollars for
you and give it back they’re basically claiming to invest your money for you.
Once you reach out to one of these fake accounts a scammer will send you a dm moments later saying
that they’re a project team member and that they can assist you they often change their username
or their profile picture to impersonate a real team member on discord or youtube for the case of
discord you can do something really simple you can check the actual discord handle and check if it
matches the information of the impersonated team member.
For example, mine is practical psychology 9608 and no one can copy that discord handle for youtube it could be something as simple as just clicking on the account and seeing that they have zero subscribers or no videos uploaded remember no legit project team member will ever give you a WhatsApp telephone number and we will never ask
to invest your money for your scam.
3. Burning or taking benefits from your wallet
Burning a percentage of a token or sending it to a dev wallet now another scam well at least it’s kind of a scam is that token developers will implement something that is called a burning feature they will say every time this token is traded a portion of the trade is burned forever.
So an example of this is that if you were to send 100 tokens to your friend five tokens would be burned forever or at least sent to an account that nobody has access to this makes you believe that one day there won’t be very many of these tokens out there and if you buy now and then just hold the value of your token should automatically increase well let me tell you something.
If my dog ate something that one day turned his poop orange that might be the entire day in his whole life where his poop was orange but just because it’s scarce and it only happened once doesn’t mean it has value nobody’s gonna want my dog’s orange-colored poop for it to have value other people have to want that orange poop for it to have value keep this in mind with tokens that have a deflationary feature especially if that’s all that they offer scam.
4. Seed phrase or private key with money
Something that I saw actually a few days ago here’s the setup someone contacts you and says something like this hey i live in china and they just made crypto illegal so I want to get rid of my wallet so I don’t get in trouble here’s my seed phrase you can donate the money or do whatever you want with it and maybe have some for yourself then after that message.
They will actually send you a real seed phrase to an actual account with actual money in it the one that I personally saw had three thousand dollars worth of tether but here’s the trick to get the tether out you must first have some ethereum in the account to pay the gas fee so if you’re kind of smart you’ll think hm I’ll just send it to my own account to do that you have to deposit like 50 of ethereum so you can actually transact the money out of the account well.
It happens to be that the fee to transact a token is like fifty dollars while the fee that sends ethereum is like ten dollars so you deposit fifty dollars and then immediately the scammer sends the money to their account profiting forty dollars when I say immediately I mean really fast like within ten seconds they have a computer running a program that checks if there are funds in that account and then automatically sends it to their ethereum account so there is absolutely no way for you to get the three thousand dollars out of there now the sad part of this is the blockchain.
If someone gives you their seed phrase and the wallet has money in it do not deposit money for
any reason whatever money you deposit in there consider gone I’m also going to say technically
if they were in China and they didn’t want to be connected to the account they wouldn’t have to
give it to someone ethereum accounts don’t work like that it’s just a bad logic scam.
5. Contract Bug Method
A smart contract bug so another trick that scammers use which you may not even be aware of is a bug where people can buy a token but then they can’t sell it now I know what you’re thinking how is this possible well there are actually three ways of doing this first when the developers are creating the token they simply disable the approve function in the erc20 token contract.
Basically means decentralized exchanges cannot get your approval for putting the token to be sold the second way is to add a rebase function into the token contract so at the moment you try to sell the token you’ll lose 99 of it third they could easily write a few lines of code that prevents the token from being sold to a dex only bought or supplied this means a lot of money coming into the project and none is going out making it a perfect situation for scammers to run away with all their money technically.
They could make it so when you sold your token the money you would have received goes to the developers also now to sum this up I’m not saying you should
learn how to read smart contract code but I will say before making any buy over a thousand dollars
you should find a friend who can.