In the other post, I discussed with you the WAYS TO MAKE MONEY IN CRYPTOCURRENCIES, But, where you make money, you are also bound to making losses – in this post i will discuss with you how you can lose money in Cryptocurrencies.
The unstable nature of these digital currencies means that if you’re investing with the hope of making money, it’s very easy to lose some or all your original investment.
I have personally seen people lose money in Cryptocurrencies because of the ways below. I was also, on different scenarios had been captured in one of these ways.
1. Wrong Addresses
2. Ponzi Scams
3. Twitter Scams
4. Phishing Scams
5. Lost Private Keys
6. Open Blockchain Wallet
7. Fraudulent ICOs
8. Exchange Hacking
9. Computer Virus
10. Panic Selling
11. 51 Percent Attack
12. Fake exchanges
13. Fake Wallets
16. PUMP & DUMP GROUPS
17. PYRAMID OR PONZI SCHEMES
Let’s go through these one by one…
Unlike bank transactions, Crypto transactions are irreversible. If you send your coins to a public address you didn’t mean to, you have lost your money, unless the other person decides to send your coins.
Ponzi scams usually promise you unrealistic profits you can make by investing in cryptocurrencies. They often have referral programs to encourage investors to sign up their friends so that there’s cash flow for payouts to old investors. In reality, most people will lose their investment in these types of schemes once no new investors to bring in money.
Scammers on social media have devised a new method to get your coins, they say If you send them one Ether coin, they’ll send you 100 back!
Sound too good to be true? It isn’t. Still, scammers have tried to fool people’s followers by making fake accounts (with real names and photos) to lure victims into thinking that they were being offered a great deal from a reputable source.
Here, the scammers will try to get your username, password, or seed keys somehow by luring you to a fake website.
LOST PRIVATE KEYS
There might be no worse regret in crypto than buying a crypto low (say, in 2013) and trying to sell high (say, at the end of 2017), then realizing that you lost your private keys. You would have lost your money because you can’t retrieve your private key.
OPEN BLOCKCHAIN WALLET
This type of scam comes in this form;
“Antminer is a mining hardware that works specifically with blockchain wallets. To start mining you create an empty blockchain wallet and get it connected to the mining network. Once it’s connected, you fund your wallet to get the miner activated on the network. It works with traffic so the more people get on the network the faster and easier mining is. You get daily payouts, the higher the amount of btc you fund the connected wallet with, the higher the quantity of btc you mine daily”
DON’T FALL FOR THIS, WHOEVER HAS ACCESS TO YOUR WALLET, HAS ACCESS TO YOUR MONEY.
The most common way to pull off a scam is to fabricate a fake ICO, create marketing hype and persuade people to buy.
That is because ICOs are a great and innovative way to kickstart a company and that is the aspect that is misused. You will give them your money in hope that once their project is live, you will sell the token for profits. But what do they do? They run away with your money.
There are so many examples i can give of exchanges that got hacked where users lost their money with the famous one being Mt Gox Exchange. Always transfer your coins into your wallet and only leave a small amount for trading if you so wish to.
As many cryptocurrency investors know to their cost, your cryptocurrency investments can be vulnerable to hackers. Keep your anti-virus software up-to-date and ensure you aren’t giving out your data online if you are storing or investing in cryptocurrencies.
They say don’t chase a coin whose price is swiftly going up, usually the price comes down drastically to make you panic sell – you may lose your money because you will be forced to sell on a loss to avoid losing more.
51 PERCENT ATTACK
51% Attack is a situation where a single mining entity gains more mining power of the network because it could tamper with the process of verifying transactions and potentially spend the same Bitcoins twice.
You need to be very careful with fake exchanges because once you deposit your coins there, you have no way to get it back if the intentions of that exchange are not right. You will be locked out of your account and fail to gain access.
It is one of the easiest ways to scam people and happens many times during the launch of new coins. These wallets take your seed or private keys and rip you off of your funds.
FOMO (Fear Of Missing Out) is when investors feel they are missing out on something big and as a result, will immaturely buy an asset to hop on the bandwagon.
FUD (Fear, Uncertainty, and Doubt)
Always do your due diligence before you invest in any coin. Don’t sell your coins on a loss because others are doubting it or are giving fake news.
PUMP & DUMP GROUPS
This is a scheme where a group of people pumps the price of a coin after buying it with the aim that once the price goes by a certain percentage, they all sell and the price plunge. You will definitely lose your money.
PYRAMID SCHEME (same as PONZI SCHEME)
This form of scam is the easiest to spot but people still fall for it.
If you find a crypto project that actively encourages the recruitment of new investors to maximize your profits, it is a Ponzi scheme type. This system works on the model of scamming the one who enters the system later. Also, schemes that promise unrealistic returns are definitely Ponzi schemes.
Thank you for reading……
Please note that, the earlier post about WAYS TO MAKE MONEY IN CRYPTOCURRENCIES, those same ways can also be ways to lose on their opposite.
Be on the lookout, your money is hard-earned – you can’t surely afford to lose it.