Scam risks associated with trading in Crypto currencies

In-spite of Ban in India, investors trade in cryptocurrencies and should be aware of the risk associated with crypto currency scams

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Being an electronic cash system, crypto currencies, which works with a peer-to-peer network system, has never been the favourite when it comes to monetary exchange. Satoshi Nakamoto invented the first digital currency in the year 2008, and it was presented before the public in the year 2009. It was basically a decentralised international network which favilitated the generation and transfer of coins. Cryptocurrency has become a global subject nowadays, Most of the governments, banks and companies are aware of its significance, while ordinary folk often remain woefully unaware about terms like coins, tokens, ico’s and much more.

The Bitcoin Theory

Bitcoin was the first and foremost digital currency in the universe of cryptocurrency. It is essentially a software file which acts as the ledger of a transaction, known as “Blockchain”. Now, thousands of cryptocurrencies are working globally, and millions of people are investing in the same.

However, cyber criminals have found ways to make fraud deals even in this universe. So how do they go about this? Some people create fake projects and represent the whitepaper by stealing them from some reputed projects. After reading the description on the white paper, the unsuspecting individual makes a deal and obtains the key to unlock the files. However, once he has access to these files, he often finds nothing in it. He then realises, albeit too late, that he has become a victim of fraud.

The Main Problem

Thousands of people are getting trapped in online scams of cryptocurrency. Being a victim, they cannot report this scam to anyone as the transactions are done virtually without being traced. Being online, it is almost impossible to locate the source of trading or trader and the viability of the coin or token leading to unidentified and unverified coins offered to everyone.

Facts Pertaining To Crypto currencies

Although banned in India, crypto currencies are legal in other parts of the world. Below are some specifics which you should definitely look in before considering investment in crypto currency:

  • Crypto currencies cannot be traced: As the investor knows, the crypto currency is kept in the password-protected drives. So, it can be transferred and converted from one profile to another, by passing a key to the dealer. No third party is involved in the deal. The trader can make a fake profile and product and hoodwink you because there is no one to trace the record of this deal.
  • Digital currencies can’t hold: As we know, the crypto currencies are digital and they can be converted into another currency very easily. The trader can break the currency into forms, and he can transfer it while passing the key. So, we can say that no one has a hold on cryptocurrency.
  • It cannot be found in banks: Cryptocurrencies are digital, we can’t ‘see’ them in the visual sphere. It is a currency which is held in some software files and can be used while putting a key in the file. No one can get the access on the data except its maker and the buyer. This is a big reason why Indian banks have outlawed digital currencies like Bitcoin.
  • We can’t use it directly: All the investors are unanimous to the fact that we can sell, trade and buy digital currencies, but we cannot use it directly. We can buy them and wait till we get a better value for our coins. As these cannot be traced or used, scams are common. Because it is known, that there is no accounting involved.

A Possible Remedy To Overcome The Problem of Scams

The cyber developers are monitoring the cryptocurrency market to prevent the investors from being scammed. There are some visible preventions which an investor can follow in order to stay away from scams.

  • The investors need to report the fake ICO addresses to the authorities to ensure that other investors do not fall victim to the scam.
  • The investors need to research the currency and the trader with which he is going to do business.
  • It is high time that dealers in cryptocurrencies involve cybercrime detectors in their business units if they want to prevent their business from getting scammed.

As is known, scammers keep on inventing different ways to trap investors; in such circumstances, an advice to the investors will be to stay updated while investing their hard-earned money in a crypto-coin. The research and background of the company are some mandate factors to be known beforehand.