How to Spot Crypto-Currency Scams

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Scroll down for a handy infographic on How to Spot and Avoid Crypto Scams

We are active members across a number of independent communities, across various Slack channels, Facebook groups, and Reddit communities, and it’s evident in a lot of these communities that scams are common; in some of the larger Australian BitCoin groups, there are constant posts (5+ per hour) advertising get rich quick schemes to multiply your BitCoin holdings, or to purchase BitCoins or other cryptocoins are basement prices.

If it sounds too good to be true, it probably is!

As a community, we want to ensure our readers and community members are always safe and do not fall for these kinds of scams.

Some tips to keep safe:

  • If you see this kind of content posted on any communities, use the Report functions of that community to get the offending content removed.
  • If you click through to any of these sites, be wary of links to download software or whitepapers. These are common ways to infect your computer with malware, which may result in your data being encrypted and held for ransom.
  • Be wary of any “investment” opportunity that asks for BitCoin or other currency to be deposited to an address.
  • Promises to double your money in xx hours or even days are used to woo you into transferring money. You will likely never receive your investment return, and your deposited funds will be lost immediately.
  • Direct/personal messages received on various social platforms informing you about investment opportunities are almost certain to be a scam.
  • Forbes has a great article on how to spot scams.
  • Invest in a hardware wallet such as the LedgerWallet Nano S or Trezor’s hardware wallet; transfer your funds to these hardware wallets to ensure that if your accounts do every become compromised, your funds are safely stored on your offline hardware wallet.
  • Ensure you use Multi-factor Authentication where your accounts provide it; this will require an SMS or secure token generation application on your mobile phone; when you attempt to logon, you must enter a code sent to your device
  • If your mobile phone is used for Multi-factor Authentication, don’t install apps like Coinbase on the same device. Never save your passwords to websites on your mobile device unless you use a secure password tool such as LastPass or 1Password
  • Always use a highly secure password. Tools such as LastPass and 1Password will generate secure passwords for you, and can enter these highly secure passwords for you when you visit sites.

Infographic: How to Spot and Avoid Crypto Scams

Are cryptocurrency exchanges like Coinspot a scam?

No, Coinspot is not a scam. Historically, cryptocurrency exchanges such as Coinspot charged higher fees to buy, sell and trade cryptocurrencies. As a result, they were incorrectly labelled as a scam; really, the fees were just higher than other exchanges. Coinspot, as an example, has recently improved it’s fee structure, down to a lower 1%. This improved the integrity of Coinspot’s reputation, which already has high levels of security and liquidity. You can read more about Australia’s Best Exchanges in our review which covers many aspects such as usability, security and fees.