Topic: Dangers and Risks for Beginners (Read 470 times)

Sometimes it is easy other times not. It is best to avoid sending money to anyone without understanding what is happening and how scammers may trick you. Generally if you want to invest you will have to trust an exchange and pass KYC in some of them. Bitcoin is P2P though, meaning you can buy from someone directly. You may try this forum too as there are some trusted members that can be an escrow for the deal and make it without any problem.

To detect scams in general first of all you need evidence. For example in the case of new projects a plagiarized whitepaper, fake team members, etc. There are other red flags but you will need concrete evidence that they are scam. Sometimes these are hard to find but they are always there the entire time.

A good way to understand scams and how people detect them is looking at this thread: Scam Accusations

I hope those newbies in crypto will find this thread or other related threads about this subject. Because this will open their minds that bitcoin or crypto is not a scam. But those behind it are the ones who are screwing naive users. But the concept itself is not a scam. Many noncrypto users have the notion that crypto is a scam, but if they will educate themselves, they will know the truth why scammers are everywhere.

Thanks! Very good information that will be useful for everyone.
But I still don't know how to detect scams fraud etc

Mistakes happen, and 200 million is maybe a lot - except maybe in China. I remember data from one of their censuses when they themselves admitted that some 10-15 million people were not covered by it - because they live in such remote and inaccessible areas that it is very difficult to reach them. They say there are still areas in China where people live and have never seen a white man

Despite the ban, the Chinese have found new ways to continue trading Bitcoin, and this is perhaps the greatest strength that BTC has, it can resist any regime, and this is definitely evident in the example of China.

You're welcome for comment

This post will surely prevent a lot of beginners who are willing to learn from being scammed. These are almost every way in which beginners and even non beginners could get scam.

I once fall for this :

And now, whenever I want to invest in any coin or project. I always check if its premined or not. This is by checking the coin exchange tracker total supply and the explorers total supply.

I will edit post asap, thanks for pointing this. Not a small mistake, that's 200 million people less..


Thanks for this information. I haven't looked in Huobi much besides some reports I've read. Certainly, there is interest from China and a government can't stop Bitcoin but only make it difficult for its citizens to trade or own. Thank you for the constructive comment.

You have slightly reduced the population of China, which today is over 1.4 billion people, and also even though China has officially banned crypto trading, that doesn’t mean the trade doesn’t exist at all.


Also, paying income tax is only necessary when the crypto is converted to fiat, and just owning a BTC that is worth x times more today than a year ago means nothing. Paying taxes is of course desirable because it finances the entire infrastructure we need for everyday life. But in some countries the level of corruption and bad politicians is so high that it makes no sense to fund a beast that destroys everything around it.

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Generally a well written post with very good tips for beginners, I hope most will read it before they fall into a trap.

Giveaways are just one of those scamming attempt made by those crooks. Time passed by, their skills for scamming people are improve because the latest is so effective where they managed to steal some money when they managed to hacked some popular celebrities twitter accounts.

Here are some preventive measures to protect ourselves from those kinds of attack: https://bitcointalksearch.org/topic/collection-of-comprehensive-guides-on-identify-and-avoid-scam-projects-5125435

I guess one of the most commons scams that you missed to include are investment opportunities. Most of these scams are offering too juicy an ROI that a lot of gullible individuals cannot resist the urge to take the risk for a much larger return. Many of this kind of scam are offering to double your investment in a very short period of time. While too-good-to-be-true ROI should always be taken as a solid red flag, there are still countless of people who fall for it.

Another one which you also missed are fake support agents of wallets, exchange platforms, gambling sites, and so on. You can usually find these scumbags on Telegram and other social media sites. I don't know which category this falls under.

I would also include fake trading experts who are normally maintaining a certain channel or group chat for their exclusive TAs which are oftentimes sold for a premium.

And since I am into gambling, albeit moderately, there are also fake predictions, tips, fixed games, and so on which beginners should never ever entertain.

Maybe many of them failed, but there are still some altcoins that were built with a good reputation. I can't blame you with having a mindset that most of them are not worth the money because we're at a time where scams are so prevalent and beginners are most likely to fall for it because they take a risk without doing advance research about the potential risk and dangers they may face. This is the reason why research has a significant role in everyone, it presents a different view of things. That way, you will have a sufficient understanding of which coins are a good investment.

Exactly. Dangers are just out there and not only for beginners but even for some who are already in the industry for quite some time already if they missed even a bit of security measures. Once or twice, we will experience such but the most important thing is that we will learn from those experience and not let it happen again. As a saying goes, "To err is human, but to do the same mistake over and over is stupidity."

Anyway, it was indeed a good compilation. Everyone with no or little knowledge of the dangers out there need to read this for their safety and security as well.

This is an excellent compilation for a newbie. Gonna bookmark this.
Also, the original post is very knowledge dense for a newbie 

Dude, first of all, can you please remove the font color in your post because 1) it wasn't a website link 2) it was unnecessary. Try to read Bitcointalk Posting Etiquette (number 5 to be specific)

Going back to the topic, I am somehow allergic to alts but I think it's harsh to say that 99% of them are trash. There are cool alts with great value and applications as well such as ethereum, monero, dogeoin etc. Just try to look further  Maybe I would agree if you say that most of the new tokens are worthless .

I was not reading the thread for the title speaks for itself. However, I give you merit OP because of the great effort you have done in your post. Such beauty to see that many users now are doing quality posta in this forum being a responsible user. If only all shitposter could have this kind of attitude then I do think that theymos will going to need more users to help him getting rid out of the shitposters.

Regarding with the thread, I agree with you that those mention above were happening. Sad to say that  bitcoin system was been drag by these abusers and making it bitcoin seem like a scam too for those who do not have idea what is bitcoin all about.

Still bitcoin system is making its name havin some establishment accepting bitcoin as an option for payment is like an adaptation. Slowly and surely bitcoin will going to change things like to minimize the third party service in doing transaction and the choice to remain anonymous in it.

I guess what really matter now is awareness that we have bitcoin system fully functional.and working, education to minimize or eradicate of getting scam from the abusers and independence from the third party service making it fluent and efficient and lesser fee in doing transaction in the future compare to banks services.

Every beginner needs to know that 99% of altcoins will go to zero. Perhaps a few of the altcoins we have right now will survive the long run. History has proven that altcoins usually do not have anything to offer and are mostly speculative instruments in the cryptocurrency world.
Bitcoin is the King. Remember this when the next forked coin claims it will do the flippening and replace Bitcoin in dominance. Don't make the mistake to listen to sock puppets and influencers.

On the issue of website and exchanges, it always seems quite easy to win users or investors over by websites and exchanges. As most of them would be like, 'they've got a website/exchange' and suddenly feels confident over it, don't see the need to verify the website or exchange and as such, become vulnerable to whatever.
What they fail to understand is, you've got yo give or invest in something and hope for a return. That's taking risk to a large extent, knowing that it could go in one or two ways. You profit or you loss. Scammers understand these facts but most users don't. They always want to gain and as such, your hopes are pushed up on everything which signifies trouble.

Really good article about the risks and dangers that everyone should know, especially beginners.
And here is most beginners/newbies are trapped in the cycle of scammers. Mostly, they are interested in the rewards that they can get by doing such very simple things. Moreover for them who do not take time to ask others or analyze the scams. And most also only follow the others to get in that scam.
And this what makes the view of crypto becomes worse in newbies. (actually not only newbies but also other people in the crypto world can also be trapped in that kind of scams). They only know part of crypto, not the whole. In fact, to know about the crypto, we must understand the basic, development, the risks & dangers, and also the earning/profits. I will put earning or profits after all because if we only think first about earning and profits, we will be easily trapped by the scams and other frauds here.

Moreover, more to remember:
Once you enter the crypto world, you must be able to manage and control your emotion:
- never panic, emotional, can't control the danger because of the bear market,
- the feeling of a hurry without any analysis, so we can get trapped so easily, it is mostly because of the greediness to earn reward easily.
- Only following hype, FOMO, fud, that make everything goes worse.
- If it is about trading and investing, ensure the management of risks, funds, diversification, and others. Some trading and investment tips should be learned.

 

I am sure that yobit does a lot of shady things with their ICOs and the dice they have and use for their investbox. I think that this YO token they have as their native token is useless too.
Although it is traded in other exchanges besides yobit.


Anyway this doesn't mean it is not manipulated or they don't wash trade it on their exchange. Not ever touching this coin and basically I'm only looking into Bitcoin for the long run and nothing else right now.

Thanks for all of these very interesting articles. I will read them and it is a great addition to have them all in one post together.

Scam
Collection of comprehensive guides on identify and avoid scam projects
Youtube scam channels. Please spend your time to report them and take them down

Bitcoin wallets, exchanges

Trading
Bitcoin Support and Resistance for dummies
[Tutorial] Golden cross VS death cross
One of the Best Weapons in Trading
[GUIDE]: How To Setup Stop-Loss order and other types of orders
[Guide] - How to use different order types.


Security, privacy
Good topics on security and privacy
Why KYC is extremely dangerous – and useless

Phishing attacks

Risks are really normal when you begin in this industry. Either you invest or work, there is always tendency that your effort will not be paid of. But this is part of our life. If we don`t want to win in a game then we should not risk. The dangers are part of the game and only quitters are the losers. As long as we are learning from the mistakes that we did, we can grow and be matured enough to encounter every risk.

Having a basic knowledge in crypto before entering the world of investment and trades is an advantage against to the scammers. It might also lessen the risk that we may input. As we all know, being newbie is always a greed and thinking of a rich quick investment. Which, in result we fall in scam.

This is a great read for both Beginners and experienced as well.
I would like to suggest you add a description about using Bots by some exchanges to create fake trading orders. Few days ago, i shared the example of Yo token which is a shitcoin created within the Yobit exchange. The system in Yobit creates fake volume by adding fake successful buy/sell orders in the order history box.


[screenshot taken a week ago]

You can clearly see how orders are made by a bot, without to forget that this Yo shitcoin isn't traded in any other exchange and has no utility at all.   

I have to admit that I completely forgotten about the fake giveaways which is probably the most popular among scammers. Added it just now!

That's nice compilation of the dangers and risks that you could face as a newbie. Most scams are motivated by greed and almost always promise something in return so beware especially of fake giveaways and the like.

A great read for newbies such as myself who have dabbled in Crypto but don’t understand the full extent of the risks and scams that are prone to it.

A lot has changed in the last few years when it comes to the dangers involved when using cryptocurrencies. I've made this post after because I keep reading about many of the old and new dangers that appear to be increasing in a massive scale, and added some vital information for beginners to start their Bitcoin journey. The origins of most of these dangers are not new but lately, they infest the Bitcoin world and make anyone interested, having second thoughts. I tried to keep it simple and focus only on the important information for each subject. There may be more but currently, I think with this list we can cover most of the dangers involved with cryptocurrencies.

A) Common Scams
The scams surrounding this field always had a huge effect and made people skeptical about using Bitcoin.

i) Fake websites (mistyped domains - minor changes in letters)
This scam is of highest risk to lose funds. as scammers create clones of famous websites by misspelling the domain and eventually use them to extract funds or cryptocurrencies from their victims. Such cloned websites can be wallets, exchanges, or anything related to Bitcoin.
It is important to know that these scam websites appear on google searches usually bellow the official legitimate website but they also started a new kind of promotion using Google ads. This way they appear (as an advertisement) above the first search result and by having similar information as the website we search for even an experienced user can be confused.
We always have to be very careful and read the domain names letter by letter. The use of ad-block on our browsers helps too. Also, raising awareness by reporting scams always helps.
ii) Phishing attempts
Phishing emails are the most common threat. Scammers send emails trying to lure people into clicking links that will either download malicious software or redirect to a scam website. This is one of the oldest scams but they are very lucrative and effective for the scammers so they use them very often. Phishing attacks can also happen in desktop apps. An example is the case of Electrum and the person that lost 1400 Bitcoins lately. (Electrum had made this known since 2018 and if I remember correctly it was announced on bitcointalk too with a banner appearing on top about the vulnerability of that version of the software).
iii) Private messages
Scammers are everywhere right now. They are in chatrooms and apps like Telegram and all social media. They become annoying as they pm and try to build trust having many different scripts to fit on every occasion. They will try to extract as much money as they can. One way to deal with all of them is not to respond and block them immediately. Another type of scam happens as scammers target an individual, having obtained information about him first.
iv) Malware
Our system can become infected by malware just by clicking a link or downloading an app. We must be certain we are downloading software from the official source. Also only download software we are 100% certain that it does not contain malware. There is crypto-jacking malware that mines cryptocurrencies and there is malware that scans for private keys and sends them to the scammers' server. Also, there is malware that replaces addresses to ones that belong to scammers when we copy-paste them. Be sure to read the public address twice before sending your crypto.
v) Fake Giveaways
These are everywhere, although lately there have been steps to reduce fake giveaways by Youtube and social media. Still it happens and scammers ask for cryptocurrencies offering to send back twice the amount for reasons of giveway and airdrops. Common scam that noone should fall for but it seems many beginners still fall victim.

B) Crypto Scams
i)   Scam projects/ICO's
ii)  Scam Wallets
iii) Scam Exchanges
Before investing in anything that looks like a great opportunity we need to perform due diligence. There are many projects that exit scam, disappearing after they milked their investors and run with the money. Usually, there are many red flags and they are easy to be found. Bitcointalk has excellent scam busters and an easy way to find if a project is a scam is to read about it on this forum. An exchange or any other service can exit scam at any time. The past behavior does not guarantee they are honest services. Perhaps the regulated services can be considered most safe though.
iv) Cloud Mining - Doubler Sites
Avoid and don't spend a cent on these. they will rip you off your money and while some cloud mining services may be running for years, they can still follow the rest and exit scam for any reason without paying anyone back.
v) Ponzi Schemes
Bitconnect, Onecoin, PlusToken, and many more. Avoid anything that guarantees extreme returns. There have been many more and currently, there are a few Ponzi activities on Ethereum as Forsage.


C) Hacking
i) Hacks in our system
A hacker can infiltrate any system if he is given a chance. But the job is made easier if the users do not care about protecting their systems.
Steps we can take to increase our security:
- Strong passwords
- Different passwords for every website we use
- Don't store passwords on your device
- Securely store our private keys and use hardware wallets
- Don't download desktop sharing applications as "Teamviewer" or "Anydesk" for any reason
- Don't download any application unless you are absolutely certain about it and have performed thorough research first
- An antivirus and a good firewall can help a lot
- Use two-factor-authentication (2fa)
ii) Hacks in websites (exchanges and web-based wallets)
Exchanges get hacked all time and your money is never "safu" in one of them. There are dozens of cases of exchanges getting hacked (or claiming that they got hacked) and because they could not cover the hack with their funds, their customers lost all or part of their cryptocurrency holdings. Basically, most crypto exchanges have been hacked so far and in many cases, they shut down right after without paying their customers. Mt.Gox and Cryptopia are some examples. About wallets, the safest bet is having most of your cryptocurrencies in "cold storage" wallet. Treat all online services as a danger to your funds. What is right now secure might not be the next day.


D) Trading
Investing is not trading and some beginners confuse these two and instead of following their plan, they start trading. And trading may become gambling as there are many exchanges offering high leverage, future options, and binary trading that all are extremely high risk and can lead to liquidations and loss of all your funds. If you plan to use any of these trading options you should be sure to learn how to use them first of all and always read the specific rules of each exchange.

Avoid:
i)   Pump and Dumps
There are pump 'n dump groups in telegram and influencers in youtube that provide signals about which altcoin they will pump. They have already bought when the price was low and they wait for their followers to raise the price and dump the coins to them. A pump and dump usually happen in a few minutes and eventually, the price goes back to where it started.
ii)  Coins with Major Red flags (i.e. Sushi)
We don't know the founder of Bitcoin and we don't need to. The reason was that Satoshi did not want to be the person in charge. He has given Bitcoin to the world and stepped back to allow it to become an autonomous mechanism run by the community and consensus. This is not an excuse for every coin developer to hide his identity. In 99,9% of the cases a developer is anonymous the project turns out to be a scam. There are more red flags we can find in a project but I suggest not jumping in new projects because of hype and always do research.
iii) Binary Options
This is gambling and most of the binary options exchanges have been proven fraudulent. (more info here)
iv)  High Leverage
Avoid all leverage trading exchanges as a beginner. We need to learn a lot before using them as we can easily lose money by making simple mistakes. A mistake can cost a lot more than just money (link).
v)  Exchanges with low liquidity
You won't be able to sell your cryptocurrencies on some exchanges as they won't have enough buying orders at the current price. Most exchanges provide liquidity with market makers but they may have wide margins and force their customers to sell at lower prices.
vi)  Arbitrage
Only for experienced traders. You may find that it will take days to send the coin to another exchange (i.e. ETC will take a week to deposit in Kraken or Coinbase). Also, some fraudulent exchanges create artificial arbitrage opportunities to lure traders and steal their crypto.


E) Altcoins
Every beginner needs to know that 99% of altcoins will go to zero. Perhaps a few of the altcoins we have right now will survive the long run. History has proven that altcoins usually do not have anything to offer and are mostly speculative instruments in the cryptocurrency world.
Bitcoin is the King. Remember this when the next forked coin claims it will do the flippening and replace Bitcoin in dominance. Don't make the mistake to listen to sock puppets and influencers.
The risk of investing in altcoins is extremely high and their volatility proves this.
i) Shitcoins
Coins that their only purpose is to make money for the developers. This is the case for most cryptocurrencies.
ii) Premined coins
This was considered a scam behavior years ago but after some point, no one actually cared. Ethereum was pre-mined by a large percentage as the devs had an unfair headstart. After that perhaps the percentage of premining or the percentage of the tokens minted and held by the devs did not matter much to investors (or miners for coins running on their own blockchain). It still matters as holding a large percentage of the coins be it a dev or a whale makes the coin unattractive and a dump can happen anytime.
iii) Fake coins
There are some coins/tokens that do not even have a smart contract. They are centralized on an exchange server and their devs which are probably the exchange devs too are using them for pump n dumps scamming their customers. (i.e. Yobit with a series of fake ICO,IEO that are not cryptocurrencies and not blockchain-based tokens).
iv) Fake news
Devs use various ways to manipulate the price by marketing their coins most of the time with fake promises, partnerships, or fake statements of decentralization (i.e. XRP, IOTA, Tron, Verge, and many more).


F) Influencers
YouTubers, social media figures, and the famous people that are involved in cryptocurrencies. It may be entrepreneurs, CEOs of big corporations, Bankers, etc. They can use their power to influence others on mainstream tv and social media. And usually, they don't have your interests on the top but theirs. Some get paid to promote a certain agenda, others have positions that want to shill and others are knees deep in various cryptocurrencies. They will shill their coins or spread fud accordingly.
Don't listen to them. Do your research and don't risk deviating from your plan and sell all your Bitcoin for Chainlink because a YouTuber shilled it. Don't even think that you should have bought when he said to as you will just gamble your Bitcoin for no reason.


G) Government stance on Bitcoin
This is serious. It is not recommended to try and hide your holdings to avoid taxation from your profits.
Some countries have banned Bitcoin and consider it a crime to transact with it. China does not allow 1,4 billion people to use any kind of cryptocurrency since 2017. We should know that what is the regulation right now may not be the same in the future. It is better to avoid disclosing to anyone your cryptocurrency holdings for this and many other reasons but avoid hiding from tax authorities.


H) Learn to DYOR
This is very general but also very important to know that most of us can give false information about a subject. In bitcointalk, there are highly skilled Bitcoin experts. You will learn to recognize them after some time passes. But this is not only about bitcointalk. Research if something looks important to you. Try to double-check the facts and try to find the official sources about facts and situations. Everyone can make mistakes and it is important to correct ourselves. So, no matter how carefully planned is a presentation of a topic or a comment, it is always up to us to invest our funds and do research instead of letting others do that for us.


I know the list will not be full but I made it intending to help beginners get a better understanding of the dangers involved with cryptocurrencies. Most are in a vulnerable state and I keep reading their questions and fears about scammers. I hope with this post to help at least a few by educating about the risks and dangers.