Top 7 web3 biggest scams exposed
You've probably felt the pain of the current market situation. Losing money on a safe investment hurts, but falling for a scam can be heart-wrenching. This article is set to expose the top 7 web3 scams.
People say that Web3 is the Internet of the future. Actually, this is not too far from reality. The mix of decentralization (blockchain technology) with token-based economics in Web3 is fascinating. Web3 is an internet that is built on the blockchain and gives consumers more control and ownership than the standard Web2.
No matter how forward-thinking the technology, ideas, or goals are behind a movement, bad actors will always find a way to take advantage of the situation and cause harm to others. Scammers may be found anywhere, and Web3 is no exception. Now, what are web3 scams?
What is a web3 scam?
Web3 scams are similar to traditional financial fraud, however, the perpetrators target your cryptocurrency holdings rather than your cash.
Scammers on web3 use many of the same methods that are used in other types of financial crimes, such as pump-and-dump schemes, which make exaggerated statements about an asset's value to convince investors to buy it.
According to Shane Cummings, wealth adviser and director of technology and cybersecurity at Halbert Hargrove, this latter type of scam could involve hacking into a victim's cryptocurrency wallet or convincing an investor to deliver digital assets as payment for a fraudulent transaction.
These attacks aim to get the victim to reveal sensitive information or send the attacker money or valuable digital assets such as non-fungible tokens (NFTs).
In the words of Chengqi “John” Guo, a professor of computing information systems and business analytics at James Madison University, “as an instrument, web3 scams are particularly appealing to nefarious agents who enjoy cryptocurrency's swift conversion to fiat money, ready-to-use third-party transaction applications, and rich obfuscation techniques.”
Top 7 web3 biggest scams exposed
Now, without further hullabaloo, let's take a look at some of the most audacious and extensive scams to hit web3 in 2022. They include;
- Pump and Dump Scam
- FLIP-COIN Scam
- Pancake Swap Scam
- Phishing Scam
- Using the wrong protocol or network for a transaction
- Admins will never DM you first
- Harmful airdrops
Pump and Dump Scam
There is little oversight of Web3, thus many people use it without consequence and many others continue to view it as a frontier business. The majority of governments have not yet committed to or shown much interest in a web3-style decentralized funding structure.
Some influential people and traders get in on the ground floor of a new Blockchain venture by purchasing digital money at a discount. They spread the word about the coin on social media, causing its value to spike and demand to persist for some time. People who don't know acquire the new coin, which causes the price to skyrocket before the insiders start selling it at a loss.
The insider gets a ton of money by selling their coin at its height, while the naive purchasers lose everything as the price drops. This is part of web3 scams.
How to protect yourself
- Learn to read what has been documented: It's important to find out more about a coin before you buy it so you don't end up with one that isn't worth much.
- When some influencers keep telling you to buy a certain coin, don't be too quick. Many of them are just pumping coins and will leave when the price is high enough.
- Stick to coins that don't change, and don't buy anything without doing enough research and reading.
- Do not be greedy.
FLIP-COIN Scam
The concept of “flip coin” was developed from the older con of “flipping cash.” A victim sends money without suspecting anything and then is told to wait while the money is doubled. The victim anticipates receiving a double coin but soon learns that they have been scammed out of their money.
In 2020, hackers caused a crisis on Twitter by using a variation of the flip coin trick. Many high-profile accounts were targeted, including those of Jeff Bezos, Elon Musk, Apple, Uber, Barack Obama, and Joe Biden.
Pancake Swap Scam
Pancakeswap is a decentralized cryptocurrency exchange that lets you swap BEP-20 tokens. It works on the Binance Smart Chain BSC. Its dApp platform also lets you swap, stake, lend, and yield farm.
The trick: A social media user who doesn't know what's going on usually finds out about Pancakeswap from YouTube or other social media sites. When an asset has a liquidity gap, it can be bought or sold quickly and easily without affecting its price.
The scammer tells the user that he doesn't need to be an expert or know much about smart contracts, and then the scammer sends the user a link to get the contract to work.
Phishing Scam
Under false pretense, a phishing fraudster steals crucial information from an unsuspecting user. It's a typical fraud, but by examining and deconstructing it, you'll learn how to avoid it and how it works.
The bulk of these frauds starts on social media or through odd mail. It is primarily social networking for cryptocurrency, with scammers claiming airdrops or a good ROI. When you click on the link, you are usually routed to a site where the unwary victim enters their information.
You fill or link your wallet innocently, and the scammer utilizes the details you provide to access and take your funds.
How to protect yourself
- Never connect your wallet to someone you don't know well enough before.
- Don't let anyone have your private keys, which are used with an algorithm to encrypt and decrypt data. If you did, they would be able to get to your money.
- Keep your recovery phrase a secret, because if someone knows it, they can get into your account quickly.
- Check the address you're working with on the following websites: ScamAlert, Bitcoinabuse
Using the wrong protocol or network for a transaction
Keep in mind, though, that different blockchains can't just interact with each other. Even if they are built on the same platform, like Binance Chain and Binance Smart Chain.
The same can be said about different networks or sidechains that work with a blockchain. They might be based on the main blockchain, but you usually have to change (bridge) your transaction to use them.
Make sure that the wallet you send your tokens to also accepts this type of token. If they do not, your tokens will be lost.
When in doubt ASK ASK ASK. No one will be mad at you if you are worried and check things twice.
Admins will never DM you first
Still, on web3 scams, it is important to know that, the staff of a crypto company will never send you Direct Messages (DMs) offering help, asking for money/crypto, your passphrase, or any other important personal information. All news is shared with the public through official websites and social media accounts (Discord, Twitter, Telegram, etc).
Always ignore and report any person or account that calls or sends you a message asking for your details, offering customer support, promising crazy investment opportunities, asking for verification codes, saying your account has been blocked or telling you your details are needed to get your account unblocked.
Harmful airdrops
Free tokens or NFTs are dropped directly into users' cryptocurrency wallets via airdrops. It's a method employed by businesses as a means of advertising, with the goal of drawing in customers and rewarding those who try out the product early.
To get these airdrops, users must often link their wallets to a dApp or website. Many airdrops are entirely valid, but criminals utilize this tactic to steal money from users' wallets once they link their wallets to malicious websites.
Conclusion
We must take full responsibility for our financial safety if we want to learn about and use the many benefits of Web3 technology. One of the good things about the space is that it gets rid of middlemen so you can have full control over your assets. But that means you have to be stricter and more careful. Avoid web3 scams. Stay safe. Protect your property.
