Of all the cryptocurrency scams, fake news might be the method that most consistently flies under the radar.
While many of us have a trained eye now for phishing attempts, free giveaways, and the classic pump and dump scam, we may still be susceptible to fake news.
If you don’t know what we’re referring to, scammers these days are turning to fake news in order to spread misinformation surrounding cryptocurrency so that they can affect prices and maximise their earnings.
This fake news isn’t as easy to avoid as you may think, though, as it permeates social media, chat apps, and news sites.
While it may not be as overt an attempt to steal your cryptocurrency as phishing, for example, fake news has the potential to influence, which is a dangerous thing in this digital world we live in.
Since it’s becoming less and less clear what is real and what isn’t on social media, it can be easy to believe a headline that implores you to invest in Bitcoin right away or one that says that Dogecoin is tanking.
Examine the social media username
One of the oldest tricks in the book, yet one that still fools many social media users today, is when someone impersonates a famous personality on a platform like Twitter.
While you might assume that it would be easy to distinguish between a real deal and a fake, many people fall for the fake accounts time and time again.
Because it’s hard for us to notice when someone has created a profile that’s identical to the famous person’s account, but for one changed letter in the username.
That’s all it takes to scam hundreds or thousands of people.
One of the most famous examples of cryptocurrency fraud that came about as social media fake news was when someone successfully impersonated the founder of McAfee cybersecurity, John McAfee.
Aside from the irony of the cybersecurity head having his identity stolen online (through no fault of his own), it was a shocking moment that boosted the popularity of GVT which was an emergent digital coin at the time.
All it took was an impersonator account to put out a tweet advising people to invest in GVT, and the seed was planted. What made it so convincing is that McAfee had a reputation for seeing Bitcoin’s rise to popularity before it was a big thing.
The biggest red flag people should have picked up on here is the lack of a blue verification tick, but also the addition of the letter ‘L’ in the username which would have indicated that it wasn’t the real John McAfee.
After this tweet, the value of GVT began to soar, which as you can imagine likely made the scammer and his friends an awful lot of money at the expense of many cryptocurrency investors who took the bait.
This is a classic example of a pump and dump scheme, which is where scammers try to artificially inflate the value of a cryptocurrency by encouraging others to invest in it so that they can drop out and make a profit.
What makes the pump and dump scam so effective is that the cryptocurrency market is highly volatile, meaning the value of a currency can change in an instant.
As such, those who’ve never invested might look at it as a get-rich scheme citing examples of young kids investing in crypto years ago and making a fortune out of it.
When first starting out, it’s tempting to take on board any advice you can get, though in many cases this advice can be bogus or given in an attempt to take your money.
With the rise of cryptocurrency in recent years, there has also been a surge in fake news websites that imitate popular news outlets to convince readers of their authenticity.
Since everything is fast in the digital world, it’s plausible that you could navigate to a website you believe to be ‘CNN’ only for it to turn out to be a fake.
This has happened before, with the fake CNN website promoting Bitcoin through a series of articles and claiming which famous people were investing big money in the cryptocurrency.
This is another attempt at a pump and dump scheme, and it’s usually effective because it preys on confirmation bias and misinformation.
If you want to believe that Bitcoin is the next big thing, and you stumble upon an article that claims that Richard Branson has just poured millions of dollars into it, then your confirmation bias might cause you to reach for your wallet.
Likewise, if you don’t know much about Ethereum but you read an article about how it is exploding in popularity and you need to get on board with it now, then you might just part with your cash.
A simple way to tell whether or not you are getting your cryptocurrency news from a valid news site is to look beyond the article title and browse the page you are on.
Is it CNN or just a very good interpretation of the news site?
Do you see the lock icon on the left-hand side of the URL bar at the top of the page?
Did you come across the web page through a link you found on social media or in an email?
These are the questions you need to ask yourself whenever you find yourself reading an article about cryptocurrency.
Read between the lines
Another good way to detect whether or not a scammer is behind the news piece you are reading is to read between the lines.
That is to say, try to figure out what the article is really saying, and whether they are trying to persuade you to take a certain action.
Generally speaking, reputable online publications might take a particular stance towards cryptocurrency but it’s unlikely that they will try to push you to invest in one or another.
If you feel a strong urge to invest in a particular cryptocurrency after reading an article you found online, think about why that is.
Is it because the article offered sound investment advice or because apparently celebrity x has poured millions of dollars into it so you should too?
Nothing good comes for free
While we certainly believe that some good things do come for free, when it comes to cryptocurrency, you should be suspicious whenever something is given for free.
Since cryptocurrency has proved to be such a valuable investment for many people in recent years, and is so sought-after, it doesn’t make sense that someone would offer it up for free.
Free unsolicited advice is also a problem, though many cryptocurrency experts out there do give out sound investment advice on their social media platforms.
A good rule of thumb here is only to follow those verified experts that you know to be legitimate on social media, and ignore anything else you see or read.
Chances are, if a random account reaches out to you or you receive an email about cryptocurrency, it’s bad news.
After all, if someone knows that a particular cryptocurrency is about to skyrocket in value, wouldn’t they want to keep that knowledge to themselves?
It’s difficult to make smart investments with regards to cryptocurrency, so to think everything you read is helpful is naive. Most people don’t have the slightest clue, but will happily sell you on their theories.
Unfortunately, there will always be people out there who want to make money at the expense of others, and that’s why it’s best to err on the side of caution with cryptocurrency and be very selective over who you take advice from.
Even apps can spread fake news
It isn’t just websites, email, and social media that spread fake cryptocurrency news though since mobile phone apps can deceive too.
It’s an interesting approach on the part of scammers to go through the effort of creating an app just to spread fake news, but it can be effective so you have to be on your guard.
Before you download any application related to cryptocurrency, check to see if it is legitimate.
That means go through all of the ratings on the store, check what people say in the reviews, and do a search online too - since you can never be too careful.
You should also head to a cryptocurrency news site and search the name of the app since they will often post articles about the latest scam sources.
After you’ve done this initial round of research, take a look into the people or the company that created the app.
If they are anonymous and you can’t find any information about them on the internet, then that’s a significant red flag. Yet if they are backed by a reputable cryptocurrency company then there’s a strong chance that the app is authentic.
Again, caution is key, so just make sure you know exactly what you’re downloading when it comes to cryptocurrency apps.