The Psychology of Cryptocurrency Scams
Source: Talking about Li and the DAO
Trust a few
Harm no one
Love everyone
--- --- --- --- Preface
1. What is a cryptocurrency scam?
Cryptocurrencies are generally high-risk investments, even when purchased through legitimate means. First, let's understand the essence of cryptocurrency scams. A cryptocurrency scam refers to intruders stealing digital assets from holders through fraudulent means. Scammers are those who commit fraud using pseudonyms or remain anonymous.
2. How do scammers use psychology?
1. Establishing a persona --- --- Ambush stage
"Persona" refers to character setting, which simply means portraying an accurate image of a character. Besides physical characteristics, a persona also includes personality traits, the background that shapes the character's life, and the character's abilities.
Here, we should mention the Social Comparison Theory.
This concept was proposed by American social psychologist Leon Festinger in 1954, suggesting that individuals use others as a benchmark for self-evaluation in the absence of objective criteria. Festinger pointed out that in upward social comparisons, individuals compare themselves with those who are more socialized; in downward social comparisons, they make reverse comparisons. People tend to compare their situations with others to assess their status, achievements, and happiness.
In the cryptocurrency field, establishing a persona is a very low-cost and easy task. Age, achievements, hobbies, language, region… all of these can be rewritten. It's like adding a layer of embellishing code to one's real life, creating another persona that doesn't belong to oneself in a virtual world. Scammers transform into seasoned veterans in the cryptocurrency field, showcasing their trading achievements, strategies, and methods, which makes you admire and yearn for them. To deceive others, one must first deceive oneself. Even the scammers themselves may become immersed in their disguises, leading you to yearn for a better life and aspire to become more perfect, gradually stepping into the "web" they have woven for you.
2. Money-making strategies --- --- Induction stage
Regardless of the social software used, the highest realm of deception is warmth + humor. They will address you affectionately, answer your questions when you need it the most, and even be available at your beck and call. This behavior increases their trustworthiness and authority. Through a period of companionship and communication, scammers will present you with opportunities and temptations, opening the doors to a complex world that dazzles and amazes you.
The adult world is easily tempted, and clarity and judgment often arrive late. A partner in the group once said: "If you still hold centralized thoughts in a decentralized world, you will definitely be scammed. In a cyberpunk future, zero-trust thinking is crucial." Human nature is profit-seeking; under the premise of being strangers, answering your questions, introducing money-making projects, and leading you to make money… when did they become the trusted life mentor you rely on? Temptations often wear a glamorous disguise to conceal the dangers hidden within.
3. Do as I say --- --- Target locking stage
In the cryptocurrency field, do not let the market lead you by the nose, and do not let any so-called "successful person" do the same. Some words need to be listened to carefully, while others require calm judgment. A partner in the group once said: "If you don't know who is providing the returns, then you are the one providing the returns." It is essential to avoid touching what you do not understand.
Previous articles have repeatedly mentioned that if you are trading, you should choose official tools, use trusted cryptocurrency platforms, find legitimate projects, and go through proper channels. Avoiding these "proper paths" should trigger your alertness. This alertness is like a protective charm by your side. Staying vigilant in trading is a good habit; anything involving authorization, providing phone numbers and ID numbers, entering passwords, or financial transactions should be approached with caution. Always prepare for the worst while hoping for the best, and take responsibility for your safety with every action.
3. How to protect yourself from cryptocurrency scams
Be wary of unknown calls and emails.
Reject investment proposals from friends, as they may have been scammed but unknowingly recommend the scammer to you.
Do not believe promises of high returns with no risk.
Do not save passwords on your computer.
Enhance your awareness.
4. Common cryptocurrency scams
1. Pyramid schemes
Also known as "Ponzi schemes." This is a prototype of a financial pyramid where scammers offer "their investors" the opportunity to earn large sums of money by attracting new participants. Payments come from the funds of newcomers rather than actual profits. In this case, participants are recruited into this fraudulent scheme, but typically, once new investors deposit funds, the scammers disappear forever.
2. ICO scams
A type of scam related to Initial Coin Offerings (ICOs), which involves several forms of fraud. First, so-called cryptocurrency promoters raise funds for an ICO and then disappear. Second, developers can deceive investors by launching an ICO on a fake exchange. Third, there are reward scams, claiming insufficient funds to pay project promoters. These are the most common types of scams associated with ICOs.
3. Rug Pulls
This scam is closely related to ICOs. In "Rug Pulls," intruders create a new cryptocurrency or DeFi project, attract investors, wait for funds to come in, and then suddenly withdraw all the funds one day. The project and its founders then completely disappear, leaving investors with nothing.
4. Phishing
In this case, scammers send emails containing malicious links to people. They disguise themselves as websites offering lucrative investment opportunities to lure users. Once users click, scammers obtain personal data such as cryptocurrency wallet addresses, keys, or PIN codes. Once the funds are stolen, the wallet itself usually disappears as well.
5. Pump-and-Dump
This scam primarily targets a small number of cryptocurrencies. Its essence is that scammers artificially inflate the value of an asset, misleading potential investors into believing these coins are undervalued (pumps). In this way, they exploit investors' fear of missing out on a unique opportunity. Afterwards, attackers sell the coins they initially bought at a discount for a higher price (dumps).
6. Fake exchanges
Cryptocurrency exchanges are the most popular platforms for trading digital assets. This is why scammers often take advantage of this by creating fake websites. The main feature of such websites is that they usually offer exceptionally favorable conditions --- --- for example, no trading fees or registration required.
7. Cloud mining
This type is related to fake exchanges, as it appears on fake platforms. Scammers offering cloud mining provide users with the option to rent equipment and share profits. In reality, they do not own any equipment and disappear as soon as they receive funds.
8. Social media scams
Scammers use social media to spread false information, such as fake advertisements or promotions about cryptocurrencies. To gain trust, they create fake accounts and even impersonate celebrities. Their most common method is to send private messages to users, promising substantial returns for a small upfront payment, but in reality, they deliver nothing.
9. Live streaming scams
Intruders create fake live streams on video platforms like YouTube, impersonating well-known opinion leaders. During the live stream, they promote new cryptocurrency promotions and opportunities, all of which are fake. They encourage viewers to send cryptocurrency to specified addresses, promising larger returns, but in reality, they keep all the funds received without giving any returns to the viewers.
10. Pig-Butchering
In this scam, intruders typically establish long-term relationships with victims through dating apps. Once trust is built, scammers persuade victims to invest small amounts in a fake cryptocurrency platform that shows positive returns. As users invest more, the scammers cut off contact, making it impossible for users to withdraw their funds.
Postscript:
A partner in the group once said: "People always tend to trust authority, believing they have profound predictive abilities regarding the market."
The best lies in the world are not those that turn black into white, but those that only tell carefully selected parts of the truth. Every day, we are bombarded by a tide of information, constantly navigating the boundary between black and white. In fact, the one steering the ship for oneself is always oneself!
