What Is Cryptocurrency and How Can You Protect Yourself and Your Investments?
By now you have probably heard a lot about cryptocurrency or people investing in bitcoin. You may even wonder why there’s a lot of interest in its value and use in the future. crypto has a ton of potential and is shaping up to be a major player in the future of finance and tech.
After all, that’s why anyone invests anything at all. And in hopes of making a profit.
Understanding what cryptocurrency is and awareness of the online scams out there is the key to falling victim to what could be a profitable investment in the future.
What is Cryptocurrency?
Cryptocurrency is digital or virtual currency that uses cryptography for security purposes and to operate independently from a central bank. The central bank’s functions to control inflation, manage the money supply, and regulate financial institutions. In the United States, our central bank is the Federal Reserve. Therefore, No government or bank controls it as of now.
The most common cryptos out there are:
Bitcoin (BTC): The original and most valuable one on the market
Ethereum (ETH): Popular for smart contracts and building apps
Altcoins: Solana, Cardano, Dogecoin, etc
Crypto Scams Expected to Increase in 2025
If you’re looking to start investing in bitcoin or another kind of crypto now, be sure to do your research before putting any money down. Check the legitimacy of the websites you’re on and the people who are giving you financial or investment advice.
Social media sites such as Facebook and TikTok are found to be the most emerging sources for crypto fraud schemes in 2025, so be sure to do your research more about a company or product before making an investment. Just because someone on the internet makes it seem like an amazing opportunity does not mean it is.
Pump and Dump Schemes
Organized groups manipulate the price of lesser-known or newer cryptocurrencies on the market. Think of these like penny stocks except without securities. Once the price of the crypto goes up, these groups will then sell their positions and drive prices down, leaving unsuspecting buyers with worthless tokens and them with the profit.
How it works: A group hypes a low-value coin (often on social media), people rush to buy, price spikes, insiders sell at the top, and the price crashes.
Where you’ll see it: Twitter/X, Telegram, Discord, Reddit, TikTok.
Red flag phrases: “This coin is going to the moon!” or “Buy now before it’s too late!”
Ponzi Scheme Investments
A Ponzi Scheme is when a project or group promises unrealistic returns that use new investors’ money to pay earlier investors, eventually collapsing when they can’t bring in new money or investors.
How it works: You earn rewards for bringing in new people, but the system collapses when new sign-ups slow down.
Where you’ll see it: “Crypto investment platforms” promising high returns with little to no risk.
Red flags: Unrealistic ROI (e.g., “Earn 10% daily”), no transparency, pressure to recruit others.
Rug Pull Scams
Rug pull scams are one of the most common and devastating scams in crypto. A rug pull scam happens when a crypto project suddenly disappears with investors’ money, leaving everyone holding worthless tokens. One of the most well-known cases surrounds internet personality Hailey Welch, or “Hawk Tuah,” encouraging her followers to invest in her memecoin $HAWK. Within minutes, the value of the coin reaching close to half a billion dollars. And then a few minutes later, the value by 93%, wiping out nearly all of its $490 million market cap.
How it works: Developers launch a new coin project, encourage people invest, then the devs disappear with the money.
Where you’ll see it: New NFT or DeFi projects that pop up overnight.
Red flag: Anonymous team, no audit, no real use case, overhyped – especially by online influencers.
“Pig Butchering” Scams
This type of scam gets its name from the scammers’ tactics to build trust and loyalty with their victim to “fatten” them up with affection and/or fake investment advice. The scammer then “butchers” the victim by stealing large amounts of money or crypto. This is among the most dangerous and manipulative cryptocurrency scams currently out there.
Victims are encouraged to deposit small amounts on a crypto investment platform or trading app at first. And there may be some money that the victim can withdraw to feel more at ease to invest more. But eventually, the website begins to glitch, they require another KYC verification, and suddenly the website disappears, or your support service vanishes and the money’s gone.
These scams are now using AI-generated identities and fake trading dashboards to appear more convincing. You never know who you’re talking to on the internet, so ALWAYS verify and limit your interaction with strangers who give you more attention than actual people in your life do.
Romance Cryptocurrency Schemes
Online romance scams have been around since the creation of the internet, and like most scams, they are scamming you out of money. This is in a similar vein as pig butchering where the scammer showers a person with attention and affection to get them to invest in fake crypto assets, or steal their personal identification.
They rely on manipulating individuals to believe they have formed a genuine connection with another person online in order to gain their trust. Scammers take advantage of the natural human desire for companionship and trust, exploiting these qualities with ruthless efficiency. Once the scammer gains the victim’s trust, he or she eventually begins asking for money or enough personal information to steal their identity.
[RELATED: Detecting Online Romance Scams: What You Need to Know]
Online Hackers
Most crypto investment hacks happen because someone got access to your private keys or seed phrase, which is what locks your investments away. Most commonly though, hackers are targeting blockchain bridges and DeFi protocols. And remember, crypto is not a part of a centralized bank, so there are no sound protections beyond the technology.
To best protect yourself from people from hacking into your account, look into buying a hardware wallet. A hardware wallet is a physical device (kind of like a USB stick) that stores your crypto securely offline. It keeps your private keys (the thing that lets you access and send your crypto) off the internet and therefore away from hackers.
Because it’s offline, it’s much safer from hackers, phishing attacks, and malware than keeping crypto on an exchange or a mobile app.
How to Protect Yourself from a Crypto Scam
Understanding what cryptocurrency is and awareness of the online scams out there is the key to falling victim to what could be a profitable investment in the future. Investing in crypto can pay off big, but it’s also risky, and you are not guaranteed anything. It’s not safe in the traditional sense like a savings account or blue-chip stocks.
- Be mindful of online sharing. Scammers use personal details to craft their cons.
- Only invest in what you’re willing to lose.
- Beware of urgency. Don’t be rushed into making decisions.
- Research individuals and groups before sending money to anyone.
- Don’t trust DMs – even from verified accounts, or someone with a lot of followers.
- If a project doesn’t have an audit or delays sharing it, don’t trust it
- Trust your instincts. If something feels off, talk to someone you trust for financial advice.
