In recent years, cryptocurrencies have become an integral part of the financial world. With their proliferation, various forms of exchange have emerged, including P2P (peer-to-peer) exchange. However, along with the growing popularity of P2P platforms, the number of fraudulent schemes targeting unprepared users has increased. In this article, we will examine how crypto scams have infiltrated P2P cryptocurrency exchanges and how to avoid falling for scam deals.
What is P2P Cryptocurrency Exchange?
P2P cryptocurrency exchange is a way of trading where buyers and sellers interact directly, bypassing centralized platforms. This allows users to set their own deal terms, including price and payment method. The principle works as follows: one party offers to sell cryptocurrency, and the other to buy, establishing direct contact to discuss terms. However, the absence of a middleman increases the risk of fraud.
Advantages and Disadvantages of P2P Exchange
The main advantage of P2P exchange is its decentralized nature. Users can set their own deal terms, making the exchange more flexible. In addition, P2P exchanges often offer a wider choice of payment methods, including cash, bank transfers, and even electronic money payments.
However, this method also has disadvantages. The lack of centralized control can create opportunities for scammers. Since the transaction is conducted directly between users, there is no guarantee that the cryptocurrency will be transferred or that payment will be made. Fraudulent schemes can take various forms, from creating fake accounts to scamming with fake certificates.
The Most Common Fraud Schemes in P2P Exchange
There are many ways that fraudsters can try to deceive users in P2P exchanges. Let's look at the most common schemes.
Fake Accounts
One of the most common schemes is creating fake accounts. Scammers can use various platforms to create multiple accounts with attractive offers. These accounts often have high ratings and positive reviews, which inspires trust in users. Typically, the scammer creates a fake page where they promote their services, successfully conducting "test" trades with other fake accounts to confirm their reliability.
Payment Fraud
Another type of fraud is payment fraud. Scammers may forge payment notifications, showing that they have made a transfer when in fact they have not. They often ask the seller to release the cryptocurrency immediately before the funds are confirmed. This deceptive behavior can lead to the seller losing both their money and cryptocurrency at the same time.
Extortion
Scammers may also use extortion as a way to deceive users. After the transaction is completed, they may either threaten or blackmail the victim to make them return the cryptocurrency, citing an alleged lack of agreement on the deal. This can include threats to publish personal information or demand an additional sum of money.
How to Avoid Fraud in P2P Exchange?
There are several strategies and rules that can help users avoid fraud in P2P cryptocurrency exchanges. Knowing these simple yet effective measures can reduce the risk of encountering scams.
Rely on Reputation
Before starting a transaction, be sure to check the user's reputation. Many P2P platforms have rating systems that show the reliability and integrity of the seller or buyer. Review previous clients' feedback about a specific user. The more positive reviews and the longer the client has been on the platform, the higher the likelihood that you will have a safe trade.
Use Secure Platforms
When choosing a platform for P2P exchange, it is important to select verified and reliable services. Check if the platform has security mechanisms, such as an escrow account. An escrow account is a tool that holds cryptocurrency until both parties confirm the fulfillment of the deal's terms. This significantly reduces the likelihood of fraud.
Be Cautious with Payment Methods
Before making a transaction, pay attention to the payment methods. Avoid using unreliable or complex methods, such as new or little-known systems. It is best to use methods like bank transfers or major payment systems with buyer protection. If something looks suspicious, it is better to decline the deal.
Process of Conducting a Safe Transaction
A safe transaction in P2P exchange requires following certain steps to ensure the protection of both the seller and the buyer.
- Before conducting a transaction, both parties should clearly agree on the terms. This includes discussing the price, payment method, and execution time. All agreements should be recorded in the chat on the platform so that in case of disputes, you can refer to this information.
- When conducting a transaction, always use an escrow service. It ensures that the cryptocurrency is held securely until both parties confirm they have fulfilled their obligations. For example, the seller will not receive the money until the buyer confirms that the cryptocurrency has been transferred.
- Before transferring cryptocurrency, ensure that the payment has been successfully made. If you are using a bank transfer, wait until the funds are credited to your account. If the seller insists on immediate cryptocurrency transfer, it is better to refuse the deal.
Ultimately, all steps of the transaction should be documented. This includes correspondence, payment confirmations, and any other important details. If disputes arise, you will have proof that the transaction was conducted according to the terms.
Conclusion
Fraud in P2P cryptocurrency exchanges is a serious problem, but it can be avoided by following simple recommendations. By knowing the main fraud schemes and following safety rules, users can significantly reduce the risks of losing their funds. Attention to detail, good practices, and insight will help avoid scams and enjoy trading cryptocurrencies