It’s only a decade ago since Bitcoin’s invention, but already we’ve seen a tremendous increase in its popularity worldwide. Today, it remains to be the top cryptocurrency dominating the digital currency market. The good news is that several investors have also joined the investment. Does that mean everything is well with Bitcoin? Not at all. Besides the competition it’s currently facing from altcoins, the Bitcoin market is full of risks. A significant risk is the prevalence of scams. How common are those Bitcoin scams? To answer that question, let’s discuss the various types of scams that are there.
Most Common Bitcoin Scams
The prevalence of fraud in the crypto industry is worrying and is one reason why some people shy off from investing in cryptocurrency. Though the scams are familiar to all cryptos, Bitcoin is most affected because of its position and fame. However, with proper familiarization with top Bitcoin scams, you can learn how to avoid them and invest successfully. Here are some scams to watch out for:
Blackmailers claim to have hacked into your computer. They then send you emails threatening to exchange the information they have about you with Bitcoin. They say that if you don’t send them, then whatever content they have will go viral and be spread across your social media platforms. Well, unless you’re so vulnerable and timid, be aware of such scams!
Free Giveaways and Prize Giveaways
It’s sad how some people can steal others’ hard-earned money by claiming to give them free compensation. Scammers ask people to provide personal information or send a certain amount of money for registration in exchange for a free giveaway of Bitcoin. Whenever you see such message requests, you should take caution and report them.
This involves using someone else’s social media account to trick users. The recent Twitter-Bitcoin scam is an example of this kind. Hackers invaded accounts of prominent people and used them to send messages that promised a double refund for those who would send some Bitcoin amounts. They make it appear as if the original account owner, whom people, including you, know and trust, is communicating. Within minutes, they steal vast amounts of funds. Always double-check the validity of such messages using multiple sources.
Face-to-Face Meet Ups
Sometimes when people trade Bitcoin, they may want to meet in person. Unless you’re familiar with the party involved, avoid such arrangements. Fraudsters may rob or injure you in the process. Others can even give you fake fiat currency in exchange for Bitcoin. It’s better to confine such deals to peer-to-peer platforms or exchanges for your safety.
Phishing Emails and Websites
This is a common fraud in almost all business sectors. They are used by scammers to purport that some trusted agencies or organization is seeking your help. Such emails tend to request you for action like password reset or changes regarding your account. The same applies to websites that may be designed to steal people’s login credentials. Avoid logging into suspicious websites or clicking links to such. If you get an email purported to be from an agency you know asking for action but looks doubtful, confirm the authenticity first. Try contacting the agency to inquire if such requests are genuine.
With the status of Bitcoin and its increasing significance, many people are considering acquiring it. That makes its demand high, leading to a pitfall that some enter without knowing, using fake exchanges. These trick users by giving competitive terms like quick access, cheaper fees, and other “appealing” services. If you’re planning to buy or sell Bitcoin, find legit and reliable sites to use.
Ponzi and Pyramid Schemes
A Ponzi scheme tricks investors into participating in offers with the promise of high returns. A promoter lures people to invest in their scheme. After doing that, initial investors will get what, according to them, are “returns,” instead are payouts from money put in by newer investors. That convinces them that the scheme is legit, and they continue depositing more money. After a while, the scheme collapses, and the investors lose money when the promoter disappears.
A pyramid scheme assures people returns according to the number of participants they make join. It also ends like the Ponzi one and leads to mass loss of money for those involved. Watch out for such incidences and never join or invite anyone to participate with the hopes of getting continuous returns. Avoid making capital contributions to others promoting the process.
Malware and Ransomware
Malware is a program that hackers install on users’ wallets to get their addresses changed unknowingly. Once that happens, they take charge of all your transactions and alter them. Ransomware is malware that blocks access to a device unless the owner pays a ransom in Bitcoin. Before giving in to such threats, try consulting with a professional to assist you in removing it. Take care of the programs installed in your device, especially those that require administrator access. Try using an updated and trustable virus scanner to help limit the installation of suspicious programs.
Pumps and Dumps
Investors always look forward to price changes because it means profit for them when they go up. Some people use tricks to artificially raise or pump prices and entice others to invest so that they can dump their assets for a profit. They also tend to take advantage of people with FOMO (Fear of Missing Out). Keep an eye on fake news about Bitcoin price hypes and always research carefully before making a move into Bitcoin investment.
Whether you’re using cloud mining, which allows Bitcoin mining without employing expensive hardware or mining through the standard way, there are plenty of scams to know. Some pro miners tend to hide “blocks” (containing several Bitcoin transactions) and leave others in the dark so that they gain the profits alone. If you decide to mine Bitcoins, it would be ideal for joining a mining pool to reduce your chances of being scammed.
The Bottom Line
Have you ever been scammed while trading Bitcoin? If so, it’s unfortunate, and if not, you need to be vigilant and keep on the watch for any possible scam scenario. We can’t promise that knowing how common Bitcoin scams are will prevent you from falling victim to them. But it can help you familiarize yourself with them and learn how to avoid them.