Every other day we hear news of cryptocurrency scams in the blockchain space. The common bitcoin scams involve people unknowingly falling into the trap of Fake giveaways, Ponzi schemes, Phishing, Computing hacks, and Fake exchanges.
In this article, we will briefly discuss the common bitcoin scams and how you can avoid them
Bitcoin was an unknown currency in the early 2010s. It was worth pennies and there were only a handful of investors rooting for it. However, in 2017 the price of bitcoin skyrocketed. The news of investors getting rich overnight gave rise to interest in cryptocurrency. Since then, the fintech industry is making efforts to mainstream cryptocurrency. At the time of this writing, Bitcoin is sitting at 23K USD. This is a result of the steady growth of investor’s trust in crypto.
The newfound interest in crypto has its own downside. Fame has attracted many malicious actors towards it as well. There are increasing numbers of scams, frauds, and ICO scandals. We can make the novel and complex nature of crypto responsible for widespread scams. However, it is the actions of individuals as well that make these scams successful.
In order to avoid falling victim to scams, it is crucial to understand the ploy of hackers. This way you can identify the red flags beforehand. We will list down the top 7 common bitcoin scams here. So let’s jump right in.
Common Bitcoin Scams
Fake Trading Platforms
Trading platforms are used for buying, selling, and exchange of cryptocurrencies. They make the trading process smooth and easier. Nevertheless, some trading platforms are just scams. They take over the money of users and never return it.
For spotting a fake exchange look at their services. The surprising low fee and unrealistic promises of incentives are scammer’s tactics. Moreover, you can also check the URLs for any unusual changes as some fake trading platforms imitate the real crypto exchanges. Furthermore, web addresses must start with HTTPS which shows that traffic is encrypted.
Giveaways are another common scam for bitcoin. The well-known incident of the Twitter hack in August involved the giveaway scam. The hackers published a misleading message from accounts of famous individuals. People sent their bitcoin in the hope of getting back double amount but clearly that never happened.
Fake giveaways are very easy to identify. Any gifts that require you to send something first are frauds. Additionally, avoid sharing the private key of your crypto wallet with anyone.
Blackmailing is a common form of making someone pay you the money. In the internet space, hackers steal sensitive user data and ask for money. They threaten to release information if the victim fails to comply with their demands. The money is taken in the form of cryptocurrency or bitcoin as it is difficult to track the recipient on blockchain.
You can protect yourself from blackmailing by careful choice of credentials, use of two-factor authentication, and avoiding visits to unprotected sites.
Also Read: 4 Common Misconceptions About Bitcoin
Locking Out From Account
It is also known as a ransomware attack. The attacker leaves malware in users’ devices to lock them out of their accounts or block access to valuable data. Usually, big companies suffer from this type of attack.
Do the following actions in order to prevent a ransomware attack:
- Update your device security periodically.
- Avoid clicking on spam or suspicious links.
- Install the latest version of antivirus to keep your device clear.
There are two ways of phishing attacks. The first one is through social media while the second through email.
In social media phishing, the attackers pretend to be someone else. They use the name of an authoritative person to scam people. You can avoid becoming a victim by cross-checking the profile or looking for blue ticks.
Email phishing involves emails from fraudulent companies that pretend to be from a reputable organization. If an email looks suspicious to you, do not open it or click on any link. You can also send the email to the actual company and confirm the message with them.
The public address of bitcoins wallets is usually long with a mix of characters. When sending funds to a wallet, people just copy and paste the address rather than typing the whole thing. Scammers make use of this weakness and leave a copy-and-paste malware in the device. When you paste the address from somewhere the scammers’ address replaces it and funds never reach your targeted place.
You can avoid this scam by taking care of your device security. Do not install software from an unknown person. Additionally, take good care in browsing unprotected sites.
Ponzi schemes are also used in cryptocurrency scams. These involve paying old investors with new investors’ money. When there is no longer a new person joining in then the money stops following. There is no actual business in Ponzi schemes. Scammers effectively lure in the investors by giving them the reward for the first investment. However, the victim loses everything when he is all in.
To avoid falling into a Ponzi scheme, do extensive research before buying any crypto. If the profit is totally dependent on new investors joining in then the scheme is a lost cause.
Bitcoin scams can be avoided once you know where those are coming from. Have patience with your finances and do complete research before investing somewhere. The onus of protection your cash falls on you first of all. So, stay vigilant.