Bitcoin Scams – How to Identify and Avoid them


Bitcoins and other cryptocurrencies are interesting yet complex and with very little regulation, leaving them vulnerable to scams. People that have been into cryptocurrency for some time know very well that it is an advantageous market for scammers.

bitcoin scamsThese scams flourish because the average cryptocurrency or bitcoin investor is motivated by the idea of a get rich scheme and looking for a way to make money fast. The greed usually gets the best of them, and they end up with a loss. Thus it is a perfect market for scammers especially with no regulations and the constant movement of coins from wallet to wallet. For an average investor, it will be quite challenging to track their currencies after being scammed.

To be able to avoid being scammed as an investor, you need to be more knowledgeable about what kind of scams you need to look out for. How to identify them and how to even prevent them from happening to you. Always remember that it is better to preserve your capital now instead of just rushing and going in full force thinking of future Lamborghinis and Maseratis.

Following are some bitcoin scams, how they work and how to identify and avoid them.

Phishing scams

This type of fraud may sound a little bit familiar to you because it has also been used to scam major bank customers. In this case, phishing occurs when you receive an unexpected and uninvited email that looks like it is from your wallet provider or cryptocurrency exchange.

In this email will be a link that will direct you to a site that looks almost exactly like your exchange or wallet. Do not click on that link because it is almost always just a scam site. If you fall for the trap and go to the unofficial site and fill in your details, the scammers will now have enough personal data to log in to your actual account and steal your money.

How to dodge phishing scams

Don’t make the mistake of not double checking your URLs to confirm that you are on the right website.

Do not open any links that you are uncertain of or that look suspicious in your email. If you did not request it why are you getting it?

NEVER EVER reveal or give away your private key

Fake wallets and exchanges

In a similar manner to phishing scams, be very careful of falling for fake bitcoin exchanges. Most times they may have all the features that make it look like a reliable exchange; meanwhile, they are just the opposite. They are imitations waiting to snatch people’s hard earned money.

Some fake exchanges will go as far as to offer bonuses for large deposits to attract those eager investors. Some also use pop-ups and adds to pressure people into creating accounts and making deposits right away. But what you don’t realise is that once they have your money, you will not get it back. They may request large fees or make it almost impossible to withdraw your money or take your money point blank.

Bitcoin and other cryptocurrency wallet scams

Other scammers will focus on creating fake wallet apps that are so sophisticated that when you download them to your smartphone, they can easily take your account detail and personal data without you noticing.

The worst part is that the fake apps make it amongst legitimate apps in the app store, so it is challenging to tell them apart. That is why it is imperative to do some research before you download anything to your phone.

Avoiding fake bitcoin and cryptocurrency exchanges and fake wallet scams.

When it comes to cryptocurrency (bitcoin), it is always important to use well know and reputable exchanges to avoid getting trapped in scams of this sort.

Before creating an account with any exchange or wallet make sure to do your research though roughly. Consider whether the company is registered. Check reviews as well, are they reliable enough to confirm the exchange or the wallet ’s legality.

bitcoin scamsNever succumb to any pressure that will lead you into making extravagant deposits and disclosing your data.

Do not erratically choose wallets from any app store instead you must only download software from trusted exchanges and wallet providers.

Dated bitcoin scams

Although cryptocurrencies are somewhat focused on new and developed technology. Some scammers still use the oldest tricks in the book to rip-off unsuspecting consumers. A typical example of this is a random phone call that you have not requested or a fake email from someone pretending to be with the IRS.

The point would be to try and make you believe that you are owing to the IRS some money. And that legal action will be taken if you do not pay off the amount in bitcoin immediately.

Avoiding old schools bitcoin scams

Do not trust spontaneous calls from people you don’t know or unrequested emails

Use common sense; if someone you don’t know from a foreign country contacts you promising you lots of cryptocurrency funds, use your common sense and identify it as a scam

Ponzi or Pyramid schemes

A Ponzi scheme in simple terms is investors are promised ridiculously high returns as a way of luring them in. It is straightforward but also very effective. The process involves a promoter whose sole purpose is to convince people into investing in a scheme. The first investors to fall for the scam and make an investment, will receive what he thinks are his returns.

However, it is a payment from newer investors. As these new investors feel happy with their payments and are convinced “ it works “ they will encourage others and will keep putting more money themselves. When it becomes more difficult to bring more investors in as a result of more awareness of this scheme the scheme shuts down as the original promoter runs escapes with all the money.

Although these kinds of schemes are not so new, many people still fall into the trap so be careful!

How to avoid Ponzi or pyramid schemes

Keep an eye out for people presenting you with big cryptocurrency project ideas that have to do with you convincing other people to join the team so that you can enjoy more significant profits.

If a scheme offers you returns that are too good to be true, then they are not true. Do not trust them, when in doubt DON’T.

Bitcoin scams -Malware

Malware has always been a tremendous weapon for online scammers with the development of technology in cryptocurrencies being complicated and not easy to understand.

Malware is now an even more significant threat. Instead of stealing personal account data or credit card details, cryptocurrency malware is programmed to access your web wallet and clear out your account. It also searches for cryptocurrency addresses, and when it finds them, it puts a scammer’s fake address in place of the legitimate one which may as well infect your computer.

How to avoid malware scams in cryptocurrency (bitcoin)

You must update the antivirus on your soften very often to make sure you are fully protected from malware.

DO NOT download or install anything on any of your devices if you are not sure of how safe they are or how real they are.

NEVER open any attachments that you think may be fake or you don’t know where they came from and what they are for.

Mining scams

bitcoin scamsWith systems such as cloud mining that permits you to carry out the mining of cryptocurrencies without the hassle of managing expensive hardware.

There are some services available that allow you to rent clod mining server spaces to do your mining at a set rate. Never the less there are quite a lot of scams out there as well. And as usual some will promise you extravagant returns that never come to pass, and some steal your money.

How to avoid bitcoin and other cryptocurrency mining scams

Before signing up for any cloud mining operations make sure you have done your research. Consider whether you can find any actual reviews on it, does it have https? What is its public mining address, does it have one? How long has it been operating for?

Do not trust companies that make you extravagant promises or offer you guaranteed returns.

Pump and dump

Cryptocurrencies are investors fantasy turned reality with some market manipulation which has now resulted in schemes known as the pump and dump. This scheme is based on a big group of buyers who focus on a particular altcoin with small market capitalisation. They buy the coin and wait for the price to rise, and then they take advantage of the massive increase in price and sell them.

This is typically illegal in securities markets; however, in the unregulated cryptocurrency market, it is somewhat normal.there are a lot of groups online that are practising the pump and dump scheme. Therefore you need to be careful of such kind of scams.

How to avoid pump and dump bitcoin and cryptocurrency scams

Stay away from small market capital cryptocurrencies that have a low trading volume, but they have an abrupt price spike.

Steer clear of false news about a specific coin or social media hype about a particular coin.

Before buying any cryptocurrency, you must have done sufficient research on its credentials.

Fake ICO scams (bitcoin)

bitcoin scamsAnybody could create their cryptocurrency if they wanted to. All you would need is some simple design skills plus a computer. What scammers do now is they create a beautiful fake website that looks so professional that would not even suspect. They put effort into great marketing to attract people and make it look like the next best thing in the industry.

Once they have created a good web presence the real scamming begins. These scammers will now launch their Initial Coin Offering (ICO). They will set it up so that for you to purchase their coin, you need to send them some bitcoins or any cryptocurrency, and as you do so, they take your funds (scams). JUST LIKE THAT!

How to avoid (ICO) scams

Never the less some actual projects are launching with an (ICO). But you need to be very careful and do your research thoroughly before investing in any new projects.

In conclusion, it is obvious now that there are several ways to scam investors in the cryptocurrency industry. Just remember that if anything is too good to be true, it probably isn’t true and when in doubt DON’T!

Always do your research when you want to invest in cryptocurrency. Make rational decisions because nobody will ever look after your money better than YOU!