As the old saying goes, money is the root of all evil. However, like most things in this world, everything has a good side and a bad side. It is often in the hands of humans whether to use something for good or for bad.
The same goes for the emerging cryptocurrency Bitcoin. It has grown in popularity and use since 2014 as more major retailers adopt virtual currency. While Bitcoin offers a more secure and convenient way to conduct transactions online, the rate of fraud cases related to it has also increased alarmingly.
Common Bitcoin Scams
If you are using Bitcoin or are looking to start using it, here are the most common Bitcoin scams you need to watch out for:
A Ponzi scheme works by attracting people with promises of doubling their investment overnight. It’s easy money with minimal effort, but you will have to transfer Bitcoin to them first as a deposit. You are given high-interest rates and your initial deposit will increase once new investors pour in. Basically, you are paid using the money new investors bring into their system. This works out in the beginning, however, when new investors no longer buy in, the system collapses and you lose your money.
Fake Bitcoin Wallet Scam
Just like your regular wallet, a Bitcoin wallet is a virtual space where you store your Bitcoin cryptocurrency using a software program. This gives the Bitcoin user anonymity and security when transacting online. However, fake Bitcoin wallets have malware intended to steal your passwords and steal your Bitcoin once you reach a certain limit.
Bitcoin Exchange Scam
To buy Bitcoin, you will need to link your credit card with your Bitcoin wallet so you pay its equivalent in cash. Bitcoin exchange scams offer lucrative deals with cheap rates that will trick you into thinking you’re getting value for your money. They often claim that they sell Bitcoin a certain percentage lower than the general market value but when you send your payment in, your Bitcoin never arrives.
Bitcoin Phishing Scam
Like your typical email spam, you will receive an email that looks legit and tells you that you have been awarded or given Bitcoin. The email then contains a link that you supposedly must follow to claim and transfer the Bitcoin into your own wallet. You will be asked to enter your wallet details and just like that, scammers can take over your account and wipe it clean.
Bitcoin Cloud Mining Scam
Unknown to many, Bitcoin cloud mining is a legitimate operation that allows people to mine Bitcoin without the offline issues often attached to it. You no longer have to deal with hardware, mining software, or connectivity issues – the Bitcoin mining is done through the cloud. Scammers take advantage of this and you get little to no returns on the money you invested.
How to Avoid Bitcoin Scams
So, the question is, how do you detect these scams and avoid them altogether? While we cannot escape fraud schemes once and for all, here are simple ways to protect yourself from Bitcoin fraud.
Investigate the company or website before any transaction
There are lists available in online forums of companies and software that offer legitimate services. You can also make sure that the site is encrypted by checking if it uses HTTPS instead of HTTP. Ask people you know and trust to recommend companies and websites for services you are interested in.
Don’t follow referral links or outbound links
This applies to all the Bitcoin scams we talked about, as they often display fake ads that tell you to click on links that redirect you to their site. Don’t click on sponsored ads that show up on search results and never follow an outbound link from emails, suspicious or otherwise. If you must, open a new tab and enter the site URL manually to check it out.
Check for malware
It goes without saying that before downloading anything onto your device, check for malware. It’s always better to be cautious and see if there are executables that contain viruses.
The more we transact online, the more vulnerable we are to data scams that ruin our investments. To protect your finances, make sure to do your due diligence when making transactions online and avoid fraud.