Bitcoin Scams - How To Stay Safe In The CryptoCurrency World
Scams have long been part of the day to day lives of human beings. While today's scams are quite a bit more intricate, people have been trying to defraud each other since the beginning of currency as we know it.
In fact, even back in the renaissance days, the shell game was used by con-artists to fool people out of their hard earned money. With Bitcoin being a relatively new currency, yet a widely accepted one, scams revolving around the currency seem to be everywhere.
Here are the top 5 scams you should watch for in order to keep your money safe in today's cryptocurrency world.
- Overview - Table of Contents
- Bitcoin Ponzi Schemes
- Bitcoin Wallet Scams
- Bitcoin Exchange Scams
- Bitcoin Mining Investment Scams
- Bitcoin Phishing Scams
- Final Thoughts
Scam #1: Bitcoin Ponzi Schemes
One of the most common scams in the world of Bitcoin at the moment is the Ponzi Scheme. Essentially, the con-artists grab your interest by promising you high interest rates on deposits made.
As the nature of the Ponzi Scheme would tell you, those who make their investments early are paid out using the dollars from those that come in later.
This lasts for some time. However, must come to an end at some point. When there's not enough new people signing up to pay out on older investments, the scam falls apart, and those who took part start to realize losses.
Scam #2: Bitcoin Wallet Scams
One of the factors that makes bitcoin an interesting currency for many is anonymity when making purchases. This anonymity is generally provided through Bitcoin wallets. Essentially, these scammers tell you that their program is the safest and easiest way to transfer Bitcoin anonymously.
The wallet will work perfectly for days, weeks or even months. However, at some point, he con-artist behind the scenes will transfer the bitcoin out of your wallet and into their own. So, when choosing a Bitcoin Wallet provider, make sure that you do your research!
Scam #3: Bitcoin Exchange Scams
There are several Bitcoin exchanges out there. These exchanges simply sell Bitcoin at the current market rate. However, when looking for a Bitcoin exchange, make sure to do your research. Some exchanges will grab your interest by charging incredibly low fees on credit card processing (an area where exchanges realize their profits).
When your credit card is processed, you receive nothing. No Bitcoin, no refund, the money is gone. One great thing to keep in mind here is that if the fees sound too good to be true, they probably are!
Scam #4: Bitcoin Mining Investment Scams
Bitcoin mining is a process that involves incredibly high level equations. These equations are designed to validate transactions and provide security for the public ledger, something known as the blockchain. However, in order to mine bitcoin, you generally need extremely powerful and expensive computer equipment.
As a result, many people invest in the equipment for these mines, earning returns in the long run as more Bitcoin is mined. Unfortunately however, there are mining investment scams that will take your money, not to purchase equipment, but simply to realize a product. At the end of the day, the investment was never real, and your money is gone.
So, when thinking of investing in Bitcoin cloud mining, make sure that you do your research on the investments you make.
Scam #5: Bitcoin Phishing Scams
Finally, many con-artists have been sending emails to people letting them know that they have been given or awarded Bitcoins. However, in order to accept the gift or reward, they will need to log into to their wallet using the link in the email. However, when the user logs in, the information is stolen, giving the con-artists full access to the user's wallet.
While there are quite a few scams in the world of Bitcoin, you don't have to become a victim. At the end of the day, you can avoid most scams by simply being aware of them. With that said, if you're involved or want to get involved in the Bitcoin movement, keep an eye out for the scams above.