Bitcoin Scam

Bitcoin Scam

The bitcoin and cryptocurrency markets have been on the rise, with the entire virtual currency market nearly reaching a capitalization of two trillion dollars. So, as you can imagine, with eager investors looking to get in on the action, there is an equal number of fraudsters looking to make some quick cash.

Bitcoin Scams: What they are and how to spot them

So how does a scammer hustle bitcoin from your wallet? And how can you spot a scam before the situation gets out of hand?


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What is bitcoin?

Let’s begin with the basics; what is bitcoin? Bitcoin is a digitized currency invented in 2008 and then implemented in 2009. Bitcoin is decentralized with no central bank; currency is transferred from user to user on the peer-to-peer bitcoin network with no third party

Bitcoins are generated as a reward for ‘mining,’ a record-keeping process completed using a computer’s processing power. Bitcoin can be traded for worldwide physical currencies, and investors buy bitcoin in a similar method to forex trading. Bitcoin can, of course, be exchanged for goods and services the same as any other currency, but due to their anonymous nature are often used on the black market and the dark web.

Is bitcoin a scam?

To say that bitcoin, on the whole, is a scam is a bit of a stretch, but since bitcoins are more often used for investing than legal transactions, many investment scams are floating about utilizing both classic and new tricks.

A scam method unique to bitcoin and cryptocurrencies is mining scams. To mine any considerable amount of bitcoin, you need a substantial amount of heavy hardware; thus, cloud mining services began popping up so investors could mine bitcoin without splurging on hardware. However, this has also caused an uprise of fake mining platforms that promise huge gains but fail to follow through, and many others are just fronts for pyramid schemes. Mining bitcoins from an investment perspective isn’t a very wise idea either, as buying bitcoins would be more comfortable and more cost-effective than mining them.

Another fraudulent method criminals use to swipe your coins is through malware. As a digital currency, malware can be used to gain access to your digital wallet. The best way to avoid this from happening is to have a ‘cold’ wallet (bitcoin wallet not connected to the internet). You should also always be cautious of what you download and keep up to date with the latest anti-virus software.

Other methods of scamming you out of your digital savings are a bit more typical and classic. For example, you might get an unsolicited phone call or email claiming to be your bank and with a link that will look almost identical to the exchange wallet, you usually use. This is a classic phishing scam which you might be familiar with.

Or you might be conned by fake exchanges and wallets, which look like the real deal, but once you have deposited your coins, you aren’t getting anything back. Fake wallets can also be used by scammers to gather personal data from smart devices or are just plain fraudulent, and those coins aren’t coming out.

Other classic scams include unsolicited phone calls that claim that you owe tax, and if you don’t pay up, you will be facing legal action, though, of course, this is all false. And even the well-known ‘Nigerian Prince’ scam has been adapted for stealing digital currencies. Always be vigilant and do your research before making any form of investment.

How to Spot a Bitcoin scam?

Now that we have outlined potential methods used by bitcoin scams, we can break down how to avoid becoming a victim in the first place. Here are a few red flags which could suggest your bitcoin investment is less than valid:

  • Unsolicited phone calls and emails pushing you into making a transaction
  • Pushy sales tactics and a lack of support
  • Being unable to withdraw currency
  • Large withdrawal fees
  • Sketchy brokers who promise huge returns, bonuses, and rewards when you invest with them
  • Negative reviews and previous customer complaints
  • Website only recently appeared on the market.
  • Vague web content
  • Misleading information and flat out lies

As I previously mentioned, it is vital that you scope out all the details when planning to invest to be sure that you are investing with a legit broker. If you fail to do due diligence, then it may come back to bite you.

How can we help?

Here at trader defender, we specialize in due diligence services. Our team of industry experts is here to give the common consumer full due diligence reports on any business you wish to invest with so you can make sure you have all the facts before you take the plunge.

If you have been scammed before and want to prevent it from ever happening again or just want to be sure you have covered all your bases, then book a free consultation with us today. Or contact us directly to get a quote on our services.