Since my last article on Bitcoin last December, the cryptocurrency fell from almost $20,000 to under $4,000. I told you back then not to invest in Bitcoin. Today’s article is about Bitcoin Scams an how to avoid them.
Blockchain technology is very interesting and paying with cryptocurrencies may be the future, but using it as an investment vehicle is not the right thing to do for the average private investor. Last December, I told why I thought Bitcoin is too risky to buy, and as 2018 shows, I was right. But although many burned their hands on bitcoin this year, there are still a lot of amateurs who try their luck on it. These people always try to get you to invest in their system and if you reject, they tell you how stupid you are and that you have no clue about investing. Although all too often I’m longer in the business as they are. That’s why I want to share with you an article by my friend Jack Morgan about Bitcoin Scams and how to avoid them. Enjoy reading!
Bitcoin has taken the world by storm, and since its introduction in 2008, it has inevitably faced several controversies. Scammers found a gold mine in the digital currency for many reasons. One of them is the fact that only a few people understand it, which makes it easier to make them believe false promises. Another reason is anonymity – cryptocurrency gives scammers relative ease to cover their tracks. Lastly, a major reason is that it is largely unregulated. Bitcoin chiefly operates outside of the conventions of a financial system; and this worries regulators as it has the potential to be linked to money laundering, tax evasion, fraud, and terrorist funding.
What are the most common bitcoin scams and how do you spot them?
Fake Bitcoin Exchanges.
One popular example for these would be South Korea’s BitKRX, which posed to be a branch of the country’s Korean Exchange (KRX) and claimed to be a platform to exchange and trade bitcoin. Ultimately, it turned out to be fraudulent. There are also those that pretend to be connected with well-known exchanges using apps or fake websites; users are scammed when they log in and their account details are given away. When you are directed to a website, make sure that the URL has “HTTPS” rather than just “HTTP.” Without the letter S, it means that the web traffic has no security and encryption.
Someone promises an incredible return of investment using bitcoin and a lot of people buy in it. Before you know it, someone runs off with all of your money. That’s basically how Ponzi schemes work. At first, victims will be made to believe that it actually works – say, the digits in their bank account are increasing. This will also make them talk about its “success” and convince others to join in. Eventually, calls to the customer service are unanswered, there are technical problems with the website, or the money will be remitted late – among several excuses while your money disappears for good. If you see ads that sound like, “double your bitcoin overnight,” they’re probably scams. How it usually works is you have to send them your money first before they can double it.
Scammers use bitcoin as a product in pyramid scams. In these schemes, your low initial investment will be multiplied if you invite more people to sign up. After a lot of people have invested their money, the original scammer walks away with all the money.
Malware. Hackers have long been using malware in order to get a hold of other people’s login credentials and account details. Now, it’s being used to drain Bitcoin wallets that are connected to the Internet.
How do you avoid falling into these scams?
- If the offer is too good to be true, stay away from it.
- Be vigilant on social media – legitimate bitcoin traders and brokers can be victims of poser accounts or impersonators.
- Never conduct financial transactions via direct messages on social media platforms.
- Do your homework and research on services you encounter and the best trading platforms; verify their claims and check their legitimacy or whether they are a registered corporation or not.
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