Bitcoin is a worldwide used cryptocurrency and a digital payment platform. It is the first decentralized currency that is digital in nature and it works in absence of a central respiratory. The system works as a peer-to-peer network and transactions happen directly without intermediaries. The transactions have to be verified by network nodes. The transactions are then recorded in a public distribution ledger known as the blockchain.
Bitcoin has gained popularity over time and its popularity may greatly increase as time goes on. Bitcoin has many scammers who take advantage of innocent victims. They exploit the victim’s lack of knowledge about the market condition and use that as an opportunity to steal from them. They use this decentralized currency as an opportunity to make money illegally without being traced.
How To Identify Bitcoin Scams
In order to protect yourself, you need to understand how transactions take place and how they are formed. It is important that you learn how bitcoins work to ensure you do not get involved in transactions that you cannot understand. If you do not understand the transactions, it is always good to consult an expert. Many people believe that bitcoin’s price is continuously increasing and that they always have a chance to make profit. They believe bitcoin is an easy way to make a quick buck, not knowing that the price can fluctuate and they may take losses. Bitcoin’s price falls mainly because of internal political reasons on the way it is structured.
People should be educated about the bitcoin blockchain so that it is not as easy for scammers take advantage of the market conditions. Scammers operate in many ways, but mainly the easiest path is to take advantage of a victim’s ignorance. They personally contact potential victims via social media and email with an interest to gain from their ignorance.
Bitcoin Scams To Look Out For
Bitcoin Ponzie Schemes
These are hard to identify because often appear to be legitimate for set period of time before they pack up and are revealed to be scams. They tend to benefit the first few people who join them, who then invite their friends and later vanish with all the money. They are common because they make a lot of money within a short period of time. Ponzie schemes are scams in and of themselves and are fraudulent systems that require you to invest in them with a promise to make huge profits in return. They require you to advertise their systems as a way of making more money.
You gain more profits when you refer other people into the system. Old investors are paid using the money collected from the new investors up to a point when the scammers have collected enough money, and then they disappear from the market. These scams are hard to identify immediately as the first few investors make profits. They encourage other people to join the system before the scammers disappear, leaving many of the newest investors in the wind.
Many scammers use bitcoin to fool victims to download software that ends up being fake and not working. They may also sell substandard products or even software that may cause harm to your computer. This is called a fake bitcoin wallet and it hides in malware downloads. You should always do your research and verify any software before you purchase it online. The scammers are normally interested in collecting your personal information to use it for their gain.
Once you click their content they direct you to their URL which has harmful content for your machine. The content attacks your computer and can cause harm to your data. They make various invitations through social media relating to bitcoin. You should be careful before clicking any links that you get via social media and email, especially if they are not from people you know and trust.
These are rampant on social media and use the bitcoin name as a tactic to gain a victim’s trust and give themselves credibility. They offer enticing services to users with the aim of gaining bitcoins from the victims. In the end, they do not actually offer the services they promise and do not return the victims payment. They take advantage of the victim’s trust as they present themselves as a legitimate enterprise. Once they gain your trust, they lead you to a spoofed website that is functional only to collect their payments and disappears after a short while.
They can also present themselves as an entity that is checking your bitcoin validity. Once you enter your password, they automatically phish your information and disappear. You should be careful and not trust anyone with your private key. Ensure you understand all transactions well before transferring any money to fictitious accounts.
These scams pretend to offer bitcoin exchange services. After paying your initial fee, they promise to double your investment within a short time. Once you invest, your bitcoin is stolen immediately. These scammers succeed because they are able to broadcast their activities to many unsuspecting people through social media. They widely advertise their services to many people and manage to get a good number of people who fall into their traps. The scammers require little money for the software but at the end of the day they make a lot of money from many unsuspecting victims. At times, they require small investments from you to entice you to make bigger deposits in the future.
How To Protect Yourself
- It is difficult to trace bitcoin once it leaves your pocket. This is the reason why it is preffered by most cyber criminals. You should not easily trust online dealers who promise to give you services without knowing who they are.
- Do not fall into schemes that promise to make you rich within a short time. These schemes end up costing you and anyone else you bring into them huge losses. You should avoid exchanges with hidden identities by all means.
- Ensure you deal with legitimate brokers only, in case you want to exchange your bitcoin. Make sure you research sites well before you invest in them. It is important to know about bitcoin exchanges and their history of users before you do any transactions. This will enable you to identify those that are genuine and those that are not.
Top Bitcoin Scams Conclusion
Bitcoin transactions are irreversible after being confirmed via the blockchain. They lack consumer protection against fraud, unlike credit cards which can often recoup money that is lost through scams. Many governments are being cautions and creating regulations on the use of cryptocurrencies to help users avoid these types of scams, but the lack of regulation and centralization is exactly what bitcoin was invented for. In the end, it’s the user’s responsibility alone to educate and protect themselves.