The world of cryptocurrency can seem ephemeral and bizarre, especially since it's an exclusively digital domain. There's no way to go down to your local ATM and withdraw a couple Bitcoin to stick in your pocket, so there's always this feeling in the mind of a crypto novice that the whole thing just doesn't exist – it's just fake money.
The truth is, of course, that you couldn't be farther than the truth. While Bitcoin does exist only in the digital world, those little ones and zeros hold real-world worth – and they can be quite valuable. If the rocketing price of Bitcoin is any indication – close to $2500 for a single Bitcoin as of June of 2017 – fortunes can be made and lost on this unique digital currency.
Here Are 3 Easy Ways To Avoid Bitcoin Scams
This makes it crucially important to protect your investment. Here are three ways to avoid getting scammed out of your valuable Bitcoin.
1. No Amount Of Security Is Too Much
Your Bitcoin is an incredibly valuable asset, and you have to protect that asset through as much digital security as you can muster. This means making sure the ownership keys on your Bitcoin wallet – your “passwords” – are as secure as possible.
The best way to do this is to take steps to make your passwords accessible to only one person – yourself. Keeping your Bitcoin in a wallet isn't the same as depositing it in a bank – there's no regulatory body like the FDIC to guarantee your funds from loss – so you've got to take personal steps to ensure you're the only one with access.
The safest wallet is one that is locally hosted on your own hardware, on a password-protected computer that has good overall security.
However, in the event that you choose a digital wallet that's overseen by a third-party company online in order to make it more accessible or convenient, be sure to thoroughly vet this company before moving your funds into one of their wallets.
Even then, don't put any more Bitcoin in there than you're willing to lose.
2. Keep Tabs On The Service Industry
Unless you're a Bitcoin miner, you can't produce BTC without purchasing it without investing funds that exist as a different currency. You've got to find a way to exchange your hard-earned dollars or Euros for Bitcoin.
There's a big push towards convenience when it comes to purchasing Bitcoin. There are services that allow you to purchase BTC with a debit card or a credit card, but these services often charge some substantial fees for the privilege.
Not all of these currency exchange services are created equal. Choosing the wrong service can leave you feeling pretty well fleeced, especially if they just take your money and run.
However, keeping tabs on how the Bitcoin service industry is developing means that you can compare and contrast these different services to find the most reputable ones with the least onerous fees.
3. Understand The Underlying Technology
Finally, this last point cannot be stressed enough: because of the inextricable marriage of technology to this digital currency, it's incredibly important to understand the underlying tech that powers cryptocurrency. Doing so will prevent you from falling into any traps with Bitcoin or any altcoins you choose to invest in and trade.
Your knowledge of the technology doesn't have to be exhausting.
Again, unless you're going to be starting up your own Bitcoin mining rig, some of the more esoteric points don't need to be absorbed, but you absolutely must understand the basics of digital currencies, how they're mined via blockchain, how they're transferred from one party to another, and how currency exchanges and digital wallets function.
This prevents scammers from pulling the wool over your eyes and making off with your investment in a bogus deal.
Thankfully, there are a plethora of excellent educational resources out there that you can use to gain a better understanding of cryptocurrency in general. The majority of these resources are open-source and free to peruse, making the barrier to entry into the world of cryptocurrency lower than you might think.
Just The Tip Of The Iceberg
No backup plan is perfect. Even the most foolproof security can be compromised, and there are any number of ways to get scammed out of your Bitcoin investment today that we don't mention here.
From cash gifting schemes to high-yield investment programs that are just Ponzi scams in disguise, there's no end of opportunities to be separated from your cash.
However, most of these scams are straightforward enough to spot several miles away. The harder ones to spot are those mentioned above – if you keep at least these three tips in mind, the chances of you falling prey to losing your entire wallet's worth of Bitcoin will be much less than the would be otherwise.