Bitcoin or any other cryptocurrency exchanges are relatively new in the market. Their novelty means that a lot of the people using them have limited or no knowledge about how they work or what the security threats related to them are. Scams related to Bitcoin sometimes can be very similar to that of the conventional finance sector.
Bitcoin in itself is a secure means of investment. Well, as secure as any normal means of investment can be; which is to say that there are risks associated with every single type of industry in the world. Anyone wanting to invest in the Bitcoin currency if they watch out for some common scams that can be seen trending in the crypto industry. With a little caution and sensibility on part of the investor, such scams can be avoided altogether.
Phishing
The first most commonly used bitcoin scam is Phishing, which works exactly the same as any other Phishing scam does for normal credit card fraud. You will receive emails enticing you to invest in Bitcoin through their website, and when you click on the links provided in the email you may end up on a scam site. Even if you have previously used Bitcoin, scammers will sometimes send you emails that may look like they are from your trusted exchange, but are from a scam exchange.
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One way you can avoid falling for such scams is that you should avoid clicking on hyperlinks provided in the email, even if they do look like they are from your trusted exchange. Always visit a website by entering its URL in your web browser’s search box. Always check if the URL starts with http or https; and only use the one with https as it is secure while the former is not.
Fake ICOs
ICOs have seen a rise in the crypto industry as more than 7 billion US dollars were raised by ICOs. But one has to keep in mind that there are a lot more failures in that area than total successes. Businesses end up creating an incredible amount of hype for their offering to attract investors. When people end up buying the nfts tokens, they find out what they are holding is actually worthless. A study by the Wall Street Journal indicates that 1 in every 5 ICOs is fake.
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Therefore, in order to make sure your investment is safe it is necessary that you research the ICO before investing. Most sham ICOs have a plagiarised or copied whitepaper. Most of the team behind the project would most likely be anonymous. A fraudulent ICO would mostly be unclear on its objective and would be in a hurry to raise the funds.
Fake Exchanges
With little or no regulatory bodies controlling cryptocurrency exchanges in a lot of countries, the cropping up of fake wallets and exchanges is inevitable. Such scammers will use every online scamming techniques available to make you believe that their offers are legitimate. However, there are certain ways you can make sure that the exchange that you are investing in is authentic.
It is always useful to do some research before approaching an exchange. Never fall for any exchange that may look attractive in your email and end up being a phishing scam. Always check the legitimacy of such services if they have secure dealing methods. Reputable exchanges may often use identity verification and face verification features for the verification of their customers.
Ponzi Schemes
Ponzi schemes are another common but elaborate way of defrauding users into investing in Bitcoin. Such schemes are easy enough to spot but people still end up falling for them. Ponzi schemes usually offer impractical returns to investors and encourage even more returns if they manage to draw in other investors. The whole idea behind such scams is to defraud the one that comes in later. The existing investors believe that the returns are legit and hence manage to encourage others as well.
Cloud Mining Scams
Cloud mining involves pooling money together in order to rent Bitcoin mining machines to mine their currencies at a set rate. A lot of these schemes are legitimate, however, some are fraudulent. One way to identify them is to look if they are offering guaranteed returns or if they have a public mining address and has https in the URL.
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