Is Bitcoin A Scam?

bitcoinBitcoin scams have been around almost as long as the cryptocurrency itself. There has been, however, an increase in the different types of scams that conducted. This can make it quite difficult to determine what bitcoin opportunities are legitimate and which ones are fraudulent. This article will deal with some of the more prevalent cons:

Sham Bitcoin Exchanges

Bitcoin exchanges are utilized as a way of purchasing bitcoin. Users exchange traditional currency for cryptocurrency. Most fraudulent exchanges will begin the process as any exchange would.

They request the individuals to pay a certain amount of money to receive bitcoin in return. However, once the money is transferred there is no bitcoin sent to their wallets.

In most instances, you will be unable to contact these exchanges once the transaction has been made. One of the ways that these exchanges lure customers in is by claiming to have lower credit card processing rates than other exchanges.

See here how you can make money with bitcoin.

Fake Bitcoin Wallets

This is actually a scam that is relatively easy to create. This is because there are so many wallets available on the market, it can be difficult to determine which ones are real and which ones are fake. Some scammers go the extra mile and create wallets that are very similar to popular or well-known ones. Once the bitcoin is entered into the wallet, it is stolen.

Bitcoin Investment Fraud

The problem with bitcoin investment schemes is that you don’t know that you have been swindled until it is too late. These types of scams are very similar to that of a Ponzi scheme. Initially, you invest funds in an investment service.

In the beginning, you will begin to see small return on investment. What’s happening here, however, is that these aren’t profits at all. Instead, the scammers are taking money from the newer investors and giving it to the older investors. Eventually these payments will stop. You will also be unable to withdraw your funds as they have already been transferred elsewhere.

On a similar note, there are also multi-level marketing scams. These promise to reward current customers if they successfully manage to refer their scheme. These types of scams also have an initial payout but this too is from the money brought in by new investors.

False Cloud Mining Services

Some people prefer to mine bitcoin instead of buying it outright. The mining equipment, however, is quite expensive which is why many people join pools. Here, they combine their resources to purchase this equipment so that they can begin mining. Typically, once you have “bought” the equipment, you don’t see any results. Sometimes, the perpetrators may offer low profits before then disappearing with the funds.

Phishing Scams

These can take different shapes and forms. The main goal with these is to get you to go to a fraudulent website. You can be led there by emails claiming you have won something or offering you a business opportunity. In many instances, the websites may sound or appear to be ones that you are familiar with. Once there, they may trick you into handing over your information about your bitcoin wallet and then draining it.

How to Avoid Bitcoin Scams

As you may noticed, some of these scams are quite subtle and often lead you on for quite a while. Therefore, it can be difficult to determine which opportunity is a scam and which one is not.

The best thing that you can do is to always stick with exchanges and institutions that you can verify and that have been established. For instance, if you want to buy or exchange bitcoin, make sure to only do business with agencies that are well-known. Or, use reputable binary options brokers to trade bitcoin so that you can be certain about receiving what you have traded for.

You should also never believe claims that seem too good to be true. For example, suspiciously low exchange rates, free services, and similar tactics are all considered to be red flags. You should refrain from doing business over social media platforms or any sites that may seem unsecure.

Since cryptocurrency is largely not monitored by the company, it is important to avoid these bitcoin scams. If you do lose money or bitcoin due to these schemes, it is quite likely that you will not receive any compensation.


Page Updated: July 3, 2017

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