Bitcoin is the pioneer of all cryptocurrencies, and because of that, it is the most popular nowadays. Bitcoins are excellent investments, and you can invest in Bitcoin even if you are not an active trader.
However, be wary of Bitcoin scams when looking for opportunities for investments. There are a lot of Bitcoin scams that can strip you of your hard-earned money if you are not careful. Without further ado, let’s start:
1. Bogus Bitcoin Exchanges
Cryptocurrency and Bitcoin exchanges are convenient for a crypto investor. With the help of exchange, it is straightforward to receive Bitcoin and other cryptocurrencies as payment or to send it as payment.
It also allows for smooth investing transactions, especially when the exchange offers its cryptocurrency wallet. However, you should be wary of exchanges that seem too good to be true.
Back in 2017, financial authorities in South Korea along with the local crypto community in the country uncovered a fake exchange going by the name of BitKRX. The phoney exchange introduced itself as an affiliate of the biggest crypto trading platform in South Korea and had taken money out of customers.
To avoid this scam, it is best to adhere to well known and widely recognized Bitcoin exchanges. You should also be updated and stay on top of the news by going through legitimate Bitcoin forums, which will allow you to be updated about news of fake exchanges immediately. When you are informed, it is effortless to avoid this type of Bitcoin scam.
2. Bitcoin Ponzi scams
Bernie Madoff is probably one of the most widely recognized Ponzi scammers, applying the scam into mainstream ventures and investments. Nevertheless, Ponzi schemes are not limited to mainstream investments.
The basic principle of a pyramid scam where someone will obtain proceeds from new recruits to provide payment to old recruits can also be used with Bitcoin and other cryptocurrencies. Believe it or not, even Ponzi schemes have found its way into cryptocurrency.
An example is MiningMax, who managed to scam people out of 200 million dollars before the perpetrators get caught. The people that they scammed did not get any kind of earnings on their supposed Bitcoin investments.
3. Malware on the internet
The advent of the internet brought a lot of good chances. However, it also brought computer viruses, malware, and other harmful digital software. Unfortunately, the hiding of identity and electronic aspect of cryptocurrency is a breeding ground for hackers.
To protect yourself from viruses and other malware on the internet, avoid clicking on email attachments sent by unknown persons, and always use an updated antivirus program.
Ensure that you are aware of bitcoin being utilized as a lure. Do not believe links or invites to cryptocurrency exchanges that offer to give you benefits, such as Bitcoin when you sign up.
There are many secure, genuine, and risk-free cryptocurrency miners and exchanges. However, you won’t see them floating around the internet on suspicious links.
As an alternative, carry out your personal investigation. Research your options using Google, forums, or websites that can be trusted, and look for your chosen service provider after researching them instead of accepting offers from individuals who comes to you.
There are also ways to assist you in making sure that you are secure in case you accidentally downloaded malware.
These include using two-factor authentication (2FA), and using two wallets for your cryptocurrency. You have two options for wallets, which is a “cold” offline wallet that is not connected to the internet, and a wallet that is connected to the internet. This is regarded as the best thing you can do to secure your cryptocurrency.
4. Fraudulent Cryptocurrencies
A frequent fraud is to showcase a brand new cryptocurrency, also known as an altcoin. These scams revolve upon the concept that you are too late to make profits with Bitcoin, and you have a higher chance of earning money by investing in their newest cryptocurrency. One of these scams was “My Big Coin,” which was already shut down. The scammers who operated the My Big Coin scam has taken 6 million dollars from people, disguised as investments in the upcoming cryptocurrency.
However, the funds were instead directed to the scammer’s bank account. Avoid this type of scam by being informed about new and legitimate cryptocurrencies. While it is true that there is money to be made in legitimate altcoins, and people got rich with trading on successful altcoins such as DASH, Ethereum, and Litecoin, there are still scams that you should be wary about.
Do not trust all altcoins that are new to the market. You should always do your homework and research about that altcoin before signing up. If there is not much information about an alleged altcoin, then keep away from it. You can also wait for a few days after the feedback has already poured out so that you can adequately assess whether to trust a new altcoin or not.
5. Old-school rip-off
Old school scams in Singapore involve someone calling you or sending emails, informing you that you owe money to a government agency (like taxes,) and demanding you to send money.
However, with Bitcoin scams, they are instead demanding your Bitcoins as payment. This old school scam might seem obsolete, but, there are still a lot of people getting fooled by these phone call and email scams.
Out of all the scams presented in this list, this is by far the easiest to detect and avoid. Legitimate collection agencies of the government will not contact you via email or phone call. This also applies to non-Bitcoin related scams. Additionally, if the government will be in no way demand Bitcoin (or any other cryptocurrency, for that matter) as payment.
6. Bogus ICOs
Initial Coin Offerings or ICOs will ask investors to invest in an altcoin currently in development in exchange for incentives when it is finally released. Stay away from ICO frauds by figuring out what exactly are you investing in.
It is advisable to decide on your own whether you believe in a new cryptocurrency to be the next big thing. If you don’t have proper judgment to make the right call on investing in a new cryptocurrency, you should probably stay away from investing in ICOs at all.
This is because even if the ICO you invested in is not a scam, it still has the potential to fail, and thus you will lose the money you invested. Even if an ICO is really hyped with a lot of famous Bitcoin personalities supporting it, it is still not a guarantee that the altcoin will see success once it came out.
7. Fake Bitcoin miners
There are Bitcoin miners that claim to be able to mine using any gadget, such as your mobile phone, old laptop, and even on your browser. Do not waste your time and hardware on such software.
For instance, a blog post on social media websites in which a person claims that it is possible to mine Bitcoin by merely installing software should be treated with a grain of salt.
There are fake miner applications that pose as legitimate miners, but they are mostly doing nothing, acting as malware for hackers to exploit.
Even if an application is really written to mine Bitcoin, you will still be wasting power by mining on mobile phones and computers not specialized for mining.
Bitcoin will need a powerful computer and specialized hardware such as ASICs to be able to have a chance of mining Bitcoin. Most of the time, mining Bitcoin on mobile devices and computers are not powerful enough that you are just essentially overworking your devices and consuming electricity in the process for no gain, while the application earns by showing you adverts from time to time. The application can also use your computing power to mine Bitcoin on someone else’s account.
In short, Bitcoin miners have a high chance of being a scam, and on the rare chance that they are legit, they will not earn you any profit anyway.
8. Fraudulent websites
Fraudulent websites are deceiving, even if you have someone with a lot of experience when it comes to cryptocurrency. It is really easy to get redirected to a fake website that is set up to mimic the genuine website of Bitcoin companies.
Most of the fake websites are designed to obtain your login data, and they are a near-perfect recreation of the site that they copied.
One way of detecting this kind of Bitcoin scam is by looking at the address bar and looking for a small lock icon, which means that you are on a secure website.
Also, check if the address contains “https”, and not “http”. You can also look for slight misspellings in names, or different top-level domains (.com, .net, .org). If the website you are supposed to visit has a .com domain, but you are currently on a .net domain, think twice before entering your details.
The safest way to avoid fake website scams is by entering the web address by typing it manually and not clicking on any links.
9. Bogus mobile applications
An additional popular method that scammers use to trick people using cryptocurrency is with fraudulent applications that can be downloaded through Google Play, as well as the Apple App Store.
Even though Apple and Google can normally identify these fraudulent applications and remove them from their app stores, the damage is already done, especially if the application had a lot of downloads. After all, removing an application from the app store will not remove the copy of the application that was installed by users.
One way you can avoid these types of scams is by downloading applications only from the website of your cryptocurrency exchange, or from other trusted sources. Additionally, Google and Apple usually publish a list of applications that they removed for privacy concerns. Stay updated with that kind of news, and delete any apps from your phone that is included at that list as soon as you can.
10. Harmful advice from tweets and Facebook updates
In case you are following stars and exes on their social media accounts, confirm that they are the legitimate account. There is a lot of impostor and fake accounts that pose as a famous celebrity and bitcoin entrepreneurs and other people that can sway opinions.
There are people who aim to manipulate the market by propagating fake news, and Bitcoin is especially vulnerable to this.
Do not believe in offers or news that originated from Twitter, Facebook, and other social media sites, except if the account is verified. Usually, official accounts have hundreds of thousands of followers and come with a verified check badge from Facebook or Twitter.
When you are scammed, be sure to report it to the authorities and alert your community. You will probably not get your money back, but at least you can help in understanding the perpetrators caught by reporting them.
Bitcoin is already a volatile asset, so don’t raise your likelihood of taking a loss by becoming a victim of these Bitcoin frauds. Be alert for possible con artists and scammers by having confidence in your intuitions. Of course, you should back up your reasoning with proper research and facts. If an investment or scheme is too good to be true, chances are it is a scam.
Now that you know how the common cryptocurrency scams work, you are now ready to invest in cryptocurrency. If you want to take out a loan Singapore, you can compare your options at Loan Advisor.