How To Avoid Bitcoin Fraud Schemes – Bitcoin Scams

Bitcoin Scams

Bitcoin is a network of peer-to-peer the transactions take place between users directly without intermediary and it is verified by network nodes through the use of cryptography. Bitcoin is a cryptocurrency and the payment system is worldwide. Bitcoin can be exchanged for other currencies, products and services.

Research produced by the University of Cambridge estimates that in 2017, there are 2.9 to 5.8 million unique users using a cryptocurrency wallet and most of them use bitcoin.

A lot of people that uses Bitcoin have been scammed and because of the risks in the market the opportunities may be irrestible for some people. Therefore it is always important to be cautious and there is clear signs of scams that investors can look for and by avoiding these scams, users can have a better chances for sucess and their investments protected.

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The following are the most common cryptocurrency scams and how you can avoid them

  • Fake ICOs

In these case atimes the ICOs themselves may be at fault for example the Centra Tech company which is a blockedchain venture backed by several celebrities has been sued in US for portraying a fake team mambers, lying about their products and misleading their investors.

For you to avoid such scammers you have to learn as much as you can about the company to avoid being scammed and to do a thorough research which involves picking apart the white paper, reviewing the team behind the venture and key board members or investors. By creating a fake websites that resemble ICO’s scammers can separate investors from their bitcoin and by telling users to deposit their coins in a compromised wallet.

  • Exchange Scam

Exchange Scams are not hard to spot but can be deadly if not spotted. Most cryptocurrencies are still bought and sold at exchanes and Many investors have been rendered penniless because the exchange they signed out for turned out to be traps and one of the biggest problem is unrealistic prices and exchanges that promise heavy discounts just to lure in unsuspected victims.

To avoid these exchange scam, your web addresses should always begin with HTTPS a sign which means that the traffic is encrypted,always check the
exchange URLs, always look for the right signs to avoid losing money and finally avoid visiting unsecured websites.

  • Multi-Level Marketing

Multi-level marketing scheme offer quick returns but they actually take more money from the investors for the sake of higher profits.
In this scammers offer larger sums of bitcoins to the investors just to scam them. Preventing these scams early can protect the investors wallet and it is very important to pay attention to the company’s fine print and ensure that their claims are feasible and real. Therefore before one invest in such, one must be vigilant and smart by doing a research before investing in bitcoin to avoid being scammed.

  • Cloud Mining Schemes

In this, new bitcoins are extracted without buying and exchanging them and it has an incredible resource intensive activity. It takes large amount of processing power and electricity and money to mine a coin and several users have been offered by many companies the ability to rent some server space to mine coins for a set rate.

Some companies hide their true costs and diminishing returns and also some companies offer a life time contracts which cost the same and also offer an outstanding returns and as difficulty of mining
increases the same investment will return smaller amounts each time. Therefore it is important to know the cost and dangers associated with mining before investing.

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  • Hardware Wallet Theft

Hardware wallet theft is a physical device that stores users private keys.This hardware security is a popular option for users that is concerned with security and privacy. This wallet offer an offline way to help crypto investors protect their bitcoin and there has been a report that some of the built-in vulnerabilities which open them to hackers that could easily easily steal all user’s holdings.

In this, users are scammed by selling hardware wallets to users with a pre-configured seed phrase hidden under scratch card and set up the wallet with the compromised and these creates a back door hackers to simply drain funds once a wallet is activated. These scams are becoming more common, but they can easily be avoided by only accepting wallets from trusted sources.

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