As with every internet-based industry, the presence of scammers are increasing unfortunately everywhere. Given the digital nature of cryptocurrencies, it is easier to scam people online with as scammers can gain trust more quickly and with much less effort compared to the real world. We have gathered now here all of the most common Bitcoin and cryptocurrency-related scams to make sure you are aware of these tricks to you can avoid them.
Unfortunately, anyone can fall victim to a scam, especially if a scheme is very-well designed and the scammer uses sophisticated ways to rip-off its clients. In most cases, you only know AFTER THE FACT that you have been scammed. In many cases however victims raise their voices, so other potential users can be warned and others can avoid to be scammed. The more you know about these scams, the better chance you have if something new arises on the “scammer market” then you will know for sure from the beginning that something is not good with this one.
Frauds, scams, rip-offs all have a very common structure: they are designed in a way to trigger greed and instant happiness. The ideas behind the scams are usually “too good to be true” – and this gut feeling generally works very well. If you ever have the feeling this is just too good to be true – let it go. In almost every single case these turn out to be scams.
Popular bitcoin scam techniques
Since Bitcoin and cryptocurrency prices tend to increase their prices at an extraordinary pace compared to other assets it also brings in many adventurers who wish to gain high returns without taking risk. But this market is not any different from other markets, the relationship between risk and return works the very same way as in other asset classes.
The difference here is, that since cryptocurrency is a relatively new market, only existing for about a decade a lost of users are not aware of how the technology or the industry works and can fall victim of a scam easier compared to other frauds online or offline. This is why you need to be aware what is going on the market to avoid Bitcoin scams.
Many scammers use this technique as it is a relatively easy setup. The scammer approaches its victims usually on social media channels and asks them to join their private telegram group where they will receive insider trading tips for bitcoin and crypto trading. There is a certain fee, around 0.1 BTC you have to pay to join the secret trading channel.
Sounds good to pay for market prediction? Nah, it is a scam.
Scammers create multiple telegram groups, and in half of them, they predict the bitcoin price goes up, while in the other half that bitcoin price goes down. They do this for a period of time until their predictions (which are just guesses) indeed follows the market price movements. Once the telegram channels have a decent history, he invites his victims to this group for free where they can see that the scammer’s technique has been working in the past. This is, however, is only for marketing purposes, once the victim “verified” the scammer indeed can predict the market, the scammer invites him to his paid group. However once joined to this paid group, the victim can be quickly realized, that the prior wonderfully working strategy is no longer applicable to live market prices.
Remember, no one can predict the market price movements, so avoid paying for such trading tips as they just won’t work.
Giveaways are another popular formed of bitcoin scams used in the past couple of years. There are two main types of giveaways scams used lately, usually using Twitter and Instagram where the attackers can easily create profiles of high-profile individuals and celebrities whom people can trust. These platforms also make it easier for scammers to reach new victims just by using the hashtags the victims are interested in and follow.
Giveaways on Twitter
One type of giveaway fraud is when a fake Twitter profiles offer giveaways in Bitcoin, Ethereum or other altcoins. These fake profiles are in the names of celebrities or popular people so there is a greater chance people trust these names. Usually, there is a cause in the background, like celebrating an anniversary or an event, where the fake profile is starting to post Tweets about that if someone sends them a smaller amount of crypto, they double it and send back twice of it in couple of hours.
Sounds good to pay for doubling your Bitcoin with a celebrity? Nah, this is a scam.
In reality, as soon as victims paid to the fake profile, they stop responding to messages and soon they just disappear completely with all the money they have received.
Do not fall for the promise of free money, there is no such thing as free lunch.
Hardware Wallet Giveaways
The other type of giveaway scam is to sell or give for free hardware wallets. Hardware wallets are one of the most secure way to store crypto, so people generally trust these devices. But a hardware wallet costs couple hundreds of dollars.
Sounds good to receive a hardware wallet for free or at a very low price? Nah, this is a scam.
So these scammers send real hardware wallets to their victims, so where is the catch? The problem is that once a hardware wallet has been setup, through the recovery phrase the scammers have full access to the wallet. It is like giving away a credit card, where the scammer has the card number and the code to it – they can use all the money from the wallet, even if they do not possess it physically.
Never ever accept a hardware wallet offered for free or at a high discount. Only purchase such devices at trusted shops, preferably at the distributor.
There are a lot of different ways people can be scammed through offering a good investment opportunity. These frauds can be presented in a form of ICO (new altcoin), IEO (new exchange coin) or even just in a form of a hedge fund. The common in all of these, that a group of people are crowdfunding their project with the help of their victims.
Sounds good to earn 10-20-50% overnight on your invested cash? Nah, this is a scam.
Ponzi schemes have been existing for couple hundreds years now, and they have hit the cryptocurrency sector too. During a ponzi, the returns are paid out from the initial payment of the newjoiners. The high returns are effectively paid out in the beginning until enough new cash if flowing in from new members. However once the rate of new joiners decline, the pyramid is collapsing and there are not enough funds left to pay out the returns to all of the users. Project owners by this time usually vanished in the dust.
Do not give out money to random people online, just because they asked you to do so with some nice presentation. Do your homework and research online.
There exists a lot of smart ways to scam people online, using bitcoin is not any different at all. Be it a trading signal, a giveaway or an investment opportunity, remember: if something sounds too good to be true it will be most probably a scam. Avoid these at all cost and save your hard-earned money.