Beware the Bitcoin rip-off
The popularity of bitcoin and other cryptocurrencies has skyrocketed since late December. Consequently, a wave of scam artists surfaced, taking advantage of new investors who aren’t as informed as they should be. It’s easy for scammers to use big words to sound authentic to people who aren’t exactly sure what cryptocurrency is. Beware of bitcoin rip-off, guys!
Drawn in by big profits and easy steps to start, people become less cautious. This makes them more willing to hand over their money hoping to see a profit, without actually doing any research.
In most cases, an individual will open an account on a legitimate cryptocurrency exchange platform, then will go on social media in order to promote themselves as crypto traders, promising doubled profits on investments. Investors will have no idea who the real person is behind the account promoting this scam. In this case, the cryptocurrency exchange becomes the man in the middle.
Promises of easy and fast returns draw users into investing their money. Even though the account is tied to an exchange, once the money goes in, the fraudster converts it into bitcoin. Bitcoin is a highly mobile cryptocurrency, able to be sent anywhere electronically with ease. In most cases, these scammers will wait until they have received around 10-20 deposits before they vanish into thin air with everyone’s money.
After this has happened, the only people the scam victim is able to go to for more answers is the authority, or the exchange this took place on. The very nature of bitcoin makes retrieving the funds extremely difficult. This is because although every transaction is public, the person doing the transacting is far more difficult to pinpoint.
As bitcoin is currently most valuable cryptocurrency, the scammers are aim there. Why would you risk if the price does not worth it? You wouldn’t, would you? That’s why % of bitcoin rip-off is much higher than other cryptocurrencies.
Beware the Bitcoin rip-off
— Whalepool (@whalepool) September 23, 2018
With more experience in the bitcoin world, it becomes far easier to be able to spot a bitcoin rip-off when it presents itself to you. Luckily, there are only a few ways that people can scam you for your coins. By doing your research, it can take as quick as 2 minutes to find out if you’ve found a bitcoin rip-off. There are a few common types of bitcoin scams, these are;
- Cloud mining schemes
- Fake ICOs
- Hardware wallet theft
- Exchange scams
- Multi-level marketing
Cloud mining schemes
The only way to generate new bitcoins is to mine them. If you want to go about getting some bitcoin without buying or exchanging them, you’re going to have to mine them. However, it’s incredibly intensive and needs a lot of energy to work. The act of mining cryptocurrency coins is extremely unique, requiring a vast amount of processing power and electricity which consequently costs more money. As a result, some companies are offering Cloud mining services where they rent out server space on their mining farm to mine coins. This allows users to make an investment to rent server space, then receive a kickback for the bitcoins mined on the server.
In some cases, companies offer “lifetime contracts” in which they keep the costs the same and supposedly offer outstanding returns. What they don’t tell you, is that as the difficulty of mining increases over-time, your same investment will see smaller returns each time. On a similar note, some companies give bold statements about the returns they provide their customers, without being truly transparent about the true costs as well as the diminishing returns.
Of course, with companies offering services that are simple to grasp such as these, Ponzi schemes lurk in the water. Most of these end up in huge losses for the victims of the scam. Although these are some of the worst scams out there, they are often the easiest to catch. Most Ponzi schemes see only support by a second website promoting them. In most cases, when looking into a fake cloud mining service, you won’t find any information. If you can’t find anything on the company providing the cloud mining service, or anyone related to it, chances are it’s a scam.
Another thing after so many scam schemes is that people are afraid. They are reading too much information about how to keep your bitcoins safe. Where to store them and etc.. With cloud mining the bad part is exactly you are storing “in safe” your bitcoins in someone else’s computer. Now, tell me, isn’t that a red alert for bitcoin rip-off?
One of the best things to happen since the cryptocurrency bloom is Initial Coin Offerings. Initial Coin Offerings (ICOs) are a way for companies to raise capital to fund their startups. Waves of new blockchain-based companies have entered the scene with new exciting ideas and innovations, and now people are able to support their favorite companies via ICOs.
However, with good, comes bad. ICOs are pretty much just corporate GoFundMe pages, so if a scammer comes up with what seems to be a great idea all he has to do is make a fake ICO. There are many ways that fraudsters can take advantage of ICOs. By creating a website of a fake ICO, scammers can instruct their users to deposit their coins into a compromised wallet.
Sometimes, actual ICOs are at fault. For example, CentraTech was a blockchain venture with backing by several celebrities. CentraTech was sued by the US, accused of portraying fake team members, lying about their products and misleading investors. Reading a company’s whitepaper is a very efficient way of detecting a scam. Review the team members connected to the venture, as well as any board members or investors. If you’re going to invest your capital into a company, the least you can do is research into its authenticity.
Yes, even though that you can be scammed, because of fake ICOs, yet just be careful more if you own bitcoins. I always say bitcoin is the most delicious piece of cryptocurrency cake out there. And I always say: beware of bitcoin rip-off!
Though cryptocurrencies are decentralized at their root, most of them are still bought and sold on exchanges. Though this makes it far easier to find what coins are in high demand, there are no regulatory third parties overseeing any of these exchanges in certain countries. As a result, several investors were left penniless when the exchanges they put money into were found to be fake. For example, a selection of South Korean exchanges was deemed fraudulent in December. This lead to promises of tighter regulations by South Korean authorities.
Though these scams are often not too hard to notice, they can be very costly if fallen for. Signs to look for are promises of unrealistic returns. Any exchanges that promise highly discounted bitcoins use this as a strategy to lure in victims. Moreover, users are able to check the URL of the exchange they’re planning on using. If it starts with HTTPS, you should be good to go. This is a sign that the connection to a website is secure. It’s always a bad idea to visit unsecured websites, but as an investor, you can avoid losing your capital if you look for the right signs.
Bitcoin rip-off is around the corner, HODLers. Do not trust all cryptocurrency exchanges! Only valuable and proven through the years such as iCE3X is your best bet!
Hardware wallet theft
For most people who are highly concerned with the security and privacy of their cryptocurrency assets, a hardware wallet is a popular option. Hardware wallets are a small physical device usually the same size as a USB, that offer a way to help investors store their cryptocurrency offline. While this seems foolproof, there have been reports of some hardware wallets coming with built-in vulnerabilities. These vulnerabilities open them up to the hands of hackers, giving them easy access to users holdings.
Though this is a big issue, it’s not the only one relating to hardware wallets. Ofir Beigel, owner of 99bitcoins.com stated;
One scam entails selling hardware wallets to users with a ‘pre-configured’ seed phrase hidden under a scratch card. The new user is told that he should scratch the card and set up the wallet with the compromised seed.
Doing this creates a backdoor, allowing hackers to easily take all the funds sent to the compromised wallet. Slowly but surely, these types of scams are becoming more common. To avoid this happening to you, make sure you’re only accepting your hardware wallets from reputable sellers/retailers.
Even in the digital world, multi-level marketing schemes have continued to surface; offering unaware investors outstanding opportunities to make progressively larger sums of bitcoin and/or other cryptocurrencies. MLMs are based on offering fast returns, but in truth, they actually just take more money for the promise of receiving higher returns.
A company that has been accused of this on several occasions, is OneCoin. The owners of OneCoin were found to be in relation with other shady operations also. OneCoin offered potential investors massive earnings, as well as luxury perks for investing more money. Despite this, there is little to no to information about this company outside of their own website. When looking at reviews of OneCoin, most of them are very negative.
With the rising popularity of cryptocurrency, staying alert and doing your due diligence becomes an unwritten requirement before investing in the industry. Though scams are surfacing all over the world, the market is also showing signs of maturing. This consequently results in better transparency as well as clearer rules.
Whether you decide to invest in cryptocurrency to support the underlying technological revolution tied to it or just hoping to make money you need to be aware as to not become a victim of a bitcoin-ripoff. Much like hackers attempt to get your bank information by phishing or keylogging, people are doing the same with cryptocurrency.
We remind you to stay vigilant when roaming the world of cryptocurrency and be sure to do your due diligence before investing any of your capital into a company. This is still a fairly new industry and while it is maturing, sometimes it may be difficult to determine whether or not you’ve found a good opportunity to invest. In light of this, you should always stay alert, and be sure to spend a fair amount of time researching into any companies you are considering putting your funds into.
So tell us, how you’ll avoid bitcoin rip-off? Are you sure you are keeping in safe your cryptos?