The popularity of Bitcoin means that it has built up a large community, many of which are willing to give advice and guide newbies in the right direction. Unfortunately, there are those who prey on the vulnerable, and look to make a quick profit at someone else’s expense. The true is same in the world of Bitcoin.
Staying safe online is about educating ourselves about the dangers. If we’re aware of the dangers before us, then we’re in a better position to avoid it moving forward.
The Bitcoin Ponzi Scheme
As the name would suggest, the Ponzi scheme is based on Charles Ponzi’s business idea of yielding high interest for investments. This idea is applied to the Bitcoin industry in the guise of a company offering high interest for early Bitcoin deposits. This works in the initial period, but as the company struggles to acquire new investors, the plan soon falls apart. It’s only towards the end of the scheme that the problems are highlighted to investors. In this instance, if something seems too good to be true, then it probably is.
Bitcoin Wallet Scams
One of the necessities when purchasing Bitcoins is having access to a wallet. There are plenty of reputable providers online, but there are also those with more sinister motives. Therefore, it’s so important to carry out research before making any sort of transaction online.
Those carrying out Bitcoin wallet scams are probably more obvious to regular users, but if you’re new to Bitcoin, it could be easy to fall for the scam. Initially, those unfortunate enough to be drawn in find that the wallet is fine for a set amount of time, but then start to notice that something is amiss, often leading to depleted accounts. While easy to avoid, it’s something to be aware of before committing to a particular wallet solution.
Fake Bitcoin Exchanges
Just like a wallet, the use of a Bitcoin exchange is commonplace. In fact, it’s probably the number one platform when it comes to purchasing Bitcoins. Again, carrying out some research allows you to find out what companies are considered the most reputable. However, if we enter the arena blindly, we could end up using the platforms.
Bitcoin exchanges have recognised the profit in processing fees, and this is where many make their profit. As such, if a similar solution appears with much smaller processing fees, it’s easy to see why many would jump ship. The harsh reality is only realised when a payment is made, and the user finds that there is no Bitcoin. Those who have fallen victim to the scam can call their bank to try and recoup the money, but knowing about the fake exchanges means that we can avoid them with ease. To find out which are the best Cryptocurreny exchanges to use visit this website.
Bitcoin Mining Scams
Bitcoin mining is a laborious task that often requires expensive equipment. The purpose of the exercise is to validate the transactions made which in turn secures the public ledger. Bitcoin mining is a process that yields results in the long-term, and takes dedication.
While there are legitimate cloud mining scams out there, there are those that promise to deliver a service that makes Bitcoin mining an inexpensive endeavour, only to find that the investment went towards a service that doesn’t exist.
As with other services, you need to carry out some research before parting with any of your money, especially if you’re new to Bitcoin.
We’ve probably all been targets of phishing scams at some point. They normally take the guise of official emails from a financial institution or another payment provider. They often ask the recipient to log in using their details, only for a scam artist to receive the information.
The Bitcoin phishing scam works in a similar way, only the user receives an email that states they have been awarded Bitcoins, and need to sign into their wallet to receive the currency. In reality, the information being entered is being intercepted by a third party. These means that they have access to your Bitcoin wallet and the contents within.
Deleting the email is enough to avoid such an occurrence, but it’s still something that you need to be aware of.
Reading about the many scams can dissuade some people from enjoying the benefits Bitcoin has to offer, but it’s about ensuring we’re aware of the scams out there. As mentioned, there are many scams that are sent to bank account holders, but as many are aware of the scam, they don’t fool as many people as the scammers would like. Just as we wouldn’t show anyone our PIN for our credit card, we shouldn’t be showcasing our private key. The more we build our defences and become more knowledgeable in Bitcoin, the less at risk we are.