You’ve read up on Bitcoins, and you’ve gotten yourself a wallet. Maybe you’ve even gotten a few Bitcoins to go in that wallet, if you took a leap and invested. But how do you protect your investment from Bitcoin scams? Bitcoin is a currency, and one of the currency’s most enticing attributes is that it’s unregulated. Does that mean it’s unsafe?
Unfortunately, yet as with any currency, Bitcoin scams do exist. It’s important to know how to recognize them, and how to protect your investment from those with less than true intentions. Here are a few of the Bitcoin scams which have affected currency holders, and how to avoid them.
Bitcoins Scams: Phishing
Phishing is simple, yet effective. It’s very simple today for a criminal to send an email, or to make a phone call, under the pretense of gaining information for business purposes. There are IRS tax scams and others which have duped innocent people out of millions of dollars; these phishers can even make their caller ID or email domain replicate that of an official business.
Phishing is used as an attempt to gain personal information. An email will be sent, or a phone call made. Over the phone line, an “official representative” will ask you for your wallet key or other identifying information, and then will steal your currency. Emails are effective, as well. A link may be included in your email asking you to log in to your wallet; your credentials are recorded and suddenly the criminal has access.
Bitcoin Scams: Promising Huge Returns
If you’re approached by a company or a person who promises you huge and immediate returns on your bitcoin investment, it’s most likely a bitcoin scam. Usually these fraudsters will ask you to pay an initial fee. This may be called an investment fee, a transaction fee, a startup cost or even a commission.
Don’t fall for it. There’s no sure fire way to earn money on bitcoin, and there’s certainly no sure fire way to earn money instantly, or even overnight. This is another example of one of the many bitcoin scams. Once you agree to participate, you’ll not only be out the initial “commission” but you’ll also have given a criminal access to your wallet. He will then be free to spend your currency as he sees fit.
Bitcoin Scams: Malware
Malware bitcoin scams begin in the same was as a phishing scam: with an email. Perhaps the email you receive is addressed from the company which hosts your wallet. Or maybe it’s from someone telling you he knows how you can mine bitcoin faster.
Regardless of the content of the email, the end goal is the same: to cause you to download a file. You may download the file directly from the email, or you may be directed to a website which will begin a download automatically. This file contains malware, and that malware can do many nasty things.
Malware, in fact, is defined as software which will do nasty things. Spyware is a form of malware, adware is as well. Trojan horses are malware, as are worms. You may just hear them referred to as viruses. Allowing your computer to download malware can not only infect your machine, but it can also give scam artists access to your bitcoin wallet.
Cloud Mining Scams
If you’re one of the fortunate folks who have access to cloud mining software, you may fall prey to a cloud mining scam. There are two ways to mine for bitcoins. You can fly solo, as many do, or you can mine with a group.
There are many legitimate ways to mine bitcoin in a cloud mining setting. Genesis Mining and Hashflare are two examples of companies which offer this service. There are nice benefits to group mining, as it will actually save you electricity costs and equipment costs.
But, of course, bitcoins scams are present in mining. Even the legitimate companies will usually charge a small fee to cloud miners in exchange for access. Bitcoin mining scams, however, charge this fee to users without actually doing any mining.
Fake Bitcoin Wallets
When you downloaded your wallet, you likely did so through a reputable website. Paxful and Blockchain are two examples of these. But there are fake wallets on the web, and it can be easy to mistake them for the real thing if you’re not paying attention.
Scam artists create wallets, which will work for you for a period of time. Your transactions will be successful and you won’t experience any trouble. Usually, though, once your balance reaches a certain threshold, your money will disappear. These copycat wallets can be downloaded on your PC, or even on your Android or iPhone, so be sure you’re downloading from the actual, legitimate website.
How to Avoid Bitcoin Scams
First and foremost, use common sense. Protect your wallet key, and exercise caution. And never engage in bitcoin transactions via social media.
Phishing scams are common, but they can be easily avoided. If you receive a phone call from someone claiming to be a representative from the company who hosts your wallet, hang up the phone. Then, simply call the company back.
Never log into your bitcoin wallet via email. Instead, visit the website or mobile app and log in directly. Similarly, never click links included in emails. It’s just as easy to visit the website from your browser, and can save you from falling victim to bitcoin scams, or from accidentally downloading malware.
Finally, realize that there’s such thing as an offer which is too good to be true. If someone offers you immediate returns on your investment, go ahead and tell them that’s just nonsense. You, unfortunately, will have to ride the volatile “bitcoin value wave” just like any other investor.
Bitcoins are a very exciting investment opportunity. But remember that bitcoin scams are possible, as bitcoin is a currency. And with any currency comes a bit of risk if you don’t take measures to use common sense and protect yourself.