Types of Bitcoin Scams – World of Cryptocurrencies

Types  of Bitcoin Scams

Due to their complexity, ease of use, and lack of regulation, cryptocurrencies are an excellent target for scammers. However, you can take a lot of precautions to guard yourself against cryptocurrency scams if you have a little bit of knowledge and good old-fashioned common sense.

Bitcoin has drawn the interest of both financial backers and merchants since its launch more than 10 years ago, with the latter group being more interested than the former. There is little institutional financial support and low liquidity in the digital currency market. However, it is full of criminals and hackers that hack it using bitcoin hacking tools or software and operate from bitcoin hacking forums or websites.

Scams involving bitcoin have developed in response to the erratic value structures of the cryptocurrency. As the value of Bitcoin climbed, more criminals started using it in their transactions, and these scams became more prevalent. Their numbers fell as prices fell, the number of trades on its platform fell, and it lost appeal as a speculative option. The likelihood of fraud within the Bitcoin organization has increased along with the stability of its foundation. The primitive blockchain architecture used by Bitcoin in the past regularly crashed as the volume of transactions on its network increased. Then, criminal activity in the Bitcoin ecosystem followed the use cases it was being put to use for, with the virtual currency frequently being employed for transactions like drug purchases on the dark web as part of bitcoin scams.

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Major Types of Bitcoin Scams

  • Use of Malwares – Malicious Software

Programmers are becoming quite creative when it comes to stealing ideas from people. Always double- or triple-check the address you’re sending bitcoin to before transferring it. Once installed, certain malware programs will modify bitcoin addresses copied from a client’s clipboard such that the entire amount of bitcoin is unintentionally sent out from the programmer’s location. When a bitcoin trade is confirmed by an organization, there is very little chance of switching it; therefore, observing this later signifies that it has passed the point of no return and unquestionably cannot be recovered. Being extremely cautious about the applications you grant executive access to on your devices is a good idea. An exceptional, trustworthy infection scanner can likewise help however isn’t secure.


  • Old-school scams

Cryptocurrencies may be based on cutting-edge technology, but plenty of hustlers continue to prey on unsuspecting consumers by employing tried-and-true methods. An unwanted phone call or email from a person identifying themselves as from the IRS is the standard illustration of this. This fictitious taxman will attempt to persuade you that you owe the IRS money and that if you don’t send them a specific amount of Bitcoin as soon as possible, you’ll be subject to legal action.

The tried-and-tested “Nigerian prince” scam has also migrated into the world of cryptocurrency. So if you’re ever contacted out of the blue by someone overseas promising you a share in a large sum of digital currency if you help them transfer funds out of their own country, use your common sense and recognize it for the scam it is.

  • Fraudulent ICOs

Many regular people enter the world of cryptocurrencies in search of the next great thing, seduced by the skyrocketing price increases that Bitcoin has seen since its launch. After all, getting in on “the next Bitcoin” early could result in early adopters earning a fortune if it ever materializes.

And if you want to get in on the ground floor, the easiest option for the average person is to buy coins or tokens in an ICO. There’s a huge appetite for new digital currencies — in the first half of 2018 alone, ICOs raised a total of $11.69 billion — and with many new buyers having limited knowledge of how the crypto industry works, it’s the perfect breeding ground for scammers.

Pincoin and iFan

In April 2018, the Pincoin and iFan ICOs, run by the same Vietnam-based company, are believed to have cheated more than 30,000 investors out of a combined total of $660 million.

iFan was meant to be a social media platform for celebrities and Pincoin promised 40% monthly returns to investors. Both were later shown to be multi-level marketing (MLM) scams.

Due to the proliferation of scam ICOs, individuals can now be duped into purchasing a cryptocurrency that doesn’t exist by using clever marketing and a little bit of enthusiasm. For instance, one report determined that 78% of ICOs in 2017 were frauds, while a different report estimated that number to be higher than 80%.

Finally, if you’re dreaming of getting rich quick from a crypto ICO, be aware that for every ICO success story there are many, many more failures, even if the project isn’t a scam.


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Ponzi or pyramid schemes

A Ponzi scheme is a straightforward yet frighteningly successful fraud that entices new investors with the promise of extraordinarily large profits. A promoter persuades individuals to invest in their plan, which is how it operates. These first investors receive payments that they mistakenly think are returns but are actually disbursements from the capital that newer investors have put. Having gained confidence in the legitimacy of the plan, investors who have received rewards continue to participate in it and persuade others to do the same.

Sooner or later, the scheme collapses when the promoter runs off with the money or it becomes too difficult to lure new investors. These types of pyramid schemes are nothing new and can be easy to spot, but that hasn’t stopped some crypto buyers from being scammed in a handful of high-profile incidents.


  • Impersonation Method

Unfortunately, scammers may easily create online media identities and impersonate real people. They typically lie on hold until the person they are impersonating delivers stuff. The impersonator then responds to it with a new message or source of inspiration, such as a giveaway, using a record that almost exactly matches the original banner or creator. As a result, it appears as though the first person is speaking. However, impersonators may also try to use these identical false records to trick other people into sending them money by tricking them into sending them private or direct messages.

Never participate in free giveaways, and if you receive an unusual request from a member of your organization, it’s best to double-check the legitimacy using a number of channels of communication.

  • Bitcoin Mining scams

You may mine cryptocurrencies like Bitcoin via cloud mining without having to buy the pricey hardware needed to do so. Users can rent server capacity from reputable cloud mining businesses to mine money at a certain rate. Additionally, there are certain legal ways to invest in Bitcoin mining businesses and receive a portion of their income.

There are, however, a lot of bitcoin mining fraud schemes out there. Others are fronts for Ponzi scams and are only there to steal your money. Some promise enormous (and improbable) profits and omit to reveal a variety of hidden fees.

Important to keep in mind is that cloud mining, as well as renting any other type of cryptocurrency mining equipment, will always be a poor investment compared to simply purchasing cryptocurrency. Due to the peculiarities of Bitcoin mining economics, you will always be better off buying the same amount of Bitcoin rather than attempting to invest that money in a mining scheme, regardless of how much Bitcoin prices change.

Even if they’re not technically scams, it’s a mathematical fact that all “legitimate” Bitcoin cloud mining businesses and consumer-oriented miner rental schemes are invariably bad investments.


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