Bitcoin Scams and How to Avoid Them
With Bitcoin’s value skyrocketing this year people around the world discovered the many investment opportunities that this cryptocurrency had opened up. Now you have Bitcoin mining rings, cloud mining, online stores, and other different kinds of business ventures that use the cryptocurrency for transactions.
For example, a new kind of scam has been going around Bitcoin circles that had managed to attract the attention of both the United States’ Securities and Exchange Commission and the Financial Industry Regulatory Authority themselves. Capitalizing on most people’s lack of knowledge about the nature of the Bitcoin, new Bitcoin ponzi scams have been popping out one after another.
It’s understandable why victims get so easily caught up in bitcoin ponzis. First of all, Bitcoin’s value is known to fluctuate from one extreme to another. The idea of getting large returns on “investments” is not really that impossible. Next, Bitcoin has a certain “edgy” reputation to it that makes it attractive to people who like to think that they’re rebelling against something.
Don’t let yourself be fooled into scams. Here are a few pointers on how to identify Bitcoin scams.
- If the returns posted are too good to be true (i.e. 100% growth in a matter of weeks) or too consistent (i.e. the scammer promises 100% every two weeks), then there is a high chance that it might be a scam. In the early days of Bitcoin, a return of 100% might somehow be possible- but today, even if its value it’s skyrocketing it isn’t doubled every month. However, in the last qarter of 2017 we’ve seen that Bitcoin price went up from $5,000 to over $11,000 in just a couple of months. So, even if it’s possible for Bitcoin price to gain a lot of value in a short time we must take into consideration that there is a very high volatility involved and an investment company trading Bitcoins must buy, sell Bitcoins and also pay its investors their profits so it’s impossible to pay 100% monthly interest just from trading Bitcoin.
- Mining for bitcoins is not a scam, of course. It’s one of the few legitimate ways with which you can earn bitcoins. Though you can always join cloud mining circles, the amount of bitcoins that you’ll get from these type of schemes are almost negligible (since bitcoins get progressively harder to mine as time goes by). If someone offers you to rent bitcoin mining equipment, flat out refuse. These things are practically useless today unless you buy a hundred of them and have the resources to keep them running 24/7. If you wish you can join mining pools but make sure you purchase the latest hardware and you must have access to cheap power because this type of hardware consumes a lot and they are working continuously.
- Don’t hastily click on Google advertisements. Some scammers would buy Google adverts that would direct people to sites that are pretty similar to some popular Bitcoin exchanges and services. Be vigilant. Always check the URL of all Bitcoin sites that you click on. The differences between legitimate URLS and fake ones are usually not obvious at the outset. For example, instead of .com, a fake address might have .tk as a domain. Should you see harmful fake adverts, you better report it to Google right away.
- Never put all of your eggs in one basket. Only store in an online wallet the bitcoins that you’ll need for small transactions and keep the rest hidden in cold storage.