A typical example of a fancily played-out bitcoin scam is celebrities tweeting about an opportunity in which if you send them a particular amount of money, you would receive double of what you sent. Another would be a professionally crafted solicitation from a real-sounding firm to buy bitcoins. Any “great new investment” that “promises” returns is sure to be fishy.
The most touted investment, cryptocurrency, and the hot currency, bitcoin, offer good, although unstable, returns. But what the hot topic can miss is the proficiency of scam artists in looting naive investors.
Bitcoin goes through many value fluctuations; it is a volatile investment. So Bitcoin is far from a safe investment with “guaranteed returns,” and so is any other cryptocurrency. But the problem here is not the volatility; it is the warm welcome to scammers.
How do Bitcoin Scams work?
Blockchain, the backstage of crypto technology, is the digital record of transactions maintained across many computers linked in a peer-to-peer network. It is a wild universe, and regulating the crypto market can put off some investors looking for the thrill to gain and lose vast amounts of money in a matter of minutes.
Payment by crypto is hard to recover, and hence scammers always ask for money in the form of crypto. The fraudsters entice investors with promises of grand returns and grow a sense of trust and security with you. Once they get what they want, they vanish. But now, it is possible to track them down and recover your money with the help of a few renowned fund recovery companies. These companies help you in bitcoin scam recovery by locating the scammer using numerous techniques and plans devised by the fund recovery agents, financial experts and law advisors.
When one learns of the possibility of doubling their money quickly, they get on the bandwagon readily. Although losing is a pretty real possibility, the idea of winning big sets a sturdy footing. The hunger for an asset class can lead you to people who use the evergreen scam techniques- the promise of high returns, exaggerated gains, etc.
To turn you into a “millionaire,” the fraudster keeps asking for investments, and when you ask for the money to be taken out, they ask you to pay a fee and some taxes. Once they are done with these “formalities,” they take flight with your money; the ruse ends there.
Keeping Your Bitcoin Safe
Hackers go to great lengths; they manipulate individuals’ crypto wallets or breach crypto exchanges to get to their money. As a result, safely storing your crypto becomes a priority, and so does practicing certain digital security habits.
Crypto exchanges and third parties offer storage in hot wallets for your wallets which are comparatively secure but still hackable.
Cold storage through an offline device with no internet is the best way to protect your funds from online fraud. But it has its risks; you can lose your investment entirely if you forget your password.
Your cryptocurrency on any exchange or wallet is not insured like the money in your bank. This brings us to choosing the right crypto platform or business. Trade and buy crypto on a platform with robust security measures with two-factor authentication for users and holding significant coins in its cold storage. Some exchanges also offer private insurance policies in thefts or hacking. Before deciding on any platform, make sure you check the Financial Conduct Authority (FCA) once. That page will help you find out if the exchange is regulated or not.
Your Bitcoin Security and Privacy
You can always take measures to secure your crypto from hacking and theft, but Bitcoin, like any other traditional investment, is vulnerable and can hamper your personal information.
Security and privacy are different here. Bitcoin transactions are not private; trades made in Bitcoin are more complex to trace than credit card withdrawals. Every user cannot know precisely how much everyone else has bought or sold.
Bitcoin trades are tied with a string of unique letters and numbers, called a hash code. Instead of complete anonymity, what you get is a feigned gimmick of anonymity. Blockchain is public, and although your activity is not directly tied to personal details like your social security number, people can identify you.
Downloading a Bitcoin blockchain requires a massive computing capacity. As a result, people cannot randomly decide to see what transactions are happening in the Bitcoin blockchain.
Bitcoin or even Ethereum, for that matter, will not give you complete privacy when you transact since they are the big sharks. Smaller cryptocurrencies are designed to provide you with privacy, but they are better avoided as they often become scams.
When talking about Bitcoin and Ethereum, available details are necessary to maintain the network as people watch. In addition, the open system aids with the accountability of blockchain.
The Regulation on Cryptocurrency
Coming to regulation, the crypto sphere is torn between getting government regulations and keeping it wild. The decentralized ethos of cryptocurrency goes against any governmental regulation, but it might help traders and investors by protecting them from bad actors. On the other hand, when we bring concerted nationwide policies into play, it brings legitimacy to the industry, giving way to institutional adoption.
What is needed is balance. Cryptocurrencies can still be the wild west, thrilling, and require no advancements in regulations if people are educated about the growth of crypto scams: social media campaigns and crypto-literacy lessons targeted at young consumers new to the space.
Cryptocurrency exchanges also play an essential role in educating users. But unfortunately, the growing enthusiasm in the industry throws critical thinking and practicality out of the window. Instead, people need to know of the risks involved.
How to Stay Safe From Bitcoin Scams
Be vigilant, wise, and research to stay unfazed from petty bitcoin scams.
You can also keep playing in the wild west but with certain precautions, look for these red flags to identify bitcoin scams from a safe distance:
- Guarantees and 100% assurances of huge returns claiming your cryptocurrency will multiply are mostly scams.
- Cryptocurrency is the form of investment where you earn profits by selling it for more than you paid. So do not fall for people who claim to know better.
- Aggressive insistence on specific crypto by a caller, recent love interest, and the organization are probable scams.
- If you are asked to pay by cryptocurrency, it is a scam. Other than that, if you are asked to pay by wire transfer, gift card, or crypto, it is a scam.
Are you interested in cryptocurrency? Use common sense and be vigilant where you put your money and with whom. Think things through before falling for an apparent scam to which you will regret losing your money.