Bitcoin Scams and How to Avoid Them
The value of Bitcoins has risen significantly over the last few years so it is no surprise that there are scammers out there that want to steal Bitcoins or take your money for no return. Here we will discuss the most common Bitcoin scams and how you can avoid them.
The Fake Bitcoin Exchange
Buying and selling of Bitcoins is usually performed using a Bitcoin or cryptocurrency exchange. Some of the exchanges will allow you to purchase Bitcoins in your native fiat currency while others will allow you to use other cryptocurrencies to exchange for Bitcoins.
There are many cryptocurrency exchanges available and more joining the group all of the time. Not all of these exchanges are legitimate and some exist to steal your Bitcoins or your money – or both.
To all intents and purposes these exchanges look and feel like real ones. They will display the real time prices and have a trading platform. But they will just take your Bitcoins and siphon them off to their accounts or take your currency and never provide you with the Bitcoins you paid for.
Malware is a small computer application that downloads onto your computer. Recently there has been cases of malware that have keyloggers detecting all of the keystrokes you make. These can discover your private keys for Bitcoin or your login details to a cryptocurrency exchange.
When this happens hackers will use this information to steal your Bitcoins. You can download malware without realizing it and the cyber criminals are getting better at this with each passing day. Never click on a website link that you don’t entirely trust.
This is another popular scam. Thieves purchase domain names that are similar to the reputable exchanges. For example they might get their hands on Coinsbase.com rather than Coinbase.com.
They then send fake emails using these domain names and ask recipients to check their cryptocurrency accounts. They provide a link in the email which goes to their fake website. It looks exactly like the real login page of the legitimate exchange.
The user has to enter their login details which the hackers steal. Hackers can prevent the user from logging in to their real accounts and very quickly they divert any Bitcoins in their wallets to their accounts. You need to thoroughly check any link in an email that has supposedly come from your cryptocurrency exchange.
You may have come across websites before that claim that they can double the amount of Bitcoins that you hold or provide you with a guaranteed return on your Bitcoins every day. Nobody has the power to double your Bitcoins and with the volatility of the digital currency guaranteed daily returns are impossible as well.
If you see any websites making these claims then stay well away from them. There only intention is to steal your Bitcoins. Sometimes they will pay out for a few days and then completely disappear along with your Bitcoins.
Bitcoin Cloud Mining
The thought of free money compels a lot of people to look into Bitcoin mining. It is very expensive to buy and run the computer equipment needed to do this on your own so lately cloud mining solutions have emerged where you can pay a company to do this for you.
There are some legitimate cloud mining services but there are scammers as well. It is not cheap to get involved with cloud mining and the scammers take your money and of course they do not perform any mining on your behalf.