Bitcoin is among the several cryptocurrencies; however, its name is deceiving. Unlike the Canadian Dollar, it is not a real currency (no entity centrally manages it). Instead, like buying a bar of silver, Bitcoin is a commodity bought and sold using other currencies.
Like purchasing a bar of silver, investing in bitcoin has fluctuating value. One Bitcoin equals tens of thousands of dollars; however, this value can change anytime.
Additionally, every Bitcoin transaction—which is recorded on a database known as the blockchain—is accessible to the public. But Bitcoin transactions also work to support the user’s privacy.
Why do people think Bitcoin is a scam/fraud?
There is a widespread belief that Bitcoin and other cryptocurrencies exclusively draw shady activities because of their reputation for being anonymous and cross-border.
Many influential people, like Bill Harris, the former Paypal CEO, have voiced their fear that Bitcoin is exclusively used in our society’s criminal underworld.
Why is it used in scams?
Despite reports that 98.9% of bitcoin transactions are not connected to illegal activities, the emergence of cryptocurrencies has given people new tools to support criminal activities. Since Bitcoin is digital money, it is impossible to monitor or identify the sender or recipient. Bitcoin is the ideal method for a con artist to get a large sum of money without being traceable.
Bitcoin entails depositing money into a device like an ATM rather than dealing with a cashier or bank teller in person. To reduce the possibility of someone notifying the complainant that they are a scam victim, scammers continuously work to minimize the complainant’s interactions with others.
Top frauds using Bitcoin or other cryptocurrencies as the payment method include:
- Government impersonation is the most well-known fraud in this category.
- Fraudulent sales or purchases
- Impersonating a company
- Family emergencies
- Rental Properties
What are the benefits of Bitcoin?
Bitcoin provides benefits over conventional money as a digital, decentralized currency, including:
Swift transfers with minimal costs
Government rules and bank fees do not apply to bitcoin. That implies that all transactions, even those conducted internationally, execute quickly and cost little. Importantly, Bitcoin provides a solution for those in underdeveloped nations without accessibility to a bank.
While international transfers often take one to five days to complete, Bitcoin transactions typically take about ten minutes.
Bitcoin’s supply will continue shrinking until a max of 21 million coins have been minted, whereas central banks can increase or decrease the availability of currency at their discretion. This trend implies that Bitcoin will appreciate over time.
Is Bitcoin a scam?
The benefits of cryptocurrencies are used against the victims of Bitcoin fraud.
Cybersecurity expert Adam Levin says, “Bitcoin-related frauds follow other criminal internet exploits until you try to retrieve your assets.” ” Cryptocurrency is difficult to trace and even harder to capture. With a few extremely high-level exceptions, once moved, it’s gone.”
In recent years, the total number of Bitcoin transactions has stayed constant, but the cryptocurrency’s value has increased. In April 2020, a single Bitcoin was worth $9,000; now, it is worth over $43,000.
These are the Bitcoin scams to watch out for and steer clear of.
Bitcoin fraud and imposters
In Bitcoin impostor scams, the numbers involved aren’t often this high. For instance, one con artist pretending to be a Coinbase reporter called PR firms offering favorable press for clients in exchange for a pitiful sum of $600.
Then there are variations on classic Social Security fraud. For example, a criminal informed a resident in Naples, Florida, that her Social Security number had been hijacked and was being used to create fictitious bank accounts. She was told to download an app and convert all her bank account funds to Bitcoin. Fortunately, she received a scam warning on her phone before the act was carried out.
Always take a minute to think before opening links provided to you by email or SMS, and never download applications to your phone unless you are very convinced they are safe to use by reading the user reviews on the site where you discovered them.
The FTC warns of a new Social Security fraud in which victims are instructed to use Bitcoin ATMs to deposit funds to pay con artists posing as representatives of the Social Security Administration.
Fake Bitcoin investing scams
Bitcoin is an abstraction of an abstraction. It is a kind of value that is neither backed by the full confidence and credit of a sovereign state nor does it have any physical form.
These features of cryptocurrencies are incredibly enticing to enthusiasts. Many Bitcoin investors think less government regulation of finance is preferable. Others like doing financial transactions that are difficult for the government to track.
These disadvantages, though, also serve con artists well when they create fake websites that promise novice investors the possibility of earning a quick fortune.
According to the FTC, many consumers have reported being tricked into visiting websites that provide chances for mining or investing in cryptocurrencies but are scams. These sites look genuine, using made-up testimonials and bitcoin terminology, but their guarantees of big returns are nothing more than outright fraud.
Bitcoin giveaway fraud
Something astonishing occurred in July 2020. Celebrities and well-known people worldwide concurrently promoted the same Bitcoin giveaway offer on their Twitter accounts. It appeared shockingly too wonderful to be true.
Former President Barack Obama posted on Twitter, “I am giving back to my community owing to Covid-19!” “I’ll send back every Bitcoin sent to the address shown below with a 100% bonus. I’ll send you back $2,000 if you spend $1,000.
A similar statement was posted on the accounts of Joe Biden, artist Kanye West, and former mayor of New York City, Mike Bloomberg.
The prize offers were all a part of a historic Twitter breach, as you might have predicted. Former Twitter CEO Jack Dorsey described it as “a terrible day” for the social media platform.
Phishing schemes target data related to online wallets in the scope of the cryptocurrency sector. Private keys for crypto wallets, which are needed to access cryptocurrency, are particularly interesting to fraudsters. They use a technique that is common to many frauds. They send out an email that links direct recipients to a custom website where they are prompted to input private keys. With this knowledge, hackers can steal cryptocurrency.
Scammers frequently use dating services to make unsuspecting victims believe they are partners in a committed relationship. Once trust has been established, the topic of rich cryptocurrency prospects and the eventual transfer of either money or account identification credentials frequently comes up in conversation. According to the FTC (Federal Trade Commission), almost 20% of the reported losses from romance scams were made in cryptocurrency.
How to avoid cryptocurrency scams
- Never divulge your private bitcoin keys in response to inquiries. No one requires those keys to do a lawful bitcoin transaction, as they govern your access to your cryptocurrency and wallet.
- Celebrities should be disregarded since they won’t approach people about purchasing cryptocurrencies.
- If you use an online dating service or app, meet your love interests physically before you give them money.
- Neglect text and email notifications from well-known or unknown businesses informing you that your account has been frozen or that they are concerned.
- If law enforcement, government agency, or utility business sends you an email, text message, or social media message informing you that your accounts or assets have been frozen and you must pay cryptocurrency or money, get in touch with the organization and disregard the communication.
- Pay little attention to job postings for crypto miners or cash-to-crypto converters.
- Do not believe anyone when they say they have explicit material of you that they want to post until you provide cryptocurrencies and report it.
- Refuse “free” money or cryptocurrency.
- Investment managers that approach you and promise to increase your money rapidly should be ignored.