08-24-2019 icon

Five (5) Common Bitcoin/Cryptocurrency Scams and How to Avoid Them

By Sagetwriter

The bitcoin and cryptocurrency industry is an emerging industry, one with a lot of benefits and potential. And as with all things involving finance including those of fiat currencies, bad elements are known to capitalize on the lapses of unsuspecting individuals who lose funds to these schemes.

In this article, we highlight five (5) common BTC and cryptocurrency scams, as well as ways to avoid them below:

  • Mining Scams

Cryptocurrency mining is a specialized crypto activity and requires a huge input of machinery and technicality too yield any sizeable gains.

However, the crypto newbie is being told otherwise by these ‘make-believe individuals’ who claim to offer you fixed returns for investing in their mining programs.

They resort to use photoshopped images, promises of big profits, and fake testimonials to convince you to part with your coins; after which they disappear.

There have also been recent cases of mining websites asking you to perform some activity for BTC; while this is possible you most likely will end up with satoshis (0.000000000000000001 BTC) after all the work, as most are pyramid/referral schemes for the promoters.

  • High-Yield Investment Platforms

This form of cryptocurrency scam could come in multiple fronts: A high yield investment website with a variety of investment options; example CryptoDoubler (Gold, Diamond – invest $50 get $500 in 7days, invest $100 get $1000 in 10 days).

Others pose as regular comments on social media pages: Example “All my life I have been looking for ways to invest in cryptocurrency/bitcoin and have failed till I met Mr John Doe who now trades or helps me earn $100 every 3 days…Contact…”

They could also send direct messages seeking to cajole you into pseudo-investing.

  • Giveaway Scams

Here, individual is lured through freebies or give away. A classic example is the fake “5000 BTC Binance Giveaway” – where the perpetrators created fake social media profiles and web links, asking users to join with a promise to get a part of the 5000 BTC available for grabs.

The scam artists either ask for some crypto deposit before you become eligible to win, or you are asked to register on a clone platform similar to the original; as they try to steal your log in or data details for later access.

There are also cases of lofty promises for referrals and the unsuspecting victim goes sharing links to other parties in hopes of a big reward.

  • Shit Coin Projects

Shit coin refers to coins or tokens with no potential or long term value. This type of crypto scam tries to convince the investor of the benefits of a relatively unknown coin and asking him to invest or buy its ICO (initial coin offering) with the promise that the coin project will be worth more in due time.

It is no longer news that most of these projects have either failed, leaving the investors with worthless tokens or have pulled exist scams.

The shit coin promoter says “Buy xyz coin, it will be worth…value in coming months, Buy xyz coin we have offices in…You’ll win a trip to…”

Note that, while there are coin projects which live up to their potential, shit coins do not stand the test of time; many are just crypto fund raisers in disguise.

  • E-mail Phishing and Hacking

This is an advanced scam model which employs tech tools and behavioural predictability of the victim.

For e-mail phishing, they try to get access to your security passwords or wallet by sending clone links of websites or infiltrating your PC/device through malware. These phishing e-mails could have attractive headlines and call to action. For example “Your blockchain wallet password is under review, click here ‘blocchain.comto reset password.- Notice the deliberate omission of the letter ‘k’ in the second link; in a haste and panic response you may not notice immediately.

Hackers employ similar tactics by trying to break down your defences and security in an attempt to steal coins or gain access to your accounts.

Prevention and Safety Measures

  • Always use long and strong passwords you can remember.
  • Do not share bitcoin wallet info with anyone or third party .
  • Enable 2-factor authentication on your wallet and devices .
  • Avoid unverified social media pages especially those with unsolicited info or those promoting high yield schemes.
  • Only participate in giveaways organized by official handles .
  • Ignore and block off comments or DMs promising quick gains.
  • Stick to trusted exchanges and websites such as NairaEx to Buy/Sell Bitcoin.
  • Always check that URL (website link ) is correct before clicking.
  • To avoid spam mails, you can use email filtering services like BitBounce which requires e-mail sender to pay $0.05 BTC before his/her mail is delivered to your inbox. This would deter phishing attempts and help blacklist them too.
  • Avoid greed and quick profit schemes. There is profit to be made in cryptocurrency but to do so you must understand how it works. So Do Your Own Research (DYOR).
  • For clarity, the cryptocurrency market is highly volatile hence, there are no guarantees on a fixed amount of profit over a given period of time. Profits vary with the market; so when promised a fixed return in quick succession set your red alerts.
  • Before investing in any coin projects, do your research. Study the coin’s development team, product and industry backers.
  • Lastly, trust your instinct. If the offer sounds too good, take a second look.

In all, cryptocurrency investing is serious business and just as you guard your bank savings and details, guard your coins too.

Found this helpful? Share your thoughts in the comments.