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Cryptocurrency can easily be described as digital money. It, therefore, implies that there is no physical coin or bill. There are many cryptocurrencies that are being created in the market, Bitcoin however, increasingly continues to gain popularity across the globe. Cryptocurrencies can be used to make payments while avoiding transaction fees. Some people do get them as investments with the hope that their value increases.

How does Cryptocurrencies differ from the dollar?
  • Government backing- unlike bank deposits, cryptocurrencies are not insured by the government.  It implies that cryptocurrency stored online does not receive the same protection as money in a bank account. In an instance where the company you store your cryptocurrency is hacked or goes out of business, the government will not intervene for you to get your money back.
  • Value Changes- cryptocurrency’s value changes constantly even within an hour. An investment that is worth thousands of dollars today could be worth hundreds the following day. It therefore offers no guarantee of its value increasing.


 Bitcoin and Cryptocurrency Scams
Even though bitcoin has been controversial since its introduction, there are still many people that hope to gain from it.   Many may not understand the idea behind bitcoin but still be attracted by its meteoric rise.
The challenge however with chasing the fortune is that you can easily fall victim of con artists and hackers that perpetrate bitcoin scams.
The fact that cryptocurrency is not regulated by the government is both a blessing and a curse.  It’s beneficial to investors but also gives room for bitcoin fraud to thrive.  Before investing in Bitcoins or any other cryptocurrency, there are potential scams you need to look out for.

  • Bitcoin Exchange Scams

Most cryptocurrencies are bought and sold at exchanges.  The fact that there are no regulatory bodies to oversee the exchanges makes it challenging for investors to determine their authenticity and credibility.
Many people loss their investments and left penniless when the exchanges they sign up for turn out to be fake.

  • Fake Initial Coin Offering (ICO)

The interesting part of cryptocurrency that is attracting many investors is the rise of ICO.  It is a way for many companies to raise capital.  There are many companies making entry to the market offering exciting projects and outstanding ideas. Their presence is however creating opportunities for fraud.
Scammers have different ways of separating investors from their bitcoin. For instance, they do create fake websites imitating ICOs and convince users to deposit coins to their wallets.

  • Cloud Mining Schemes

In order to extract new bitcoins without buying or exchanging, one needs to mine. This is however a resource intensive-activity that many users might not opt for. There are thus companies that provide regular users or enable them to mine at a fee.
There are however scammers that will use this as a platform to rip off investors. Talk of those operating without being transparent of the true cost and diminishing returns. Others do operate Ponzi schemes that see some investors losing in the end.

  • Malware

Malware provides a way for hackers to get passwords and access to computer networks. If your bitcoin wallet is therefore connected to the internet, it is easy for hackers to access and drain your funds.

  • Crypto-jacking

Scammers tend to use investors’ computers or smartphones’ processing power without their permission to mine cryptocurrency for their own benefit.
If you notice that your device is slower than usual, consumes battery quickly or crashes, you might have been crypto jacked.
How to Spot Bitcoin Fraud

  • Guarantee to make money- a person that promises guaranteed return or profits is probably a scammer. Cryptocurrency investment is more of a gamble, this means there are no assurances.
  • Big pay-out promises that will double your returns within a short period.
  • Free money promises
  • Company claims that are not clear or straight forward.

Before investing in cryptocurrency, know the risks and how to spot a scam.

Blog Publish Inquiery