How to Avoid Bitcoin and Cryptocurrency Scams: Ask These Questions - Bitsonline

How to Avoid Bitcoin and Cryptocurrency Scams: Ask These Questions

Bitcoin is completely open and available for anyone to use, without permission or identification. It has opened the world of international digital commerce to anyone with a smartphone — including those running scams.

Millions more people can now participate in commerce, finance, currency trading and investing. However this new openness also requires increased alertness and personal responsibility. The mantra “be your own bank” also requires you to make sure that bank doesn’t lose all its money — whether it’s through theft, hacking, or scams.

Bad actors are taking advantage of Bitcoin’s democratization to try out old scams on new markets. We’ve seen ponzi schemes, fraudulent investments, promises of too-good-to-be-true returns, multi-level marketing (MLM) operations that collapse under their own weight, and outright thefts. On top of that, many bitcoin users are vulnerable to the same internet “phishing” attacks that plague regular banking and credit card customers.

Outside of Bitcoin, other fraudsters want you to pour money into their alternative cryptocurrency projects, promising their system is “better than bitcoin” or offering a chance to “get in at the ground floor.” While not all these projects are scams, they are all extremely risky and returns of any kind are not guaranteed. If you can’t afford to lose the money you’re investing, it’s best to avoid them altogether.

Questions to Ask Yourself

To avoid falling victim to schemes and swindles, ask yourself the following questions before handing over any cash, or BTC:

Does this project seem realistic?

Sure, different people have different notions of “realistic.” There are still plenty out there ready to believe that story about the Nigerian prince, even after countless warnings. Does it promise to double your initial investment in a short time, or return 20 percent or more? If so, it’s likely a scam.

Is someone trying to play on my goodwill?

Occasionally, someone will tell you a worthy-sounding and emotional story about a personal crisis or loss, and ask for you to send them money. While it’s up to you to make the final decision, remember the ratio of scammers to genuine people in need is probably high. It’s best to err on the side of skepticism. If they claim to be someone close to you, attempt to contact that person through other channels first, before sending money.

Do I know who’s behind this project?

Does the project have a website? If so, does it publish the names of the project team? Are they real people? That is, do they have social media and LinkedIn profiles, and/or contact details? Do they live in a jurisdiction where you can take legal action if anything goes wrong? How certain am I that all this information is actually true?

Do other people I know use this service?

Maybe you just found a great-looking bitcoin wallet service on the internet, or downloaded a mobile app. Do other people you know use it too? It’s best to check around first. Search the name on Google, or post a question on a bitcoin forum like Reddit’s /r/bitcoin.

Does the website look professional?

Even if the website does look professional and well made, you shouldn’t trust it. Criminals have exactly the same access to professional website designers and developers as anyone else, and can easily publish a professional-looking page with smiling faces and promises of customer support.

Do I believe the testimonials?

Fraudulent investment schemes love to show you testimonials from “real life” people who’ve put in money and gotten rich. Remember these are also easy to fake. Even if the stories seem genuine, remember that ponzi schemes will still pay out a few investors with others’ money before the scheme collapses.

Did this email actually come from the service I use?

Fraudsters are very skilled at replicating emails and websites from trusted services. You’ve probably seen one that looked exactly like your bank. The same “phishers” are busy copying well-known bitcoin wallets and exchanges. As always, don’t click on email links to login to your account — go directly to the website and login from there. Read the URL bar on your browser. Is it definitely the address your service uses? Are you sure?

Did that request to transfer money actually come from someone I know?

Even high profile CEOs in the Bitcoin world have fallen victim to this one. An email, apparently from an employee or trusted associate, sends a request to transfer funds to a certain account or bitcoin address. If you’re dealing in large amounts of money, always contact that person through a separate channel (e.g.: a phone call) to confirm it’s actually them making the request.

Have you ever been scammed? Do bitcoin users need to be extra careful? Let’s hear your thoughts.


Now that you know more about Bitcoin and crypto scams, you may have even more questions, such as:

What is Bitcoin? A beginners’ guide to digital currency

How do I get some bitcoin?

Where can I use bitcoin?

What is the difference between bitcoin and blockchain?

How is bitcoin different from credit and debit cards?

What are bitcoin public and private addresses?

What is a bitcoin wallet?

Which mobile bitcoin wallet should I choose?

How do I keep my bitcoins safe and secure?

Who is Satoshi Nakamoto? Did he invent Bitcoin?

Is Bitcoin legal? Can I use Bitcoin in my country?

How anonymous or private is Bitcoin?

Is bitcoin secure? What are the risks of using Bitcoin?

Can I make money mining bitcoins?

What are “Altcoins”?

Should I Invest in Altcoins?

How can I avoid Bitcoin and cryptocurrency scams?


Images via CryptoPop!, Pixabay

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