As of March, you’re more likely than ever to fall victim to Bitcoin scams. That’s according to a report from digital security firm ZeroFOX Research.
Social Media Scammers’ Primary Method of Targeting Bitcoiners
ZeroFOX attributes this increase in scams to the monumental rise in the bitcoin price that has taken place in the first few months of 2017. In early March, bitcoin’s value surpassed the price of an ounce of gold for the first time in its history. Additionally, 2017 marks the first time bitcoin has hit US $1,000 since before the Mt. Gox hacks of late 2013.
In its report, the research firm attributed Bitcoin’s hard-coded features as draws for online scammers. The digital currency’s decentralization, “anonymity,” and irreversible transactions all make it easier for scammers to steal from people than traditional online payment methods.
“There’s no way to recover losses once bitcoins are spent,” ZeroFOX warns, “creating an easy way to engage in money-flipping scams like ‘Send me Bitcoins, and I’ll pay you back double!’”
Scammers also look towards social media to find victims, according to ZeroFOX. Such platforms “provide access to a key demographic” of people most eager to get into Bitcoin while lacking “the specialized expertise necessary to tell a legitimate from an illegitimate offer,” the firm said.
The unwitting victims that fall for the scammers’ traps generally end up getting scammed in one of four ways, said ZeroFOX:
- Fake bitcoin wallets containing malware
- Bitcoin-flipping (doubling or tripling your investment overnight)
- Pyramid schemes
As a bonus, the company also warned against bitcoin cloud mining scams. Be on the lookout for social media ads for cloud mining companies that guarantee profitability for an extremely low entry fee. This type of scam is harder to detect than others, ZeroFOX noted, because so many cloud mining companies are actually legitimate.
Avoiding Bitcoin Scams
To save yourself from becoming a victim, ZeroFOX recommends that you avoid links from “too good to be true” offers, be wary of who you talk to about finances on social media, and don’t conduct financial transactions through social media.
If you have already fallen victim to a bitcoin scam, the firm recommends reporting your situation to the FBI Internet Crime Complaint Center.
After studying these scams, ZeroFOX has announced the release of a new “FoxThreat rule.” The company says that this rule will automatically alert those running the ZeroFOX platform of such scams in real-time.
Bitcoin Scams Are Nothing New
Despite seeing a rise in early 2017, the Bitcoin community already has a long history with scammers.
Almost as soon as the digital currency gained popularity, criminals began looking for ways to take advantage of its privacy and irreversibility. These scammers turned to the methods listed by ZeroFOX, but also went as far as creating their own versions of digital currency specifically designed to steal people’s money — such as Josh Garza’s PayCoin.
Other thieves and scammers assumed the role of entrepreneur, creating bitcoin exchanges or other businesses claiming top-notch services. Mt. Gox, the earliest bitcoin exchange, ultimately ended up as one of these below-board businesses, with former CEO Mark Karpeles ending up in jail on fraud charges.
In the face of scams and theft, Bitcoin and its community has always seemed to survive thrive. That doesn’t mean you shouldn’t be careful, though, especially when people on social media ask you for money.
Have you ever been the victim of a Bitcoin scam? Let us know in the comments.
Images via Pixabay, ZeroFOX
Do you want to know more about how to avoid cryptocurrency-based scams? Check out our article: “How to Avoid Bitcoin and Cryptocurrency Scams: Ask Three Questions.”