How to Protect Yourself From Common Bitcoin Scams

The continued growth in Bitcoin's value over time has a downside. It gave birth to a whole new economy of cybercrime centered around various scams. Clever threat actors focus on unsuspecting victims to cause them to lose their Bitcoins in the long run. This article will shed light on today's most common cryptocurrency frauds so that you can tell the wheat from the chaff when executing Bitcoin-related transactions.

Rogue Bitcoin Exchanges

When you discover an offer on social media to let you buy BTC below market value, be aware that this may entice you to visit a cryptocurrency exchange. The first thing to check when you are on an exchange site is whether it uses HTTPS for a secure connection. If the URL begins with HTTPS, it means that the communication between your browser and the service is encrypted and reliably secure. In the case of HTTP, processing such an exchange is a slippery slope.

Another classic giveaway of counterfeit exchanges is the PayPal to Bitcoin conversion trick. These websites usually provide a web form where you are supposed to enter your PayPal email with the amount you want to sell. Then a QR code will appear to verify the transaction. However, you never get your Bitcoin, but get your PayPal account hacked.

Fake Bitcoin exchanges tend to come and go. The surface and disappear quickly, just to reappear under the guise of a different domain name.

Phony Bitcoin Wallets

It is a little more difficult to identify fraudulent Bitcoin wallets because the main function of wallets is to store Bitcoin rather than exchange it. Therefore, these types of scams are generally not aimed at direct financial gain. Instead, they more often than not attempt to trick users into installing Trojan horse software with a data thief component. This way, authors can steal sensitive information, such as your passwords.

To distinguish genuine Bitcoin wallets from fake ones, watch out for various questionable hallmarks. Similar to the rogue Bitcoin exchanges scenario, be sure to check if the wallet site is using HTTPS or is trying to impersonate a well-known legitimate Bitcoin wallet. Consider asking people you know and trust if they have used the service before.

In case Bitcoin Wallet is an app that you can download, it is recommended to check for malicious code first. Services like VirusTotal will come in handy because they allow you to scan any software binary for infections.

Phishing Scams

The goal of phishing, one of the most popular scams, is to trick people into visiting a malicious site disguised as a reputable service. Scammers will usually contact you via email or through deceptive internet advertising. By going to their pseudo service, you risk catching viruses or losing your Bitcoin as a result of a fraudulent business transaction.

The indicators of a phishing scam can be quite subtle. The fake email might come from a cryptocurrency exchange or a wallet service that you used. Cybercriminals could have obtained your details through a large-scale data breach, like the notorious Yahoo! To hack.

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The general rule is not to click on links embedded in an email. A bogus hyperlink might look real on the outside, but hovering over it will reveal a bad URL. Another tip is to treat each attachment with care. Such malicious attachments also often bring ransomware which will encrypt your data and demand to pay the ransom.

Scammers can also exploit web ads to visit you at a fake Bitcoin exchange or wallet when you search for things like "Buy Bitcoin" or "Blockchain" on a search engine. Trapped ads usually appear at the top of search results. To avoid this type of advertising, type website URLs directly into the browser rather than opting for sponsored content.

Bitcoin Ponzi Scams

Some sites offer cryptocurrency deals that sound too good to be true. According to their claims, you can supposedly get the hang of your Bitcoin quickly, say, double it overnight or something like that. This is a classic Ponzi scam. Once you submit your Bitcoin to scammers, chances are you won't even get the initial amount, not to mention there won't be any income.

These sites tend to have referral programs where you can make money from new leads. Therefore, a red flag to watch out for is a referral link in any URLs you may see on social media. An example of a referral link would be something like a website. com /? ref = 789.

Scams in the Cloud Industry

Cloud mining refers to a business model in which people team up and invest their funds to lease Bitcoin mining hardware. While this system is inherently benign and quite legitimate, threat actors set up scams to attract interested parties and ultimately deliver a lower return on investment than expected, or never deliver on their promises.

To stay away from the mining shenanigans of the cloud industry when you're up to this business, watch out for some potential indicators of risk. Again, don't trust sites that aren't HTTPS. Avoid services promoted through referral links on social media. Make sure the resource is transparent in terms of the pool used for cloud exploration, who manages it, and how much profit you will get. A reputable service usually also provides a dashboard where you can monitor all your mining operations in real-time.

Risks Associated With Bitcoin Peer-to-peer Trading

Bitcoin theft can even go beyond the online realm. As the regulation of cryptocurrency operations braces for an increase in some parts of the world, people may find it difficult to buy and sell Bitcoin regularly. These hurdles have caused the Bitcoin economy to partially migrate underground and offline, where traders meet in person to complete trading. The newborn black market is fraught with peril, however.

Some of the recent burglary incidents illustrate just how dangerous peer-to-peer Bitcoin trading can be. In April 2017, a businessman from Delhi, India went on the lookout for thieves trying to buy Bitcoin at a very attractive rate. He met the alleged traders in a shopping center. The impostors then kidnapped him and took $ 50,000 of local currency (Rupee) which he had prepared for the deal.

Another news burglary took place in New York City in May 2017. A 28-year-old man posted an ad on Craigslist offering to sell $ 1,100 worth of Bitcoin and received a response from a potential buyer. Having met the supposed buyer in Brooklyn as arranged, the victim agreed to get into a car to complete the exchange. The thief and his armed accomplice then held him at gunpoint and forced him to submit the cryptocurrency to their wallet.

The takeaway from these “street cybercrime” incidents is that you should refrain from meeting strangers in person to trade Bitcoin, otherwise you run the risk of being stolen the old-fashioned way.