Although Bitcoin helped create digital currencies, it has also generated new ways for criminals to commit crimes with Bitcoin. More people using Bitcoin means there are more cryptocurrency scams and other forms of online crime taking place every day. To prevent becoming a victim of a scam, it is important to understand how these scams work.
Bitcoin Scam Defined
A bitcoin scam is a type of theft in which a victim is persuaded to send their bitcoins and/or reveal their wallet credentials to a scammer. Scammers will use deceptive claims or impersonate an individual(s) to persuade victims to give them their bitcoins. As all transactions conducted within the Bitcoin network cannot be reversed (the transactions are final), once a scammer gains access to your bitcoins, it is virtually impossible to get your bitcoins back.
Types of Bitcoin Fraud
Fake Investment Platforms
The common type of bitcoin fraud is fake investment platforms. Scammers market fake platforms promising large returns on investments. Many scammers use this tactic to promote the idea that bitcoin is a scam; however, it is only the phony investment platforms that are scams, not the technology behind bitcoin.
Impersonation & Social Engineering
Scammers impersonate well-known individuals, exchanges, or recovery agents. Fake “bitcoin scammer” lists are disseminated on the internet, supposedly to warn users about fraudsters so that they can keep their money safe from these types of scams, but in reality, they are simply trying to run their own scams at the same time.
Phishing & Wallet Theft
Fake emails and fake websites are also a method to steal from users by tricking users into submitting a username and password (private key). Once the user’s Bitcoin is accessed, the funds can be drained very quickly. This is one of the most common forms of bitcoin fraud.
Is Bitcoin a Fraud?
Many people have questions regarding whether or not Bitcoin is a form of fraud. The answer is NO—bitcoin itself is a decentralized digital currency operating on blockchain technology; whereas the scams happening with bitcoin are done by fraudulent businesses exploiting consumer confidence, lack of regulation, and poor technical knowledge.
Why Tracking Down Theft Through Bitcoin Is Difficult?
The absence of any governing body means tracking down a bitcoin thief can be very difficult. Even though every BTC (Bitcoin) transaction can be seen on the blockchain, the usernames and Bitcoin addresses are usually pseudonyms and do not provide any means of identifying the individual involved. The problem is compounded when the scammer has used several wallets or a business that has its operational base in another country to avoid detection.
What You Can Do To Avoid Becoming a Victim of Bitcoin Scams?
- Do not trust guarantees of profits
- Do not provide anyone with your private keys or recovery phrase
- Ensure the exchange has the appropriate licensing and has been reviewed
- Be wary of unexpected emails, text messages, or phone calls
Stay away from “get-rich-quick” offers using high-pressure tactics
Education is your greatest defence against falling victim to bitcoin scams.
In Summary
Bitcoin itself is not dangerous. The potential for scams surrounding Bitcoin can have a significant impact on the state of the market. If you believe bitcoin is a scam, you will never use it, and if you ignore the risks, you may end up losing your hard-earned money. Raise your level of awareness of how bitcoin scams operate so that you can make informed investment decisions and remain safe as the crypto landscape continues to develop.
About Scams Report
Scams Report is an independent organization that exposes online investment frauds and helps victims recover lost money. Our experts have over a decade of experience tracking scam websites and maintaining a live database of fraudulent brokers.
We publish verified scam alerts, broker reviews, and recovery resources to protect traders worldwide and promote financial awareness.
