If there is ever an asset that is hotting up in popularity, then you can rest assured that scammers will fester on it like scavengers on a a rotten carcass. In this respect Bitcoin is no different to binary options, Ponzi schemes and other high liquidity opportunities.

In this article we will discuss how to identify Bitcoin scam.  We will discuss the main character traits of scammers or scam brokers. Scammers who are using this decentralised currency as yet another opportunity to fleece innocent victims.

Because Bitcoin is a relatively new digital asset for the man in the street, mainstream opinion remains rather vague about it. Because of lack of knowledge and the promise of opportunities to make huge windfalls of money in a relatively short time, it is an attractive bait for scammers to take advantage.

Bitcoin is a decentralised currency.  This means that its value does not depend on political motivations or crisis.  However, despite the fact that the price of Bitcoin has been escalating to sensational levels, it remains a very volatile asset.

It appears that everyone would like to believe that the price of Bitcoin will continue rising.  And that Bitcoin could provide an excellent opportunity to make a quick buck.  However, in truth the price could also crash for many internal political reasons especially on the way it is structured.

Because there is not enough education on Bitcoin and Blockchain, few people know how it works.  This by itself give rise to many opportunities for scammers to have a field day.  There are many ways by which scammers operate.  They do it by personal contact.  They reach out to potential victims via email blasts.  And they also use social media as a fertile ground for sowing the seeds of fraud.

Here Are Some Manners in Which to Identify Bitcoin Scam

#1 Bitcoin Impersonators

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Impersonating the Bitcoin brand is relatively easy.  Beware of Bitcoin Phishing.  Bitcoin phishing just like any other phishing scam. It is presented by someone who gains your trust and presents himself as a legitimate enterprise.  Once trust is gained they will lead you to a spoofed website.  At this point you would be purchasing Bitcoin through a site that will virtually not exist.

Alternatively, a phishing site will present itself as a means by which you will check the validity of your Bitcoin.  Once you enter your private key, this is automatically phished out of your pocket and lands into the wallet of the scammer.

In both cases, it is very important to exercise your due diligence about the sites BEFORE transferring any money to fictitious accounts, or giving sensitive data like your private keys.

#2 Malware Downloads

This is a classic way for scammers to get hold of your personal data.  Bitcoin is often used as an “opportunity” by which you will download malware software.  By offering to “create bitcoin wallets” you are directed to click through URL’s which will in turn attack your computer and data.

Invitations on social media relating to bitcoin or bitcoin surveys to click through URL’s could be suspect.  You are advised to exercise care and caution before clicking through anything that is suspect either received through email or on social media.

#3 Bitcoin Ponzi Schemes

Designer: Chander Shekhar

This is one elaborate scamming system that make it hard to identify Bitcoin scam.  It is because to start off with, you could actually start making money from the scheme.  Usually the victims of Ponzi schemes are partly perpetrators themselves.  Even if they have no knowledge of it.

What is a Ponzi Scheme?

A Ponzi Scheme is a fraudulent system whereby you enter an “investment scheme” with a deposit that promises a very high return.  You are encouraged to “advertise” the system and make even higher yields from the deposits that are incurred through your recommendation.

Old investors are paid from the revenue of the new investors.  However at some point, once the fund has grown substantially, the scammers will make off with the spoils.

The reason why this kind of scam is hard to detect immediately, is that at the beginning the investors will start seeing a high yield and will therefore think that it is legitimate.

#4 Bitcoin Auto Trading Software Systems

Bitcoin can be day traded just like any other FIAT currency. One must note that day trading is not investing in Bitcoin. Nowadays there are plenty of legitimate exchanges that offer opportunities for investment.  And then there are legitimate forex brokers who offer opportunities for day trading.

However, this is a very dangerous playground, where opportunists and scammers come up with schemes which offer to invest or even trade automatically on your behalf.  The entry capital would be small enough to make it look harmless.  However, this is usually just bait in order to entice you into bigger deposits.

Very much the same as with binary options, never trust a system which appears too good to be true.  If it looks too good to be true, then it probably is not true.

How to Identify Bitcoin Scam and Protect Yourself


One of the first and easiest way to protect yourself from Bitcoin scam is to inform yourself.  Use Reddit forums to investigate whether anyone one has been scammed by a particular site, person or scheme that you are contemplating on entering.

As with any other get rich fast scheme, the Bitcoin scammers take advantage of their victims being gullible.  Even the smartest people get scammed when they do not do proper due diligence.

Zerofox is invaluable in giving guidance on how to protect yourself from being scammed and ripped off.

  1. There is a valid reason for which Bitcoin has been treasured by cyber criminals.  It is because it is difficult to trace once it leaves your pockets.  Therefore do not trust anyone who claims that they can help you invest your bitcoin, or mine it.
  2. As with auto-traders in binary, do not fall for any elaborate get rich schemes.
  3. Make sure that the brokers or exchanges that you are planning to invest with are legitimate.  Check their sites properly before investing. Make sure that you know who the owners of the Bitcoin Exchanges are.  Exchanges with hidden identities should be avoided at all costs. Although not necessarily denoting scam, it puts them in the high probability ratio.

How to Identify Bitcoin Scam – A Conclusion

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Notwithstanding the warnings and the due diligence you may still fall victim to scam.  Scammers are usually smarter than their victims and the shame is theirs and not yours.

If you have fallen victims to scam you should immediately report the crime to the FBI’S Internet Crime Complaint Centre.  The Interpol and FBI cyber crime units are becoming far more sophisticated in tracking down scammers and dealing out deserved punishment. Furthermore, you should contact forums like Reddit and other websites and share your story.

As explained earlier if you are victim of scam, you should seek help from any quarter.  It is not shameful to be scammed.  But it is shameful to allow others fall in the same path if you can share your story.



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