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7 Common Bitcoin Scams & How to Avoid Them — AutoTrading Strategies

Introduction

Bitcoin was an unknown currency in the early 2010s. It was worth pennies and there were only a handful of investors rooting for it. However, in 2017 the price of bitcoin skyrocketed. The news of investors getting rich overnight gave rise to interest in cryptocurrency. Since then, the fintech industry is making efforts to mainstream cryptocurrency. At the time of this writing, Bitcoin is sitting at 23K USD. This is a result of the steady growth of investor’s trust in crypto.

Common Bitcoin Scams

1. Fake Trading Platforms

Trading platforms are used for buying, selling, and exchange of cryptocurrencies. They make the trading process smooth and easier. Nevertheless, some trading platforms are just scams. They take over the money of users and never return it.

2. Fraudulent Giveaways

Giveaways are another common scam for bitcoin. The well-known incident of the Twitter hack in August involved the giveaway scam. The hackers published a misleading message from accounts of famous individuals. People sent their bitcoin in the hope of getting back double amount but clearly that never happened.

3. Blackmailing

Blackmailing is a common form of making someone pay you the money. In the internet space, hackers steal sensitive user data and ask for money. They threaten to release information if the victim fails to comply with their demands. The money is taken in the form of cryptocurrency or bitcoin as it is difficult to track the recipient on the blockchain.

4. Locking Out From Account

It is also known as a ransomware attack. The attacker leaves malware in users’ devices to lock them out of their accounts or block access to valuable data. Usually, big companies suffer from this type of attack.

  • Avoid clicking on spam or suspicious links.
  • Install the latest version of antivirus to keep your device clear.

5. Phishing

There are two ways of phishing attacks. The first one is through social media while the second through email.

6. Copy-and-Paste Malware

The public address of bitcoins wallets is usually long with a mix of characters. When sending funds to a wallet, people just copy and paste the address rather than typing the whole thing. Scammers make use of this weakness and leave a copy-and-paste malware in the device. When you paste the address from somewhere the scammers’ address replaces it and funds never reach your targeted place.

7. Ponzi Schemes:

Ponzi schemes are also used in cryptocurrency scams. These involve paying old investors with new investors’ money. When there is no longer a new person joining in then the money stops following. There is no actual business in Ponzi schemes. Scammers effectively lure in the investors by giving them the reward for the first investment. However, the victim loses everything when he is all in.

Conclusion:

Bitcoin scams can be avoided once you know where those are coming from. Have patience with your finances and do complete research before investing somewhere. The onus of protection your cash falls on you first of all. So, stay vigilant.

AutoTrading Strategies is a consultancy company built by crypto traders and trading software developers.

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