As we all know, Bitcoin is the most favored cryptocurrency among digital currencies. When there was a sudden rapid rise in the price, investors lost interest when compared to the last few years. Though the price of Bitcoin became hopeful, the investors started investing in Bitcoins but there were different consequences. One of the pitfalls of new investors who started entering the digital market is the rise in scams, fraudulent activities like wallet theft, fake ICO etc. This way consumers fell prey to the fraudsters hinging around the digital currency.
This way it intensified the crimes in the digital market. The opportunities for the new investors were reduced due to unexpected fraudulent activities happening around the exchange of currencies and scam. In order to have a successful result in the investment, these traps or scam should be avoided. Connect with best service providers for all your blockchain application development.
In this article, we will see some biggest Bitcoin scams and to be aware of such fraudsters.
List of common Bitcoin scams
1.Hardware Wallet Theft
One of the scams happening around Bitcoin wallet theft. Fake wallets software were developed for the Bitcoins. The hackers can hack your Bitcoins easily through this wallet. Users try to protect their Bitcoins with hardware wallet available in the market.
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Hardware wallet is the place where the Bitcoins are saved with the available private keys for the users. This facility has been increased rapidly nowadays. It looks like small USB drives which may be very vulnerable to the fraudsters or hackers to hack all the personal holdings and the Bitcoins of the users
Some companies are selling the hardware wallet with the preconfigured with seed phrase i.e. the information required to recover the bitcoins from hardware wallet. The already configured seed phrase is used by the users which give the chance for them to hack the details and drain the Bitcoins from hardware wallet.
How to avoid
This is happening all around and the simple way to avoid this scam is you need to buy hardware wallet from the trusted source. Use the best cryptocurrency wallet development service for your business.
One of the most happening scams is the exchange of bitcoins. Though the cryptocurrency is controlled by a decentralized network still investors buy or sell Bitcoins for exchanges.
Investors will be excited to have an exchange and they may trust any source offering an exchange for their Bitcoins and in the later part, they realize that it was complete trap to drain their funds. This had led to fundless investors who lost their bitcoins to hackers.
This scam is very difficult to find out. The alarming signal is they offer unrealistic prices for the exchange. You may need to think twice before proceeding with such type of exchange.
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The side effect of this scam is that you may lose all your funds unexpectedly. So how to find these exchanges are a scam or not.
How to avoid
One of the easiest ways to check whether it is a scam or not is to check the website or URL link of the site which is ready for the exchange.
It should start with HTTPS. Here S denotes that it is secured. If not, please don’t proceed with the exchange of your bitcoins.
Hope you all know about ICO. ICO means Initial Coin Offering. This is in trend among all the organizations to raise their capital fund to kickstart their business.
When the investor looks for multiple gains, they go behind this fake ICO. With the latest technology of blockchain, many organizations are into the digital market of cryptocurrency with their innovative ideas and projects.
They initiate their own business by offering the ICO. These opportunities have provided the space for the fraudsters to hack the investor’s Bitcoins.
There is n number of scammers with this fake ICO. They create a fake website and request the investors to deposit their Bitcoins into the fake wallet. How to find it is a fake ICO? Here are some methods or tricks to find the fake ICO scam
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How to avoid
- They don’t provide any white papers
- Anonymous team members
- Unexpected execution time
- No matching with the written statement and the said words
- They avoid answering our tough questions
- Don’t provide any roadmap of the software
4.Cloud Mining Schemes
Hope you know what is mining? Mining is the way to create new bitcoins by adding a new block to the blockchain.
Adding a new block is not an easy task. It consumes more electricity as well as the power to mine the block. It is very expensive to mine bitcoins. So now companies offer the miners to use their infrastructure to mine the new block and create new bitcoins for some specified rate fixed by the companies.
The contracts of the companies offering the infrastructure to mine the block keeps on changing. Some offer lifetime validity to make use of their electricity and power that always keep a constant rate and offer good returns. However, if mining becomes very difficult, the return on investment will be a very small amount when compared to your investment.
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Some companies offer without being very transparent about the return on investment or how much to invest to use their infrastructure
How to avoid
So it is always better to analyze the risk and cost associated with mining the block or creating new bitcoins
This scheme is a type of scam which can be identified easily but still people go behind this scheme.
Any crypto project if motivates on unreasonable and illogical high return on investment then just make a clear note that it is a Ponzi scheme. It acts like the pyramid scheme. It encourages investors to recruit new investors. The fund of new investors is taken to pay the old investors.
How to avoid
How to find it is a Ponzi scheme? Here are two steps to find it
- Promises on high return on investment
- Concentrates more on new recruitment than promoting any product
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Phishing scams are yet another type of common scam among the bitcoin scams. Here the hackers will try to get your personal data like user credentials through Email.
An email scam is a type of Phishing Scam.
When the scammers get access to username and password, it is easy for them to hack your Bitcoins from hardware wallet.
How to avoid
Here they use some techniques to hack your personal data through Email. Always be careful while sharing any information to any third party. Don’t provide your personal credentials
7.Pump and dump scam
Pump and dump is a very traditional scam and now it’s been associated with common Bitcoin scams. Here in this scam a group of fraudsters will buy a stock of currency and now the supply is reduced and the demand is more. Now the price of the currency will be inflated. Now the fraudsters will be in search of investors looking for Bitcoin investment. They promise to provide the stock with a lower price over the market price and investors fall for such scams.
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How to avoid
Always get to know what’s happening around in the industry. Be informed about the fraudsters who look for investors to spend their money to earn the bitcoins for lower price. Never go behind the fraudsters who promise to provide the Bitcoins for lower rates. They have a good amount of stock with them to make you invest in them. Avoid joining any pump and dump trades.
In this article, you can see the list of common Bitcoin scams hinging around the crypto world. You can also learn how to avoid these scams to protect your wallet and Bitcoins. This makes you to safeguard your Bitcoins and improve your return on investment without any loss.
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