Cryptocurrency Scams You Need to Be Aware Of

By Jen D., August 16, 2018

Scammers are taking advantage of the buzz surrounding digital currency utilizing cryptocurrency scams to trick potential buyers and users.

Cryptocurrency is a wild ride in the world of online digital currency. Started by an unknown creator(s) using the name Satoshi Nakamoto in 2009, it is not backed by any government, bank, or goods, such as gold. It has its risks since cryptocurrency has its roots in the dark web.

How Cryptocurrency Works

All private paper money is regulated and backed by the Federal Reserve which is secured by the United States government. Digital cryptocurrency lacks that security and its reliability relies on its use of blockchain, a public ledger which lists every transaction.

This means that when you buy or sell cryptocurrency, your transaction is notated on the blockchain. The intention behind this is to create a secure, permanent ledger. This promise is enough that cryptocurrency is now a formidable worldwide market, though risks still exist.

Types of Cryptocurrency Scams

Email Scams

As cryptocurrency becomes a commonly used form of payment, scammers know that everyone wants in on the action. Email scams are becoming popular. These might offer free bitcoin or a rate lower than found anywhere else.

While some deals do exist, Bitcoin investors rarely need to offer free money as the crypto market is selling well. Be sure to look at the details for hyperlinks and ‘reply to’ email address, to see if it matches the email’s claims.

Phishing Sites

These might be found within an email or just in fake web advertisements when you’re looking for legitimate sites. A sure sign of phishing is when you follow links which take you to a different website than you intended.

A clear warning is that the URL the web and links to is different than the site you were looking for. Check your typing and during any financial transactions make sure you are not mistakenly on a mimicked phishing site.

Fake Crypto Wallets

If you are purchasing cryptocurrency, opt for a secure ‘https://’ connection. If you do end up on a phony crypto wallet, this type of fraudulent scam will have hidden malware in downloads. Once the malware is installed, your computer will have a virus or key-logger, which will send the scammer(s) your passwords and information.

Fake Bitcoin Pyramid Schemes

Besides the fact that pyramid schemes are never wise and are, in most cases, illegal, bitcoin scams of this type can be particularly costly. How to recognize a cryptocurrency pyramid scam? You might be on social media and see a post or ad is suggesting you sign up for bitcoin or cryptocurrency.

The problem?

It will indicate that you do so through an affiliate link and encourage friends and family to sign up as well. The scammer will end up making money, and you will lose yours.

Fake Bitcoin Cloud Mining

Bitcoin mining is the act of a computer system doing the necessary function to add to the blockchain transaction record. Cloud mining is when bitcoin enthusiasts get together and combine their assets to rent an expensive bitcoin machine.

This is a legitimate act, but cloud mining can also be code for a scam. It will operate similarly to other cryptocurrency scams and direct you to sites which aren’t secure, through alternate URL’s or referral links.

Cryptocurrency is a legitimate digital monetary tool, but if you decide to use it, educate yourself first. With the price of bitcoin being worth thousands (1 bitcoin is $6,256.33 U.S. dollars as of August 2018), this is money most cannot afford to lose.