An Overview of Bitcoin Fraud

How to Spot a Bitcoin Scam

When you're scoping out potential companies to work with, start with the basics. How well have they been performing? Check out the startups' track records and/or speak to an expert. You can search for negative comments or reviews on sites like You can also start your research by speaking with your existing network and family.

So what are some tips for avoiding Bitcoin scams? It may seem like no one’s policing the crypto space, but it's only a matter of time before someone finds your laptop and buys up all of your crypto. That's why it's so important to avoid trusting anyone and everyone who claims to have a coin-related deal in the works, even if it seems like they really need your expertise.

The Risks of Buying Bitcoin

In July 2018, YouTuber Michael Jones was cheated out of nearly $3,000 in bitcoin and was never compensated for his work. The 20-year-old used a popular bitcoin exchange called Bittrex to purchase a variety of coins. However, when Jones asked Bittrex for his money, the exchange froze the coins and kept them after acknowledging that they were never transferred to him. There are always risks when trading bitcoin.

How to Keep Your Data Safe

Blockchain is the technology behind bitcoin and other cryptocurrencies, which make money transfers faster and more secure. The blockchain is a chain of records kept on a network of computers. The blockchain is a finite digital ledger, similar to a bank's account. But while bank transactions can be tracked by anyone, cryptocurrencies are only as traceable as the people using them. With these tips, you can guard against people who try to steal your personal information. 

Always buy physical bitcoin: The easiest way to avoid scams is to use a physical piece of bitcoin. With physical cash, scammers have no record of transactions, and you're also able to easily move it from one person to the next. If you're using a third-party service to buy bitcoin, that person also has no way of knowing where the transaction went or how many bitcoins you've acquired.

Blockchain-powered startups are the only safe ones, so make sure you check!

It's hard to judge whether a cryptocurrency startup is legitimate or not, so we recommend you conduct research and understand why the company is launching its service and how it works before you put any money into the company. If a company claims it’s to do with currency, say bitcoin, it’s always better to meet the founders and check that they’re involved in cryptocurrency and know the intricacies of bitcoin and blockchain technology. If a company doesn't explain how the technology works, it’s likely a scam.

Another thing to consider is whether you can trust the market in which your cryptocurrency company will be traded. There are a lot of scam operators on the market who sell coins, or ‘coin’, under suspicious circumstances.

Entering your personal data

Some websites are designed to attract your attention, and this is especially true when it comes to cryptocurrency and Initial Coin Offerings (ICOs). These are fundraisers where companies are promising to sell digital tokens with a unique name. Initial Coin Offerings are a kind of initial public offering, but these tokens don't go up for sale through traditional stock market means. Usually, the tokens are traded on the so-called “exchanges” that provide options similar to a stock market. And you're vulnerable to data breaches in those exchanges, even if you try to protect your privacy.

If you're looking for ICOs, you should only download the accompanying apps and not read all of the content the startup has.

Giving up your financial information

There are always dangers when giving out your financial information online. Though it's easy to lose your credit card details in a split second, something as simple as a chain email can be just as scary. Some scam emails will send you an email with a hyperlink to an e-store, promising that you'll get a significant discount if you click on the link and sign up for the product. Since the link will often send you to a page that looks legitimate, people often fall for it. You can protect yourself by ensuring that the e-store link you're about to click is actually from the product's official store page. Don't hesitate to report these websites as phishing scams.

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