The Internet is flooded with Bitcoin scams and Ponzi schemes promising lucrative returns for a minimum amount invested with them. Whilst there are many con artists making the rounds, it may become increasingly difficult to differentiate a golden opportunity from a scam. How does one avoid Bitcoin and other cryptocurrencies scams?

Latest Bitcoin scam

It was recently reported that the Hawks is investigating a case of fraud against BTC Global. It is said that the owner of BTC Global, Steve Twain defrauded 27 000 cryptocurrency investors of more than $50 million. BTC Global promised a weekly return of 14% to investors who would put a minimum of $1 000 into the hands of so-called “master trader” Twain.

The bigger picture

Cryptocurrencies have a combined market cap of more than $446 billion at this specific time. According to Coinmarketcap, Bitcoin’s dominance is standing at 41,6%. Cryptocurrencies are truly remarkable and have the ability to revolutionize the world by means of blockchain technology. Whilst there is money to be made in this unique industry it is unfortunately true that it is not without criminal elements. As more people become learn about the enormous potential of cryptocurrencies and are eager to get in on it, it will open doors to criminals such as scammers or Ponzi schemes. If investors are not careful, they could end up losing valuable Bitcoin and fiat.

How to spot a Bitcoin scam

Sorting the wheat from the chaff can be tricky. The cryptocurrency industry at this stage, has little regulations in place, one can make a lot of money very quickly and there is no accountability to speak of.

There are numerous things to watch out for in order to spot a possible Bitcoin scam.

Fake exchanges

The first sign of a fake exchange is when it offers Bitcoin at a reduced price and tempting investors to save big by buying Bitcoin for cheap. Consumers would then be prompted to follow a specific link to visit the fake exchange. Another sign to watch out for is the website address. A legit website will start with HTTPS. If the address has no “S” (HTTP) it means that the website is not secured. Stay away from this type of sites.

Fake wallets

Even though wallets are mainly for storing your valuable cryptocurrencies, they too can be fake and pose a threat. Best way to spot a fake wallet is to ask around on social media and other chatting platforms for other people’s experience with a specific wallet. This will give one a good indication if a wallet is legit or not. It is also a good idea to have proper anti-virus security on your PC or laptop that could pick up potential malware.

Phishing and email scams

A phishing scam is someone tries to get you to visit a fake website. These so-called phishers would contact you by means of an email or advertisement. These emails may come from an address that is similar to an exchange or wallet you are currently using.

If you visit the website, they will try to steal your Bitcoin by means of a fake sale. Best way to avoid phishing scams is to bookmark the exchanges or wallets you use and to visit the sites only via the saved link. That way you cannot “accidentally” visit a fake site.

Ponzi schemes

If you see the following line “double your investment”, make a run for it! A Ponzi scheme promises investors exorbitant returns in a very short period of time. They will ask you to send them a minimum amount of funds and in “no time at all they will give you double your money back.” The matter of the fact is there is a limit to the amount you can earn from mining or day trading. It is better to invest and manage your funds yourself instead of entrusting so-called “master traders” with your hard-earned money.

ICO scams

Investing in the wrong ICO can be quite messy. Your funds can be frozen for a long time whilst your investment is losing value at a rapid rate. An ICO can go wrong should it be hacked or a staff member decides to make a run for it. This is not unheard of! The best way to protect yourself from an ICO scam is to DYOR (Do Your Own Research) about the project before you invest in it. Check out if the project has a big community supporting it? Is the project realistic and is the roadmap manageable? Who are at the steer of the project? Is the team reputable?

In conclusion, there are plenty of Bitcoin scams going around. The old saying that if it sounds too good to be true, then it probably is, is still applicable today. If you have any doubts about investing in a certain project, ask around or Google the project to see what others have to say.