Beware of These Five Bitcoin Scams

Beware of These Five Bitcoin Scams

Bitcoin - the possible black box of the commercial world - has never been without controversy. Whether to help the black market or to eliminate millions of users, bitcoin is no stranger to one.

The sharp rise in Bitcoin prices over the past year has awakened the general interest in the original cryptocurrency. With prices still looking bullish, investing in bitcoin has never been more popular, but rising interest has not been without consequences. The rapid increase in the number of scams, frauds, and stories of retail investors losing their parts to shady businesses is one of the drawbacks of new investors in the market. From ICO scandals to wall hanging and fraud, regular consumers can easily fall prey to crime.

The jury is on the legality and bitcoin utility - leaving it in a standard gray area. However, there have been a lot of legitimate Bitcoin scams that have become infamous - but, what are the five most common Bitcoin scams? And how can you avoid them?

What Is a Bitcoin Scam?

In most cases, the scam can be pretty obvious, but with Bitcoin, the situation gets darker. Bitcoin itself is a form of unlimited money that is necessarily a simple number that is valued only by agreement. It's basically like a piggy bank with a lock on it - whose code is given to the receiver of the bitcoin (an analogy established by Forbes in 2017).

Bitcoin scams have been famous criminal and public. With no bank as an intermediary in exchange, things get more complicated; pirates and crooks have therefore experienced a right age.

Top 10 Bitcoin Scams

  1. Fake Bitcoin Exchanges - BitKRX

One of the easiest ways to defraud investors is to pretend to be a subsidiary of a respectable and legitimate organization. Well, that's precisely what crooks do in the bitcoin field.

A South Korean scam, BitKRX presented itself as a bitcoin trading and trading venue but was eventually fraudulent. The fake exchange took some of the names of the real Korean Exchange (KRX) and scammed people by calling them a respectable and legitimate c exchange.

BitKRX has claimed to be a branch of KRX, a creation of KOSDAQ, the South Korean Futures Exchange and the South Korean Stock Exchange, according to Telegraph's Corner.

BitKRX used this false affiliation to trap users who would use their system. The scam was exposed in 2017.

  1. Hardware Wallet Theft

For security and conscious privacy users, a hardware portfolio, a physical device that stores their private keys, is an increasingly popular option. As small as USB sticks, these portfolios offer an off-line way to help crypto-protection investors protect their bitcoin even more. However, it has been reported that some of them have built-in vulnerabilities that open them to hackers who could easily steal all of a user's resources.

This is far from the only problem, however. According to Ofir Beigel, owner of

99Bitcoins.com, "A scam involves selling hardware wallets to users with a" preconfigured "starter phrase hidden under a scratch card. The new user is told that he must scratch the card and configure the wallet with the affected seed. This creates a leakage that allows hackers to drain funds once the wallet is activated merely. These scams are becoming more rampant, but they can easily be avoided by only accepting portfolios from reliable sources.

  1. Ponzi Scheme - MiningMax

"The Ponzi Bitcoin Scam" must be the worst combination of words imaginable for finance gurus. And the reality is just as unfortunate.

Several organizations have scammed millions of people with Ponzi schemes using bitcoins, including the South Korean website MiningMax. The site was not registered with the US Securities and Exchange Commission, has promised to provide investors with a daily return on their investment in return for an initial investment and a commission to allow other people to invest (essentially a Ponzi scheme). The site was asking people to spend $ 3,200 for a two-year, daily return on investment, and a $ 200 remittance fee for each investor hired personally, indicates a claim.

The MiningMax domain was privately registered in mid-2016 and had a binary pay structure. Fraudulent fraud on cryptocurrencies was reported by affiliates, resulting in 14 arrests in Korea in December 2017.

Korea has long been a leader in technology development - bitcoin is no exception. However, after the recent controversy, it seems that this is changing.

"But many governments are studying this very carefully," said Yoo Byung-Joon, professor of corporate administration at the Seoul National University and co-author of the 2015 research paper "Is Bitcoin E-Commerce?" viable ?: Empirical analysis of the digital The speculative nature of the currency, "said the South China Morning Post in January. "Some even plan to put their currencies in the blockchain system, the biggest challenge bitcoin is facing right now is the potential for abuse, but so is any new technology."

  1. Fake ICOs

One of the very best results of the cryptocurrency expansion was the rise in the initial supply of coins, which enabled companies to raise capital. With thousands of new blockchain businesses coming to the market with unique ideas and exciting projects, users can now easily support their favorite businesses. However, this massive expansion of ICO opportunities has inevitably raised the base of fraud.

Fraudsters can separate investors from their bitcoins in several ways. A popular method is to create fake websites that look like ICOs and ask users to drop coins into a compromised portfolio. Other times, it is the fault of the country offices. Centra Tech, for example, a blockchain company backed by several celebrities have been pursued in the United States. The company is accused of portraying fake team members, misleading investors and lied about their coins. The best way to avoid these ICOS scams is to conduct extensive research that separates the white paper, reviews the project team, and critical members of the board or investors. Before investing, it is essential to know as much as possible about the company to avoid unpleasant surprises.

  1. Cloud Mining Schemes

Mining is the one and only way to extract new bitcoins without buying or exchanging them, but it has become an extremely resource-intensive activity. Because of the unique way that new parts are extracted, it takes enormous amounts of processing power and electricity, and therefore money, to extract a part. However, many firms now offer regular users the option of renting server space to extract coins at a fixed rate.

Some companies offer "life contracts," which keep costs at the same level and supposedly provide exceptional returns. However, as the complexity of mining increases, the same investment will yield smaller quantities each time. Also, some companies make bold statements about their returns without being transparent about actual costs and decreasing profits. Others merely exploit Ponzi schemes that can lead to massive losses. It is essential to look for opportunities and understand the risks and costs associated with mining before investing.

How to Avoid Bitcoin Scams

With the inevitable rise of Bitcoin in the years to come, it is increasingly vital to understand and be very conscious for Bitcoin scams that can cost you thousands of dollars.

There is no way to avoid scams, but reading the latest red flags on Bitcoin, keeping the information confidential and checking the sources twice before investing in anything are proper standard procedures that can you help not to be fooled. After all, knowledge is power.

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