Bitcoin Scams to Beware

January 18th, 2019

Bitcoin Scams to Beware

In an age of evolving Financial Technology (FinTech) solutions, scammers and frauds are also quickly adapting to the changes in order to stay abreast. Several companies and organizations have been coming up with cryptocurrency related inventions in order to increase the penetrability of and access to digital currencies. These innovations include Bitcoin ATMs such as those put up all over the country by Bitcoin of America in its expansion plan. Because of this rise in digital currency, there is an increase in Bitcoin Scams.

As with the investor mentality, each and every scammer is trying to be as smart as possible in order to reap the maximum ‘returns.’ More often than not, victims find themselves very much far behind the scammers due to ignorance or generally lack of computing knowledge. The scams are however not unique to the crypto industry. Rather, they are also in Western Union, Money Gram and even Bank wires. They therefore do not reduce the credibility of digital money but rather portray the evolution in Technological fraud.

Importantly, cryptocurrency users ought to know that Bitcoin transactions cannot be cancelled or reversed. One should therefore be careful not to fall prey to the following types of scams:

Initial Coin Offerings (ICOs)

ICOS are the equivalent of Initial Public Offers for corporates only that they use digital currency to source for capital rather than fiat money. Some ICOs are usually well written and skewed in order to attract investors. However, most of them end up being fake promises and most are non-binding which leads to loss of investors’ money.

 This is because no legal framework has been put up hitherto to level the playing field. It is not clear whether they can be considered as security or an investor’s equity in the proposed venture. This creates a window for the organisers of the ICO to escape blame once things go south.

Communication from Unverified Utility Companies

Scammers are always keen to learn how corporates communicate to their client base on social media or through email. Once they achieve that, they will hack a utility company’s social media or email address which they in turn use to send fake communications to unsuspecting users.

Just recently, South Africa and New Zealand’s national Cricket teams’ twitter accounts were hacked by scammers who were asking followers to send a few BTCs to a certain address for them to stand the chance of winning a lottery.

You may find your local power company telling you that you’re late on payments and imploring you to do it in Bitcoin lest they power you off. It is always advisable to verify such communications before acting.

Too-Good-To-Be-True Internet Deals

These refer to insanely ‘great deals’ on the internet that one is less likely to meet in real life. High value products and services such as concert tickets, hotel services or air tickets at a comparatively throw away price. 

The scammers may even create copy paste sites through Phishing such that they look exactly like eBay, Amazon, Craiglist or OfferUp. They will go to great lengths to make the website look real but the car or game console being offered for quarter its price is not real.

Fake Communications from Governmental Organizations

Scammers are cashing in on this form of fraud mainly because people are afraid to go to jail. You may receive a call from a government institution such as the IRS imploring you to pay your income tax or face jail. They will go ahead and provide a Bitcoin address but of course Uncle Sam is yet to accept Bitcoin as a currency.

Unverified Online Recruitment

The menace of unemployment is driving more and more people crazy. Driven by this desperation, most people are willing to jump onto any and every recruitment or job offer. Scammers are cashing in on this by floating fake recruitment drives online and asking unsuspecting victims to send a few Satoshis to a BTC address for consideration.

Other scams include pyramid schemes that ask people to contribute to a common pool only for the pioneers to run away with the funds. One ought to keep in mind that Bitcoin Transactions cannot be cancelled, reversed or traced. One should only institute a transaction in a willing buyer- willing seller situation where there is fair consideration.

This disclaimer informs readers that the views, thoughts, and opinions expressed in the text/sponsored content belong solely to the author, and not necessarily to Bitcoin of America, organization, committee or other group or individual. All investments are at your own risk and should be done after careful research.

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