TL;DR - SUMMARY
There are various types of cryptocurrency scams in the blockchain field. Some of the most common include blackmail, fake exchanges and sweepstakes, social media phishing, copy-paste malware, phishing emails, Ponzi and pyramid schemes, and ransomware.
Let's proceed to briefly analyze each of them, so that you can learn how to avoid the most common Bitcoin scams, and thus keep your cryptocurrency portfolio safe and sound.
Introduction
As new technologies continue to be introduced into the world, scammers will continue to look for places to thrive. Unfortunately, Bitcoin offers cryptocurrency scammers an interesting opportunity as it is a cross-border digital currency.
The decentralized nature of Bitcoin gives you complete control of your investments. However, it also makes it difficult to define an appropriate regulatory and law enforcement framework. If scammers manage to trick you into making mistakes when using Bitcoin, they can end up stealing your BTC, and there would be virtually nothing you could do to get your crypto back.
That said, it is essential to understand how scammers operate and learn to identify potential red flags. There are many Bitcoin-related scams to pay attention to, but some are more common than others. For that reason, we are going to analyze eight common Bitcoin scams and how to avoid them.
Common Bitcoin Scams (and How to Avoid Them!)
Blackmail
Blackmail is a famous method used by scammers, consisting of threatening other people with the disclosure of sensitive information, if they are not remunerated in some way. This disbursement must normally occur through cryptocurrencies, especially Bitcoin.
Blackmail is based on scammers finding or fabricating sensitive information about you, who use it to force you to send them bitcoin or other forms of money.
The best way to prevent scammers from taking your bitcoins through blackmail is to be careful when selecting your login credentials, the websites you visit, and who you give your information to. It's also smart to use two-factor authentication whenever possible. If the information they blackmail you with is false and you know it, you can be safe.
Fake exchanges
As the name suggests, fake exchanges are fraudulent copies of legitimate crypto exchanges. Typically, these scams will take the form of mobile apps, but you may also come across them as desktop applications or fake websites. You have to be very careful because some of these fake exchanges are very similar to the original ones. They may look legitimate at first glance, but their goal is to steal your money.
Typically, these fake exchanges will attract crypto traders and investors by offering free cryptocurrencies, competitive prices, low trading fees, and even freebies.
To avoid getting scammed on a fake exchange, you should bookmark the real URLs, and always check them before logging in. You can also use Binance Verify to verify the legitimacy of URLs, Telegram groups, Twitter accounts, and much more.
When it comes to mobile apps, be sure to check the developer information, the number of downloads, reviews and comments. Check out Common Mobile Scams for more details.
Fake giveaways
Fake raffles or giveaways are used to scam you and take your cryptocurrencies, offering you something for free in exchange for a small deposit. Typically, scammers will ask you to send funds to a bitcoin address in order to receive more bitcoins in return (for example, "send 0.1 BTC to receive 0.5 BTC"). But if you make such bitcoin transactions, you will not receive anything or see your funds ever again.
There are many types of fake giveaway scams. Instead of BTC, some scams will ask for other cryptocurrencies, such as ETH, BNB, XRP, and many more. In some cases, you may be asked for your private keys or other sensitive information.
The most common thing is to come across fake giveaways on Twitter and other social networks, where scammers take advantage of popular tweets, viral news or announcements (such as a protocol update or an impending ICO).
The best way to avoid fake giveaway scams is to not participate in any type of giveaway/giveaway where you are asked to send anything of value first. Legitimate giveaways will never ask you for money.
Social media phishing
"Social media phishing" is a common type of Bitcoin fraud that, like fake giveaways, you will most likely encounter on social media. Scammers will create an account that looks like someone with high authority in the crypto industry (also called phishing). They will then offer fake giveaways via tweets or direct chat messages.
The best way to avoid being scammed through social media phishing is to verify that the person is really who they say they are. There are usually indicators of this on certain social media platforms, such as blue checkmarks on Twitter and Facebook.
Copy and paste malware.
Copy and paste malware is a very deceptive way for scammers to steal your funds. This type of malware hijacks clipboard data and if you are not careful, you will send money directly to scammers.
Let's say you want to send a BTC payment to your friend Bob. As usual, it sends you its bitcoin address so you can copy and paste it into your bitcoin wallet. However, if your device is infected with copy-and-paste malware, the scammer's address will automatically replace Bob's address the moment you paste it. This means that as soon as your bitcoin transaction is sent and confirmed, your BTC payment will be in the hands of the scammer and Bob will receive nothing.
To avoid this type of scam, you must be very careful with the security of your computer. Beware of suspicious messages or emails that may contain infected attachments or dangerous links. Pay attention to the websites you browse and the software you install on your devices. You should also consider installing an antivirus and checking for threats regularly. It is also important to keep your device's operating system (OS) updated.
Phishing emails
There are several types of phishing. One of the most common involves the use of phishing emails that attempt to trick you into downloading an infected file or clicking on a link that takes you to a malicious website that appears to be legitimate. These emails are particularly dangerous when they imitate a product or service that you frequently use.
Typically, scammers will include a message asking you to take urgent action to protect your account or funds. You may be asked to update your account information, reset your password, or upload documents. In most cases, their goal is to collect your login credentials to try to hack your account.
The first step to avoid phishing email scams is to check if the emails are coming from the original source. If in doubt, you can also contact the company directly to confirm that the email you received was from them. Second, you can hover over email links (without clicking) to check URLs for misspellings, unusual characters, or other irregularities.
Even if you can't find any red flags, you should avoid clicking on the links. If you need to access your account, you must do so through other means, such as typing the URL manually or using bookmarks.
Ponzi and pyramid schemes
Ponzi and pyramid schemes are two of the oldest financial scams in history. A Ponzi scheme is an investment strategy that pays returns to older investors with money from new investors. When the scammer can no longer attract new investors, the money stops flowing. OneCoin was a good example of a crypto Ponzi scheme.
A pyramid scheme is a business model that pays members based on the number of new members they sign up. When new members cannot sign up, the flow of money stops.
The best way to avoid any of these schemes is to research the cryptocurrencies you buy, whether it's an altcoin or Bitcoin. If the value of a cryptocurrency or Bitcoin fund depends purely on new investors or members joining, you have likely encountered a Ponzi or pyramid scheme.
Ransomware
Ransomware is a type of malware that locks victims' mobile or computer devices or prevents them from accessing valuable data, unless a ransom is paid (usually in BTC). These attacks can be particularly destructive when they target hospitals, airports, and government agencies.
Typically, ransomware will block access to important files or databases and threaten to delete them if payment is not received by the deadline. But unfortunately, there is no guarantee that the attackers will keep their promise.
There are a few things you can do to protect yourself against ransomware attacks:
Install an antivirus and keep your operating system and applications updated.
Avoid clicking on suspicious ads and links.
Be careful with email attachments. You should be very careful with files that end in .exe, .vbs or .scr).
Back up your files regularly so you can restore them if you become infected.
You can find helpful ransomware prevention tips and free recovery tools at NoMoreRansom.org.
In conclusion
There are many Bitcoin scams to watch out for. However, knowing how these scams work is an important first step to avoiding them completely. If you can avoid the most common Bitcoin scams, you can keep your cryptocurrency holdings safe and sound.
