When some people hear or read about Bitcoin for the first time, they think it's a scam. That's because most people characterize this virtual currency with risk, volatility, loss and reward. Initially, some people assumed that Bitcoin was the suspicious virtual currency that criminals used to complete illegal transactions.
But the state of this and other virtual currencies has changed. Most people see Bitcoin as a legal currency and a tradable good. However, Bitcoin's growing popularity and value has drawn people back into the world of cryptocurrencies.
Therefore, before trading, using or investing in Bitcoin, learn how it differs from fiat money or other payment methods. Also, understand the scams you are likely to encounter when trading or investing in this digital currency.
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Bitcoin as digital currency
Satoshi Nakamoto created Bitcoin as an alternative to conventional currency. Bitcoin exists electronically and is decentralized, meaning it does not have a physical account or currency that people can use to pay for goods or services.
People and companies exchange Bitcoin online with other users through cryptocurrency wallets. Cryptocurrency wallets are programs that people use with their computers and smartphones. Bitcoin does not have intermediaries or financial service providers like banks. Instead, it relies on the blockchain network and miners to validate transactions.
Understanding Bitcoin Scams
Bitcoin scams are traps that criminals use to steal tokens from unsuspecting users. Scammers are looking for unsuspecting people and companies to steal your money. So, before you start trading or investing in Bitcoin, understand common scams to spot and avoid them quickly.
Cryptocurrency experts recommend confirming that cryptocurrency companies and startups are blockchain-powered when investing in Bitcoin. This means that startups or companies track transaction data using this technology.
Also, traders and investors should check the business plans of the company they use to invest in Bitcoin, as well as cryptocurrency investment companies should specify their ICO rules and the liquidity of the virtual currency.
Every business has real people behind it despite being online. So choose a platform that reveals its owners or the brains behind it.
Common Bitcoin Frauds
Scammers use different techniques to lure Bitcoin owners into sending them their tokens or money, thinking they are buying Bitcoins. Thus, Bitcoin investors, traders and users should know how to detect Bitcoin scams before transacting with scammers. Here are common Bitcoin scams to look out for when using, trading or investing in this digital currency.
- Fake Mobile Apps: Some scammers use fake apps to scam Bitcoin investors. For example, you can find a Bitcoin app on the Apple App Store or the Google Play store. Fake apps are a risk for people who want to invest in Bitcoin on their mobile phones. This is because their developers can use them to gather user information and for malicious purposes. As such, make sure that the application you use to trade, invest or transfer Bitcoins is genuine.
- Enforced Websites: Some websites aim to facilitate Bitcoin trading and investing, but they are not genuine. In most cases, websites use URLs that are almost similar to real cryptocurrency platforms or exchanges. Therefore, check the URLs of Bitcoin trading or investment sites you visit carefully to ensure your safety.
- Fraudulent emails: Perhaps you have received an email supposedly from a legal cryptocurrency company asking you to invest through it. If you did not initiate the email conversation, please do not click on any links provided or send the requested money because it is most likely a scam.
- Social media updates and tweets: Some fake accounts of executives and celebrities on social media may ask you to do something to trade or invest in Bitcoin. But since the social media accounts are not real, the guidance is also not genuine.
In general, scammers use different techniques to entice Bitcoin users, investors and traders to send them money. So, investigate any approach you want to trade or invest in Bitcoin to avoid falling victim to cryptocurrency scams.
