We all like to think that we’d be able to spot a scam a mile away, but if that were true, why have cryptocurrency scams claimed billions of dollars over the years?

The truth is that these scams are more prevalent than ever recently, and this is due to various factors.

Market volatility is one key factor since it can make the beginner investor believe that their money will yield a substantial return. This is how Ponzi schemes manage to accumulate so much money, such as OneCoin, which stole a mind-melting $4 billion from its victims.

This belief that investing in cryptocurrency can be a get-rich-quick solution is, of course, a fallacy, so any company that promises significant returns on your investment should be met with a healthy level of scepticism.

Bitcoin is the most popular cryptocurrency, with a single coin representing tens of thousands of dollars in value.

As such, it’s one of the most targeted digital currencies by scammers and opportunists looking to make a quick buck by stealing from others.

If you want to avoid becoming a victim of one of the many Bitcoin scams out there, then stick to the following advice and exercise caution when buying the cryptocurrency.

crypto coins
Bitcoin is a highly valuable cryptocurrency which unfortunately means there are a lot of Bitcoin scams out there. Source: Unsplash
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Don’t impulse buy

One of the easiest ways to fool people into parting with their money is to offer them a life-changing sum of money in return.

While we all like to think we wouldn’t be gullible enough to fall for the oldest trick in the book, think about how many of us buy a lottery ticket regularly in the faint hope of winning big.

Working your way to the top is a daunting thought, and since we live in an instant gratification world, the prospect of becoming rich overnight can be too tempting to resist.

That’s why when you see an offer like that made by the Pincoin scam to give you 48% in monthly returns, you should instantly hear the alarm bells ringing.

Like the old adage says, if it’s too good to be true - it probably is!

If you allow the initial excitement of the potential investment opportunity to subside and come back to it in a few hours with a clear head, you’ll be in a much better position to make a rational decision.

If you come back to the offer and you still think it could be genuine, go through some of the following steps to verify the authenticity of the proposal and the company behind it.

Use reliable Bitcoin exchanges

With the rising popularity of Bitcoin, inevitably there has been a sharp increase in people looking to invest in the cryptocurrency.

This includes scammers, unfortunately, and one of the ways in which they try to secure Bitcoin by nefarious means is through fake Bitcoin exchanges.

The fake exchanges will offer irresistible rates that are hard to refuse, which works on some people.

Fortunately, though, there are many reputable Bitcoin exchanges available all around the world, so if you do the research you shouldn’t fall into this trap.

Examples of well-known Bitcoin international exchanges - as detailed by Bitcoin itself - include Coinbase, OKCoin, and Bitfinex.

Question a website’s legitimacy

If you ever receive a questionable email concerning cryptocurrency, send it to your spam folder as soon as possible.

In the case that you are directed to a website dealing with cryptocurrency, though, whether from an email link or one you found on social media always proceed with caution.

The first thing to do when you suspect that a website might not be what it claims to be is to check for the lock icon to the left of the URL bar at the top of the web page. If you’re not sure what this looks like, go to a reputable website such as Amazon or Google and then you’ll know what it looks like.

Another thing you can do if you have doubts about a website is to do some research around it and see what others have to say or reach out to the customer support with any queries you have about legitimacy.

Generally speaking, even if a link to a website looks legitimate and it’s for a reputable Bitcoin website, it’s usually best to head to the website via a search engine search rather than clicking on the link.

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Don’t fall for blackmail attempts

There are many immoral people out there who would blackmail you given the chance, in the hope that they can steal some of your prized Bitcoin.

Usually, with this type of scam, a scammer will reach out to you via email to either threaten to make your search history public or claim that they have your password or something along those lines.

Essentially they have nothing on you but they are hoping you cave in on the assumption that they could indeed do you harm.

The reason why this scam is so malicious is that many of us are so distrusting of technology and the internet that we would believe a stranger on the internet when they tell us our webcam caught us doing something we wouldn’t want to be made public.

Whenever you feel like someone is trying to extort or blackmail you like this and they are requesting cryptocurrency, send the email to your spam folder and report the email address if you know how.

Be sceptical of social media giveaways

social media phone
Social media is a hotspot for Bitcoin scams, especially in the form of giveaways. Source: Unsplash

We all want things for free, but of course, that’s not how life works most of the time.

That’s why you should demonstrate a healthy level of scepticism whenever you see a giveaway on social media that promises cryptocurrency for free.

Given how valuable Bitcoin can be (a single coin can be worth tens of thousands of dollars), do you really think people are keen to give it away for free out of generosity?

It doesn’t seem like something a stranger on the internet would do.

Here’s an easy way to spot this kind of scam: whenever you see a free giveaway that requests a small sum of cryptocurrency as an initial investment, run in the opposite direction.

Better still, report the account which posted the free giveaway first, so that you can stop the scammer from stealing money from others.

Beware the pump and dump

graph ups and downs
The pump and dump strategy is all about convincing others to invest to alter the value of the cryptocurrency in the scammer's favour. Source: Unsplash

While it might sound like an odd phrase, pump and dump is all too common in the world of cryptocurrency, and it’s a Bitcoin trader scam that has caught many people out.

The cryptocurrency market can be so volatile, with prices soaring and plummeting in a matter of days. To give you an example of just how fickle it can be, Tesla CEO and serial entrepreneur Elon Musk single-handedly caused a ripple through the cryptocurrency market when he went back on his word to accept Bitcoin as payment for his Tesla cars. He also made a comment about the meme-based Dogecoin being a ‘hustle’, which caused its value to plummet.

As a result of this volatility, many opportunists try to pull a fast one and convince others to invest so they can bail out with more money than they started with.

These scammers will persuade others that now is the time to invest in Bitcoin, and the surge can provide them with the perfect opportunity to cash out and leave the other investors in the lurch.

To avoid this scam, don’t believe the hype.

If you’re seeking advice about trading Bitcoin, head to a popular Youtube channel or pay for some cryptocurrency education, don’t let just anyone get into your head about what it is and isn’t worth.

Signed, sealed, but not delivered

Even when you’ve done due diligence, found what you believe to be a reputable source for trading Bitcoin, and are on the cusp of sending it you can get caught out at the final hurdle.

Due to sophisticated malware, hackers are able to steal Bitcoin at the very last moment of the delivery process.

This malware program which can make its way onto your computer via a phishing link or a dodgy website can change the address you send the Bitcoin to at the last second. As a result, your Bitcoin heads to the scammers address instead, and in most cases at this stage it is too late to ask for the transaction to be reversed.

One way to get around this problem is to download and use anti-virus software regularly on your computer, and check what programs your computer has granted access to.

Don’t talk to strangers

Do you remember how your parents would tell you as a child not to talk to strangers?

Well, when it comes to cryptocurrency they were onto something.

If you’re trying to trade Bitcoin with someone and they request to meet in person to do the exchange, this is a big red flag.

The reason why peer-to-peer platforms are so popular is that they hold the funds in escrow which adds an extra level of security to all transactions.

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Samuel

Sam is an English teaching assistant and freelance writer based in southern Spain. He enjoys exploring new places and cultures, and picking up languages along the way.