Cryptocurrency is a highly profitable investment opportunity for many investors. Unfortunately, it’s also a highly profitable opportunity for many fraudsters who are looking to take advantage of your hard-earned BTC.
What most people who trade cryptocurrency don’t know is how to avoid fraudsters and keep their cash safe. If you buy and sell crypto, you need to know how to keep your currency safe. Here are 5 common bitcoin frauds to keep an eye out for.
- The Pump-and-Dump Scam
Pump-and-dump scams are some of the oldest tricks in the book. In these scams, an influencer starts by buying lots of altcoins that are supposedly going to “make it big.”
Then, they begin spreading the word that this coin is the next big thing. Their followers quickly jump on the wagon train and purchase large amounts of the altcoin, at which point the influencer dumps their stocks.
What happens is that the influencer makes out like a bandit while the followers are left with loads of useless crypto. Ouch!
- The Social Media Scam
One of the first rules of crypto safety is to always double-check your transactions. That’s because bitcoin transactions cannot be reversed.
Some scammers will create fake social media profiles impersonating highly trusted individuals, such as Elon Musk. They’ll give fake promises to double the amount of bitcoin to anyone who sends their coin to the wallet address. Once the BTC is sent, that user never sees it again and can’t recover their lost coin.
- The Fake Bitcoin Exchange
A very tough-to-spot scam is the fake bitcoin exchange scam. In this scam, fraudsters create an entire bitcoin exchange that offers great prices for anyone willing to sell their bitcoin.
However, what traders don’t realize is that their bitcoin is being poured into an exchange that doesn’t actually exist. The scammer on the other end of the line simply reaps all the bitcoin while the users are left with nothing to show from the transaction.
- The Ponzi Scheme
In a twist on the classic Ponzi scheme, bitcoin fraudsters will promise high returns on anyone who invests bitcoin with their company. What they actually do is give back small “returns” from new investors while pocketing most of the money.
Just like the classic Ponzi scheme, this can leave plenty of innocent people without money. And it can leave the fraudster with piles of cash that they can never return.
- The Fake Cryptocurrency Scam
The fake cryptocurrency scam is targeted at people who are interested in investing in bitcoin but haven’t yet. Fraudsters promise to get investors access to a new alternative to bitcoin that’s bound to be even more successful.
In reality, the scammers take investors’ cash and route it into their personal bank accounts. That leaves investors with no cash and no bitcoin and the scammers with a pocketful of money.
Protect Yourself From Bitcoin Frauds
There are plenty of different bitcoin frauds out there. In fact, these five are only scratching the surface! Following safety tips and tricks can help you protect your investments and keep your money safe.
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