Here’s a list of the most common bitcoin scams to avoid.
Shitcoins
Shitcoins are considered the penny stocks of the cryptocurrency world. It’s worthless and often times its primary goal is to create a pump and dump. It can easily be identified because they are poorly put together. No plan, no whitepapers, no dev team, no roadmap, nothing whatsoever. The creators are hidden because when scam does happen, they don’t want it be traced back to them. Before investing in a coin, legit or not, just do some research on it. Always invest in technology you support, don’t just look at the price.
Bitcoin Multiplier
Any site that offers you the chance to double, triple, basically multiplies your coins like rabbits are a complete lie. The modern-day high-tech Ponzi scheme, they claim to pay a generous amount of interest for just borrowing your Bitcoins. But what they actually do is pay back a tiny bit to the old investors with the new investors’ money just to entice them all to keep “investing”. So when someone tells you they can make you money without selling an actually product, it means YOU are the product. If such software did exist, they would definitely keep it for themselves, they’re not Jesus. It’s also not theoretically possible, for example, if you double 0.001 BTC a day, you would exceed the current market cap in 49 days (not even 2 months) and that’s only accounting for your amount. The only real way to “multiply” your coins is through gambling.
Crypto Phishing
Phishers creates fake emails and fake websites to impersonate an authority figure to make you voluntarily handle over your wallet credentials to them. This is call social engineering: systems are hard to hack, but people are easy. For the basic scare tactic, they would send you an urgent email for you to verify your credentials to “prevent” hackers from stealing your credentials. Or pretending to the legitimate exchange, but rerouting all the Bitcoin transaction into their own personal, scammy wallet. And the most recent and fancy trick is literally paying for Google and Facebook ads, so it display the phishing straight at the top and right in front of the victims’ face. Some can look very convincing. Simply double check the domain name (URL) for typos and any other type of suspicious naming on all the emails and websites you open.
Exchange Hacks
Exchange hacks is not a scam perse like the rest, but a painfully big lesson to all investors. Major exchanges always and will always have big target on their backs from hackers. The most infamous exchange hack is the 2014 Mt.Gox Hack where a total of 850,000 Bitcoins was stolen and nearly collapse the Bitcoin market itself. Unlike a bank, the money on exchanges is not FDIC insured, so if they are hacked and lose money, it’s really your money they are losing. That’s why everyone always tells you to transfer it to an offline wallet and never keep it on the exchange unless you’re actively trading. And always enable a 2 step authentication on exchanges, so even if they do have your credentials, it won’t be easy for them to use it.
Malware and Trojans
Malware and trojans usually attempts to turn your computer into a mindless mining drone, also known as cryptojacking. It drains your battery rapidly, overheats your computer to the max, essentially killing your computer for someone else’s selfish benefit. The most recent trend is the misuse of a project called CoinHive to run mining code on a victim’s browser to mine coins for the hacker. There’s also a trojan called Cryptoshuffler which does things a little differently. Once infected, it monitors the copy-&-paste clipboard and waits for a wallet address to be copied and sneakily replaces it with the hacker’s. It’s commonly plagued on any file-sharing website such video and porn sites. Just always keep your antivirus up-to-date, install adblockers on your browsers and never install any untrusted software.
For more detailed examples, check our Horror Stories section.