Beware Of Bitcoin Scams

Beware Of Bitcoin Scams

Following its introduction more than a decade ago, Bitcoin has attracted investors and fencers alike, more the latter than the former. Consequently, the cryptocurrency ecosystem is marked by thin liquidity and a minuscule number of institutional investors. The ecosystem is alive with criminals and scammers who hang around as trouble-makers, trying to cash in on the chink in crypto-security’s armour. Should we beware of Bitcoin scams? Absolutely.

Bitcoin: Prosperity invites Misdemeanour

Bitcoin scams have followed the waxing and waning of the cryptocurrency’s price patterns. As Bitcoin prices were crested, the number and frequency of such scams increased. There was a corresponding increase in criminal activity. Conversely, their numbers thinned as prices plummeted, the number of transactions on its network declined. It was (albeit temporarily) relegated to being merely an unsightly investment option.

The nature of scams occurring on Bitcoin’s network has had a corresponding relation vis-a-vis the development of its infrastructure. Bitcoin’s earlier blockchain infrastructure was rudimentary. As a result, it was prone to periodical breakdowns as the number of transactions on its network multiplied. Furthermore, contemporaneously, illicit activities in Bitcoin’s ecosystem reflected its use cases, with the cryptocurrency mainly used for transactions such as drug purchases on the dark web.

The 2017 price rise transformed the nature of scams transpiring within Bitcoin. Initial Coin Offerings (ICOs) were all the rage, and ICO scams mostly corkscrewed mainstream media conversation about Bitcoin. Unfortunately, this did not invite vigilance. Instead, ICO stories were seen to be providing prospective investors with a chance to invest in a new industry that promised phenomenal returns. Little surprise, they didn’t mention that such offerings were by-and-large unregulated by the Securities and Exchange Commission. 

Bitcoin abusers: the Devil never sleeps      

Lately, as Bitcoin has become more mainstream and attracted the attention of institutional investors, hackers have repositioned their strategies to targeting cryptocurrency wallets. For instance, crypto wallet theft scams have become more common. In addition, phishing is a prevalent method for hackers intending to steal user-key information for cryptocurrency wallets.

Bitcoin scams: how do these affect you?   

Here is an outline of five essential Bitcoin scams that have made their way into its ecosystem in recent years.

Exchange and Wallet Hacks        

Previously, cryptocurrency exchanges were the primary crypto wealth sources for hackers. Now, hackers have directed their attention to other areas, such as online crypto-wallets. One of the biggest such hacks occurred in June 2020, when hackers stole 1 million customer email addresses by breaching the email and marketing databases of Ledger, a France-based crypto wallet company. They also stole 9,500 customers’ personal details, publishing 242,000 customer email addresses on a website for hacked databases. At 2019-end, cryptocurrency exchange Poloniex underwent a similar breach and had to email its customers, asking them to reset their passwords.

Social Media Scams

Social media has become a compelling force in mainstream society. Its rise has corresponded to Bitcoin’s heightened visibility in the media. Unsurprisingly, hackers are using social media’s reach to target Bitcoin holders. They have created fake social media accounts to solicit Bitcoin from followers. They have even taken to directly hacking popular Twitter accounts.

Social Engineering Scams

Social engineering scams are scams whereby hackers use psychological manipulation and deceit with a view to controlling vital information relating to user accounts. Phishing, for example, is a fairly widespread social engineering scam by which hackers send emails linking their targets to a fraudulent website specially designed to solicit vital details, such as bank account information and other personal information.

Within the context of the cryptocurrency industry, phishing scams home in on information about online wallets. Specifically, hackers are interested in crypto wallet private keys, which are the keys required to access funds within the wallet. Their method of working is similar to that of many typical scams. First, an email is sent leading holders to a specially created website that asks them to enter private critical information. Then, when the hackers have acquired this information, they can steal the Bitcoin and other cryptocurrencies contained in those wallets.

The best way to stay safe from phishing scams is to avoid clicking on links in such emails or verify whether the email address belongs to the said company by calling them up or checking the email syntax. For example, users should check whether the linked web address is encrypted (i.e., its URL begins with HTTPS). Visiting unsecured websites is a bad idea.

ICO Scams

ICO scams spiked at the height of cryptocurrency mania in 2017 and 2018. After an intense SEC crackdown, the frequency of such scams has decreased. However, they refuse to die out completely. As recently as late 2019, the federal agency was continuing its crackdown against such scams.

There are several ways by which scammers can separate investors from their Bitcoin with an ICO scam. One popular method is to create fake websites that resemble ICOs and instruct users to deposit coins into a compromised wallet. In other instances, the ICO itself may be at fault. For example, founders could be engaging in misfeasance by distributing tokens that flout U.S. securities laws or misleading investors about their products through deceptive advertising.

DeFi Rug Pulls

DeFi rug pulls are the most ‘innovative’ type of Bitcoin scams to hit the cryptocurrency markets. Decentralised finance or DeFi aims to decentralise finance by removing gatekeepers for financial transactions. Unfortunately, in recent times, it has become a magnet for contrivance in the crypto ecosystem.

But the development of DeFi platforms is being cannibalised with its own problems. Bad actors have made away with investor funds, thanks to such avenues. This practice, known as a rug pull, has become rather rampant. DeFi protocols have become voguish with crypto investors interested in magnifying returns by hunting down yield-bearing crypto instruments.

Smart contracts that lock in funds for a specified period of time are the most popular method for programmers to pilfer funds. When the contract expires or reaches a previously set threshold limit, developers frequently use programming functions to steal Bitcoin from it.

Conclusion

All Bitcoin followers have to take cognisance of the Truth, and beware of Bitcoin scams. Scammers are intelligent people capable of using devious ways to circumvent all loopholes. They are aware of gaps and lacunae in technology. They know where regulations are lax, and they are ruthless enough to exploit the opportunities presented. A rule of thumb would be to practice common sense and avoid sites that are not secure. Also, it makes sense to use official websites of the various cryptocurrencies, and visit associated fora for advice.

Should you be in need of assistance, however, Fast Action Refund (https://fastactionrefund.com/) would gladly help.

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