Cryptocurrency scammers

The market capitalization of Bitcoin has now exceeded $1 trillion, and scammers have long been on the lookout for anything to get their hands on it.

Whether you're in cryptocurrency professionally or just trying to embark on this path, you need to monitor information about fresh revelations and, in general, about major scams in this field as often as possible.

Frauds and scams involving Bitcoin

Fake sites

In very early 2016, a user of the Reddit resource lost several BTC after investing them in a fake (fake) website masquerading as the popular exchange platform ShapeShift.io. The site looked a lot like the original one, but there was a missing letter in its address, which was hard to spot. As soon as this information reached the ShapeShift team, the guys immediately posted a press release that acted as a warning to other users of the exchanger.

This is not an isolated incident. From time to time there are fakes in the form of BitStamp, Bitcoin Foundation, Blockchain.info and other popular resources.

Creating an exact copy of a popular platform, scammers steal logins and passwords of gullible users, or raise money from the wallets of inattentive users. Many such fraudulent sites can even be found in Google ads.

To make sure there are no problems: only click on trusted links from people you know. Check every time to make sure the site address is spelled correctly and that the connection is secured with an SSL certificate.

Fraud

Have you found someone online who wants to sell you bitcoins or claims to accept payment in cryptocurrency? Then most likely this person is a scammer who will disappear the second you send him your money.

These types of scammers know how to gain people's trust in many ways. Some are so devious that they send fake identities or disguise themselves as other people's names and appearances, often using the image of a bitcoin expert known in the Bitcoin community.

Some types of bitcoin scams:

• Trustworthy advertising of scam resources using links to fake and phishing sites, as well as empty promises of various bonuses or 300% return on investment
• Criminals pose as recommended sellers and use positive reviews from imaginary customers as their main argument and sell you nonexistent BTC coins, offering at a below-market value.
• Advertising and selling non-existent mining equipment on preorder. The scammers steal money from inexperienced miners who expect to get good cryptocurrency mining equipment at home for the amount paid.

To avoid problems: listen to your intuition. Often too good and profitable offers turn out to be a scam. Try to trust the trustworthy companies and services, and always check the spelling of the site address, and don't follow the links listed in suspicious emails. If you have the slightest doubt about the source try to contact the support of that resource. If you want to buy or sell BTC in your city, insist on a personal meeting or use escrow services.

Through Skype and Qiwi Wallet

A fraudster makes an agreement with a potential buyer to sell bitcoins using a Qiwi-wallet. The seller asks the buyer to open Skype and show the purse's screen to make sure the purse contains the money. Under any pretext (e.g., to check the system's performance) he then asks to generate a voucher.

"The generated code is displayed on the screen, and while the attacker coaxes the customer, he activates this code in his wallet, and the customer immediately loses money," explains Eugene Kaminsky, founder of Kryptomir, a cryptocurrency trader and miner.

Triple Scheme

In a triple scheme, the bitcoin seller is usually not involved; only the scammer and the victim interact. The scammer sells some sought-after product online, such as an iPhone, at too low a price. The seller demands an advance payment on the card, but the credit card is not his, but that of the bitcoin seller, who expects the scammer to pay for the cryptocurrency.

In the end the bitcoin seller receives the money transfer, the fraudster receives the bitcoins, and the person who wanted to buy an iPhone has nothing.

In 99% of the cases the seller of the bitcoins does not know that he is receiving money from a third party. But the defrauded buyer reports him to the police because there is information about the card he transferred the money to.

Pyramids and bitcoin deposits

Those who already have some amount of cryptocurrency and a desire to increase it are targeted by the creators of MLM structures. They offer to invest bitcoins by depositing them and promise high returns, such as two to three percent a day.

One such project is Trinity, which launched in the summer of 2017. For about three months, the service paid out money consistently, attracting clients through a referral program: the interest on the deposit could be increased by attracting people.

"Trinity eventually collapsed, being an example of classic pyramid schemes previously used in other systems and now applied to cryptocurrency," notes Eugene Kaminsky.

Bitcoin fraud

Whoever considers bitcoin a fraudulent scheme, does not distinguish between it and fraudsters who use cryptocurrencies in their criminal activities.

Bitcoin has long been a favorite option for raising money through skimpy ICO projects, crypto hawks, and fake brokerage and exchange sites set up for phishing. However, that doesn't make bitcoin itself a phishing scam.

It, like any fiat currency used by scammers, is a tool in the hands of criminals.

Reasons for skepticism of bitcoin

Why don't people believe in bitcoin?

Bitcoin is usually called "scam" by those who didn't catch the train & "didn't buy it for $100, for example, and now, watching the current rate, they bite their elbows and comfort themselves with the fact that "it all will collapse soon"

The other category of people who consider bitcoin a scam are those who have bitter experience of interaction with fraud in the field of cryptocurrencies. There are many of those who consider bitcoin to be a scam because they heard stories about people who lost all their money on deals «with some kind of leverage. Due to their lack of education they don't even try to understand what trading on margin is and that they can go broke not only on cryptocurrency, but on traditional financial market as well.

Its fueled by woeful investors who sold their homes and apartments to buy Bitcoin at the top of 2017's bullish rally. Many of them, exhausted by the bear market that legitimately followed the haip, were forced to sell their crypto-assets for much less than their purchase price. Many of them, exhausted by the bear market that legitimately followed the haip, were forced to sell their crypto-assets for much less than their purchase price.

Separately, we can think of FUD, a manipulative tactic used to establish an atmosphere of uncertainty and fear in the market. Rumors that bitcoin is a fraud are spread widely when market makers need to drive the rate lower for profitable buying before the next price hike.

Disadvantages of cryptocurrency

• Lack of 100% guarantee of safety of users' wallets.
• Risk of hacking cryptocurrency exchanges and loss of funds
• Lack of centralized regulatory authorities.
• Icertain future status of cryptocurrency, possibility of imposing a ban on the use of digital money.
• High volatility.
• Lack of ability to undo the transaction if it's wrong, or you change your mind about sending coins.
• Risk of losing capital if you lose access to your wallet.

Myths about cryptocurrency

The growing popularity of cryptocurrency has created many myths about digital coins that mislead users. Let's talk about these myths.

Myth 1. Is cryptocurrency a pyramid scheme?

This is one of the common myths among those who do not understand the topic of digital currencies. And yet, can cryptocurrency be a pyramid? A pyramid involves investing money for profit. Benefits for honorable old depositors arise by attracting new members to the system. If after attracting new participants to the system the pyramid experiences difficulties, it closes, all money is frozen and cannot be used until some time later. The principle of cryptocurrency is completely different from that of a pyramid. No one freezes the money, it is available to the trader on the cryptocurrency exchange at any time. There are no bonuses for transferring funds, as well as for inviting «in system» new traders. Conclusion: cryptocurrency is not a pyramid.

Myth 2. Is cryptocurrency necessary for shadow markets?

Some cryptocurrencies became popular after participating in illegal trade and shady schemes. But today, cryptocurrency is becoming an active part of our offline lives. Digital coins can be used to buy a car, an apartment, a yacht, to pay in restaurants and cafes. Conclusion: cryptocurrency is not a currency for shadow markets.

Myth 3. Is cryptocurrency a bubble?

Applying the term «bubble» to cryptocurrency, people often forget about what is included in it. The expression "bubble" refers to assets of value, which have increasing price due to news background. Can we say that about cryptocurrency? Cryptocurrency price growth is only affected by demand: the higher it is, the higher the value. Conclusion: cryptocurrency is not a bubble.

Myth 4: Cryptocurrency is not backed by anything?

As we know, since 1971 the gold standard was abolished, now all currencies in the world are unsecured and unsecured by anything (unless by GDP). Therefore, cryptocurrency is no different from fiat money. Conclusion: cryptocurrency is not secured by anything, just like standard currencies.