An Introduction to Bitcoin Scams
If you have ever considered buying into Bitcoin or another cryptocurrency, it’s almost guaranteed you’ve heard about the many ways scammers prey on naive investors. There is no legitimate government or bank that accepts digital cryptocurrency as payment, but there are many legitimate cryptocurrencies and blockchain-powered startups.
However, many scam sites and websites exist claiming to offer exactly this. They will try to convince you to invest your money into a popular blockchain or cryptocurrency without explaining what that means, how it works, or whether or not the company is legitimate.
How To Spot A Bitcoin Scam
Scammers are known to create websites and sign up for crypto chat forums to ask for funds. If an ICO or startup seems suspect, consider the following:
Do the founders have a unique domain name with their name?
Do they advertise their startup on Bitcointalk?
Has the company tried to take money from your bank account?
Does the founder(s) keep in touch with their customers?
Can you see other digital wallets and tokens with the company name?
What are the screenshots of the company you’re looking at?
Check to see if the website is hosted on a server that’s not in the country they say they’re located in. For example, if a company says it’s based in India, but you can’t see India anywhere on their website, it could be a sign that they’re running an ICO scam.
How To Avoid Getting Scammed
You should also stay away from ICOs (initial coin offerings) which start with a whitepaper describing a new cryptocurrency platform and promising massive returns to early adopters. The token sale (a fundraising effort that quickly sells existing cryptocurrencies to investors) that brings the ICO to life is usually carried out before the platform itself is ready, and once the market appears to be ready, you’re bound to find more scams. Here are some steps to protect yourself when you’re thinking about putting your money into an ICO:
Check the reputation of the company
Visit its website. Read and monitor its social media accounts for their responses to similar feedback you might receive. Make sure the ICO website contains minimal advertising to avoid being inundated with posts.
Are you interested in getting involved in the crypto game? If you’re a little worried about not having your entire capital investment back if it goes bad, you can always take the simple route and hold onto your initial investment. If you don’t feel comfortable with your initial decision, you can always take the crypto plunge with a smaller amount. The bigger you are willing to invest, the easier it is to feel safe in the cryptocurrency ecosystem.