If you have not heard the word bitcoin in recent years, you must have been living in a cave. Internet, TV, newspapers – all informational sources talk about the rising and falling of bitcoin price and its influence on the economy.
As with every economic phenomenon, with the growing popularity of bitcoin, frauds, and scams spread everywhere. But first things first, what exactly bitcoin is?
What is bitcoin?
Bitcoin was created in 2009 by an unknown person using the alias Satoshi Nakamoto. In simple terms, bitcoin does not differ much from the classic USD or EUR. Bitcoin is a currency. What is unique about it, that it is a cryptocurrency, meaning it does not have any physical presence: no coins, no banknotes, no central bank.
Why is bitcoin so popular?
Bitcoin is a real breakthrough. It allows making transactions without any middlemen, meaning you do not need a bank. Another important feature of bitcoin is its full anonymity: you can pay for things without proving your identity.
Some people buy bitcoins as an investment, hoping that they'll go up in value, as it happened in 2017 when bitcoin's price skyrocketed a thousand times.
Is bitcoin safe?
Most people treat bitcoin as a mythical pandora box that contains thieves, scammers, and other people of the worst kind. However, outside the realm of myths, such statements are entirely fake and misleading. Thousands of people develop the bitcoin network every day to make it better and safer.
So, the answer to the question "is bitcoin safe?" is yes, but make sure to manage your security. Otherwise, you can get into a cryptocurrency scam.
They say, forewarned is forearmed. That is why let's talk about the most spread bitcoin scams and how to protect yourself from them.
What are the most popular Bitcoin scams?
- Fake bitcoin wallet
So, you want to buy something online and pay in bitcoins? That is an excellent idea. However, before sending your funds to any unfamiliar wallet, do a little research. Check the reviews about the shop and the owner, see if no one has reported on it, and only after you ensure the person is trustworthy send your funds.
- Bitcoin pyramid scheme
Bitcoin pyramid is a crypto analog of a Ponzi scheme when you take money from new investors to pay previous investors. For example, in 2019, three men were arrested in a $722 million cryptocurrency pyramid scheme. For years, they operated BitClub Network and requested money from investors in exchange for shares of cryptocurrency mining pools. They also promised rewarding current investors for recruiting new ones. As you can guess, in the end, investors got nothing.
- Bitcoin investment scams
An investment scam is when someone offers you a fake but often convincing opportunity to make a profit after they get from you a sum of money. For example, they can say that the new cryptocurrency is being launched, and you can buy coins or tokens as part of an Initial Coin Offering (ICO). If you are not a specialist in cryptocurrencies or investments, avoid it. Otherwise, you can invest all your funds into a cryptocurrency that doesn't and won't ever exist.
- Social media scams
In July 2020, Twitter accounts of the world's most famous people have been involved in a huge online bitcoin scam. Joe Biden, Barack Obama, and Elon Mask posted tweets asking followers to send bitcoin to a specific anonymous address. Of course, it was quickly revealed that the accounts have been hacked. Yet the scammers received over $121 000 anyway.
Advice: never send money to any bitcoin wallets without doing research. Even if Elon Mask asks you to.
How to get bitcoin back from a scammer?
Thankfully, there are ways to get back your stolen bitcoin. If the funds are in an exchange, you need to contact them and ask to pause the process and freeze your crypto. Unfortunately, not all exchanges might want to obey, so you may have to get legal assistance involved.
For the judicial system to work in your favor, you will have to know who stole your cryptocurrency. In general, to enforce an order requiring fraudsters to handover stolen bitcoin, you need to know who they are.
Thankfully, one of the many benefits of cryptocurrency is seeing where the coins have gone. If they go through an exchange, you will most likely find out who the wallet owner is. It will enable you to get an order to reveal the crypto thief's identity and recover your stolen crypto.