It is highly irritating when someone steals your hard-earned money. You may feel the same if you were to lose your Bitcoin investment to a scammer too. In this article, we will help you defend against Bitcoin investment scams.
Many lose their money to scammers since they lack the necessary education and information and fail to look out for red flags. Scammers are known to paint such a rosy picture regarding their fake claims of creating wealth in a short period.
If you are new to cryptos and wish to make substantial profits by investing and trading in them, then this article is just for you.
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Defending against Bitcoin Investment Scams
After the success of Bitcoin, many have turned their attention to it and are actively starting to adopt it. The idea that one can achieve financial freedom by investing in a cryptocurrency and then trading it in the crypto market is slowly but surely catching on.
We have laid down a few pointers for you if you ever come across any investment schemes related to Bitcoin.
Conduct thorough research before opening a crypto account
When you wish to open up a crypto account for Bitcoin or any other cryptocurrency, it is wise to consider all the options available. There are several online crypto brokers, crypto brokerage firms, and crypto exchanges. You must remember that those who offer genuine Bitcoin or crypto-related investment opportunities are few compared to the number of scammers impersonating them.
As you need a driver’s license to drive a car, similarly, those offering crypto services through crypto brokers, crypto brokerage firms, or cryptocurrency exchanges need to be registered and regulated. They need to be registered and regulated, as these certificates are not only meant to protect the financial interests of crypto users but also run their financial trade.
These certificates are available on their websites; if not, you can always request that they be produced. Before you select them and avail of their services, you need to check if these certificates are authentic by searching online. Also, check that they are not involved in any litigation and have valid certificates to run their show.
You also need to check if they have the jurisdiction to run in your state or country. Go through their terms and conditions, and if you find them challenging, you can always contact your local certified public accountant or CPA.
Bitcoin Investment Opportunity
As we have already mentioned, searching for genuine online crypto brokers, crypto brokerage firms, or crypto exchanges is more challenging than searching for imposters. There are different ways to multiply your Bitcoin: through investment, trading, and passive income by staking it.
When you wish to stake your Bitcoins, research the rates of return they have to offer. Scammers have offered unrealistic rates of return. No matter how attractive the rates of return might be, never think to invest in them since they will probably rip you off.
When you come across a Bitcoin investment scheme, try to understand the working model of the scheme. If the person who is offering these services tries to use heavy jargon or fails to explain everything in layman’s terms, then you need to cut the interaction short.
Scammers generally pull off either a Ponzi scheme or a pyramid scheme.
In a Ponzi scheme, John is robbed to pay Joseph. Scammers, under a fake promise, say that you can have returns in multiples of the original amount within a few days or weeks. Once the scammers gain your trust, you will naturally invest more of your Bitcoins, and finally, the scammers run off with your Bitcoins.
A pyramid scheme is similar to a Ponzi scheme; it only differs in execution. Scammers will make fake promises by multiplying the amount of Bitcoins you earn by investing in their scheme, and you can also earn more if you recruit more. As always, scammers are at the top of the pyramid scheme, and recruits form the base.
The scheme is afloat as long as there is a steady supply of new Bitcoin investors to pay off older investors. Once the supply of new investors dries up, the pyramid collapses, with everyone losing their Bitcoins while scammers run away with them.
Bitcoin trading bots
A trading bot ensures that you make huge profits while making minimal losses. These bots are software programs that can be programmed as per your trading style. All you need to do is set a few parameters that require minimal monitoring.
These trading bots are based on complicated algorithms that consider historical data to achieve the goal of executing flawlessly successful trades.
A good Bitcoin bot is quite expensive since the firm has put a lot of money into researching it. These bots are field-tested and have a high success rate.
Scammers will offer trading bots at a competitive price. However, these bots are not field-tested and have a poor rate of success if they do work. You run the risk of losing money not only by signing up for a fake trade bot but also by the number of Bitcoins lost in the trade.
Avoid sharing your Crypto Wallet Address with others
In the crypto industry, it is quite common to endorse celebrities to publicize free cryptos or Bitcoins. To promote Bitcoin or cryptos, celebrities, through their social media accounts, request crypto users to send a few of their Bitcoins or cryptos, and they will receive them in multiples of what they have sent.
Scammers take advantage of such promotions. They will create a fake social media account with the same profile photo as the celebrity. As the message has a link, it will prompt the crypto users to click on it, redirecting them to a website.
On this website, they will be prompted to type in their wallet addresses. Once these scammers have the wallet address, they will hack into their victim’s wallets and transfer all their crypto holdings into their accounts.
Scrutinizing and considering all the aspects of trading a scam will help you defend against Bitcoin Investment Scams.
You also need to keep yourself updated with the latest developments in the crypto world to understand what the current trend is. It will also help you stay one step ahead of any potential scam that scammers are pulling in the crypto world.
The more knowledge you gain, the better it is, as you arm yourself with knowledge to avoid falling for a Bitcoin Investment scam.