How To Spot A Bitcoin Scam

Whenever something gets hot, the only guarantee is that scamsters will lock onto it like a heat-seeking missile. The virtual currency bitcoin is no exception.

For those living off the grid, bitcoin is a digital currency. Its value, not backed by any government or central bank, is determined by software that few people truly understand.

Since few know how bitcoin really works, there have been endless opportunities for chicanery. Social media has provided fertile ground for numerous frauds.

Naturally, those who want to speculate in bitcoin want to believe that the currency’s value will do nothing but go up in value, but that hasn’t been the case. The currency is very volatile and few understand why.

According to a recent report by Zerofox, a digital risk monitoring company, there’s a considerable dark side to bitcoin. Here are some ways to spot scams:

– Malware downloads. Bitcoin is often used as “bait” to get you to download some nasty software that will mess up your computer. According to Zerofox:

“Fake bitcoin ‘wallets’ hiding malware downloads: Attracting users to click through URLs posted to social media is a technique that ZeroFOX has observed in a variety of attacks.

This one uses the promise of bitcoin to lure the user into following a URL that subsequently attempts to download a malware-laden app. We also discovered that fake bitcoin surveys are often used to distribute malware, and we advise caution when encountering any social media URL that is either shortened or not secured with an HTTPS connection.”

-- Bitcoin phishing impersonators. “Impersonators run rampant on social media, and impersonating the bitcoin brand itself is a tactic that can be used to gain a victim’s trust and credibility.

A phishing website allegedly offers a search service enticing users to enter in their private bitcoin key to see if it exists in their database. Once entered, the private key will simply be phished, allowing the scammer to spend directly from the curious bitcoin owner’s wallet.”

– Bitcoin-flipping scams. “These scams could be an offer to instantly exchange bitcoins for money after paying an initial startup fee or a promise to double your initial investment overnight.

The other end of the bargain is never held-up, and bitcoins are stolen immediately. Scammers succeed because they’re able to broadcast their scam to thousands of unsuspecting targets through social media.”

– Bitcoin pyramid schemes. These scams are harder to recognize than the more egregious bitcoin-flipping examples described above, but the end result is the same; the scammer eventually makes off with the victim’s stolen bitcoins.

This tried and tested idea relies upon high yield investment programs and multi-level marketing. In these ethically grey schemes, a low initial investment can be multiplied by signing up additional members using referral links. Before long, hundreds of victims have joined the scheme. At a later point in time, the original scammer walks away and the pyramid collapses.”

How Can You Protect Yourself

Like any get-rich-quick scheme, bitcoin scams thrive on the gullibility of its victims. Just because it’s a digital currency doesn’t mean you can acquire wealth quickly. Here are some more warnings from Zerofox:

1. Don’t trust anyone claiming they will give you or help you mine bitcoin. Again, cryptocurrency is valued by cybercriminals for a reason, and nefarious behavior related to bitcoin runs rampant on social media and digital channels.

2. Avoid URLs associated with social media profiles advertising too-good-to-be-true bitcoin offers.

3. Be vigilant when engaging with the social media accounts of legitimate bitcoin brokers or trading platforms, as they are frequently victims of convincing impersonations.

4. Never engage in any financial transaction, bitcoin or otherwise, via direct message on social networks.

If you have already been scammed, report the crime to the FBI’s Internet Crime Complaint Center, but do not expect to see your bitcoins again.