Does the high price of Bitcoin attract the attention of fraudsters?


Online scams are as old as the internet itself. The large educational and generational gap between the young and old has given rise to fraud in the world of finance. First, we saw it happen with cheques and credit card payments; these eventually became too hard to outsmart. Nowadays, cryptocurrency fraud is booming, and exists in all different forms. The more people choose to buy Bitcoin, the more creative these frauds become.

In this article, we take a look at the progress of Bitcoin, how it fuels the creativity of scammers, and what you can do to avoid falling victim to such practises. Let’s delve in.

Different types of frauds in the crypto space

There are many different types of cryptocurrency scams. You may or may have not about them during your crypto journey. Let’s offer a short summary before we proceed:

  • Dating and romance scams – Individuals get “catfished” into sending cryptocurrency to imaginary personas which are portrayed by scammers through online dating platforms.

  • Investment scams – Fake ICOs, fake exchanges, and scammy altcoins whose only purpose is a large pump and dump scheme.

  • Ponzi and pyramid schemes – These are projects that operate on the basis of a continuous influx of new user signups. Once these “dry out”, the platform goes bankrupt.

  • Email scams – The most popular type of scams in the industry and more sophisticated each year that passes. Fraudsters will pretend to be the support team behind your wallet and request information linked to your address. They are also known as phishing scams.

  • Crypto giveaways – Influential crypto personalities will never promote giveaways. Yet, somehow, scammers always find a way to impersonate authoritative figures in the crypto space and pretend to host crypto giveaways. There is a catch though – you will first need to send your funds to an address before (supposedly) receiving the reward. Of course, the reward never comes.

  • Phone scams – Finally, one more popular type of fraud is that which occurs through phone communication. Fraudsters will call you pretending to be the support team of the cryptocurrency exchange you are using and ask for your password and 2FA details. As soon as you offer this information they access your account and steal all the funds contained in it.

Hacking is also on the rise

Aside from small-time scams like the ones we discuss above, there are also many groups that organize heists from exchange platforms, getting hundreds of millions of dollars through stolen value.

The examples are too many to count. MTGox, the enormous NEM hack, and even the recent 2010 Binance hack, whose hackers claimed more than hundred million dollars in Bitcoin value.

The good thing is that there are now systems in place to “taint” stolen funds, making them impossible to sell on exchange platforms of all sorts. There is also an active effort to whitelist as many addresses as humanly possible, in order to track stolen funds easier. Overal, the industry seems to be more regulated than before, and the hacks are decreasing as a result. However, there is still a lot of fraud-related activity on decentralized exchanges, since there is no way or reason to control the safety of the platform. For some, this is good; for other, it can cost them their life savings.

How to protect your funds from scams and fraud

Each type of scam will naturally require a different approach when it comes to protection. The first thing you can do is very simple: Never click on anything you don’t understand and NEVER EVER give out your personal information to anyone you do not know. This include your wallet address, private keys, pin code, 2FA, or exchange passwords. In most cases, scams work due to the voluntary participation of the user who does not have a clear understanding of the process.

The second thing you can do is research – tons of it. When you come across an email which asks for your personal information, Google the email address of the sender and see if anything comes up. Exchanges and crypto wallet companies will never ask for your personal information.

When it comes to the coins you want to invest in, whether that is an ICO or a small cap altcoin, research is equally important. Read upon the project’s fundamentals, the whitepaper, and watch any and all videos or podcasts where the team participates in. No information on he team? Then it’s best to stay away.

Finally, the best way to protect yourself from scams is to keep a level headed approach. Use your logic when trying to understand a situation you come across. Is a password really necessary? Is this update mandatory? What about the risks associated with investing in a cryptocurrency that is obviously a pyramid scheme? Emotional intelligence helps you make better investment decisions and leads to more profit over time.

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