How to avoid Bitcoin scams


A couple of years ago when Bitcoin steadily went up in price, many people finally drew their attention to the alternative kind of money. In a short time many of them realized the advantages of decentralized money system, because there were no problems related to a typical banking system, like: bureaucracy, high fees, the influence of external factors on the currency rate etc. Even global corporations decided to work with the digital money.

But at the same time Bitcoin came in sight of many scammers. For the past four years the total amount of Bitcoin scams is measured in hundreds of millions USD. The exact amount is unknown because except the headline-making cases there are a lot of victims who suffered from the attacks of fishing scammers and did not report about it.

It is worthy to note that to avoid Bitcoin scams is quite simple:


  • Don’t be tricked by easy pickings. Many scammers “accidentally” send some bitcoin address and a private key asking to send money to somebody’s address. It is intended that you decide to take someone’s money, but actually in the form of text file there is an executable file .exe, and after its installing it has an access to your bitcoin wallet. So don’t be greedy, pal.

  • Don’t follow unknown links. You can get an email supposedly from some popular bitcoin service that proposes you to visit their website using the information of your BTC wallet. In this case the consequences are quite predictable. Do a little research of any service that asks you personal data.

  • Beware of the Google publicity. Scammers buy the publicity via Google AdWords with the references to the websites that have identical interface with various popular services like Blockchain or BTC-e. If you have found such kind of publicity you should immediately notify the Google technical support.

Unfortunately, there are much more sophisticated cases of Bitcoin scams which are difficult to be avoided. As you have probably understood we are talking about fraudful exchanges, cloud mining services, pump-and-dump and IPO scams. Many users face these issues on the daily basis. No wonder when even steady going online services go out of business at times.

The biggest losses related to bitcoins, are usually associated with Bitcoin Savings & Trust ($1,834,303), MyBitcoin, ($1,110,544) and Mt. Gox ($450,000,000). The last may not be classified as a Bitcoin scam, because there is no evidence to say that, but people have lost way too much money there, so we should mention it anyway. Let’s try to recollect what this is all about.

Bitcoin Savings & Trust (earlier known as "First Pirate Savings & Trust") was a virtual hedge fund that promised to pay off extremely high interests (7% weekly) to people who invested their Bitcoins there. But it was a typical Ponzi scheme by definition.

MyBitcoin was the easiest and bitcoin-friendly online wallet in 2011. But after quite short period of its existence the service disappeared along with the money of its users.

Mt. Gox was the most popular Bitcoin exchange based in Tokyo. It started its work in 2010, and in 2013 the exchange already handled 70% of all Bitcoin transactions. But in 2014 the website executive staff announced about the bankruptcy of Mt. Gox in consequence of hacking. The result of that cyber attack was 850,000 bitcoins stolen. In this case it is difficult to get to know the real reasons: was it a theft, fraud, or mismanagement? Or a combination of these 3 factors?

These pieces of advice can help you to avoid this kind of Bitcoin scams:


  • A proof-of-reserves cryptographic audit. If the service is publicly audited it means that probably the company is financially reliable and it can fulfill the obligations. At least you can check it. Some services may promise to provide you some unbelievable security level based on high technologies which sound ridiculous. But having done a little research you see they do not have any fundings to meet the demands of customers. That happens quite often.

  • Don’t loose your mind. If an offer is too good to be true, it is very likely to be a Bitcoin scam. Remember, everyone wants to save his money. There is no room for generosity in this kind of business.

  • Don’t download the software from unknown websites. It can contain viruses that will steal your coins.

  • 100% security of your e-wallet is a computer without Internet access. But make sure that your computer does not need any kind of repair, because in case of crash it would be impossible to return your money.

That’s it. We hope this piece of advice will come in handy and you will be able to avoid Bitcoin scams.

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