As the popularity of Bitcoins rises, Bitcoin scams are becoming equally rampant.

Bitcoins have seen a meteoric rise in prices in the recent past.

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As a result, you have seen a renewed interest in them.

People for every walk of life are now trying to grab a part of this phenomenal pie.

Suddenly everyone is keen on investing in Bitcoins.

But popularity has its own unique problems.

The most pronounced one is that of scammers.

The moment an avenue comes up as a popular means of making money, scams come up.

Bitcoin ScamsThe idea being they can make a few extra bucks from investors who are not careful.

One of the biggest examples of Bitcoin scam is the huge fall in prices in January, 2018.

The value of Bitcoin plunged a whopping 50% from the 2017 values.

Even other cryptocurrencies like Ethereum and Litecoin felt the ripple effect.

An anonymous Bitcoin Exchange BitConnect also shut shop suddenly.

It has been alleged to encourage a Ponzi scheme.

Well, these are not just two isolated instances.

In many ways, they are strung by the common link of greed and volatility.

Well, that is another common term with reference to cryptocurrencies.

We often hear about volatility in prices.

Well, the volatility or the sudden swing in prices can also be due to the overarching fear factor.

Increasingly, you will notice countries across the world are formulating regulations.

These are all designed to bring in a semblance of discipline and credibility to Bitcoin trade.

As a result, the cryptocurrency industry is in the grips of huge changes.

Perhaps that is the reason you see the bubble bursting at many points.

You have many players wrapping up operations before they fall into the regulatory trap.

Prevalence of Bitcoin Scams

This is perhaps the main reason why you have to be aware of Bitcoin scams.

If you trace historic details, the current bubble is also an outcome of lack of regulation.

For so long, the Bitcoin industry has remained like an exotic island.

Very people accessed it; very few people traded in it.

The exchanges and operators were close-knit.

But as this cryptocurrency started gaining momentum, the demand also increased.

You started seeing more and more genuine and focused investors getting into the game.

So suddenly the questionable trading practices became a huge problem.

Artificial price manipulation, inflating Bitcoin rates and all such related issues were highlighted.

It is needless to mention that the Governments world over could not remain calm anymore.

As the global participation rate increased, the need to regulate it too became important.

Many large-scale manipulation techniques also came to the forefront.

Many countries openly termed these transactions illegal.

Bitcoin came to be banned in several countries globally.

As a result of this, the Bitcoin industry has suddenly woken up to the need for regulation.

Well, this does not mean that all manipulators will disappear on their own.

That will perhaps never happen.

But at the same time, a certain amount of accountability seeps into the system.

People recognize the need for better and long lasting regulations.

Also as every scam unfolds, investors also recognize the many ways they can be fooled.

This will make them more cautious while dealing with the money.

It is like forex trade scams.

Is forex trading a scam?

No, it is not, but at the same time, there are many who take advantage of general lack of awareness.

Well, with regards to Bitcoin trade too, this is one of the biggest problems.

Bitcoin Wallet Scam

Fake Bitcoin wallets are perhaps the most rampant Bitcoin scam.

Bitcoin users need these wallets to store their funds.

They need the wallet to undertake transactions as well.

Now we all know that there are many types of Bitcoin wallets.

  • Online Wallets like Web wallets
  • Mobile Wallets
  • Desktop Wallets
  • Offline wallets or hardware wallets

On an average, beginners try to go for the easy to use options.

In this regard, the mobile wallets are very popular.

This is predominantly due to the convenience and quality they represent.

Scammers too have taken note of this trend.

So their strategy is quite simple.

They want to take advantage of the trend and defraud people.

The anonymity that these wallets provide acts as an additional cover.

The modus operandi is quite simple.

They create fake mobile wallets for Bitcoin transaction.

They then use it to scam innocent and unsuspecting traders.

But the question then is why a trader or investor will fall into this trap?

Well, the scammers latch on to the credibility that certain established wallets have.

Think about a popular and well-known wallet like Coinbase or even Mycelium.

How do you establish its authenticity?

Well, normally by their logo or unique features.

The scammers often target these very credentials.

They trick investors by even using the same logo with a subtle difference.

To a beginner and sometimes even veterans, it is hard to distinguish the real and the fake.

The result is they lose their money thinking they are safeguarding it.

Most times, new users try to establish authenticity as per available data.

To make it worse, scammers are using increasingly more sophisticated system.

Some of these fake wallets have even found presence in Android and Apple play stores.

Transactional Anonymity

There is another popular Bitcoin scam using Bitcoin wallets.

Yet again, the peg for these scammers is quite simple.

They capitalize on your intent to make money faster using a popular medium.

Now they add another dimension to this.

They promise you greater transactional anonymity.

In simple words, it means that it helps you withhold your identity better.

While on the face of it, this seems like a decided advantage, there is another aspect to it.

What most users forget is that the anonymity is for both the sender and the receiver.

In fact, some recent studies revealed that most times the transfers are to the same account.

Victims do not realize it, but they are at the end of the day sending money to the same account.

So without any effort whatsoever, the money gets transferred to the scammer.

The victims meanwhile believe that their money is safe.

By the time they realize the scam, someone’s already disappeared with their money.

So the question now is how exactly does this Bitcoin scam work?

The user downloads the wallet and begins using it.

For sometimes at least, this wallet functions normally.

This is important because otherwise, you will lose the user’s trust.

The wallet user starts getting comfortable with the wallet and also starts becoming a little careless.

But once this wallet reaches a certain limit the scammer start their operation.

The moment they hit a pre-decided limit, the wallet is emptied out.

Thanks to the anonymity promised, users cannot trace the beneficiary at all.

One of the best ways to avoid this problem is to download the wallet from safe sites.

Identify some pre-decided and well-established wallet and download directly from the site.

This will make sure that you do not end up downloading a fake wallet.

Cloud Mining Scam

This is another Bitcoin Scam that you have to be wary about.

Bitcoin miners are essentially the people who look to enter a blockchain.

Every successful attempt is rewarded with new bitcoins.

In many ways, this is an important exercise.

It validates every transaction on the blockchain.

Moreover, it ensures that there can’t be a double transaction on the same formula.

Now you may not be a pro at it.

Or you may feel that a professional can do it with better success rate.

As a result, you may appoint a cloud mining company for it.

Most times, these cloud mining companies will levy a small fee.

In return of these fees, they will mine a bitcoin or any other cryptocurrency.

The advantage is you get the new bitcoin rewards but don’t have to invest in hardware.

But the advantage of this mining exercise is also misused.

This has become a hotspot for Bitcoin scammers.

In this case, the scammers float websites promising great service.

But the actual mining does not happen in this case.

However, investors do not realize it initially.

The fee for mining has to be paid upfront.

So they create fake mining contracts with the users.

The fake mining sites begin with paying much lesser than the contract value.

They start reducing the amount bit by bit.

Eventually, the mining firm stops paying to the customers.

Bit by bit, you will notice that your fund starts dissolving.

So in simple terms, this is more like a Ponzi scheme.

They get paid as long as they keep buying contracts.

Once that stops, they also stop getting paid.

Some of the best known Bitcoin scam involving mining include Cointellect, Hashinvest.

So you have to be very careful about select a firm for Bitcoin mining.

Thorough research is the key to best possible results.

Also, look for the past results to understand the potential.

Bitcoin Investment Scams

The Bitcoin industry has seen a phenomenal rise in interest.

People from all walks of life are looking to invest money in it.

But the problem is sometimes the investment schemes are actually scams.

They promise huge returns to investors to users.

But the payment is not as one lump sum.

They keep paying investors small amount daily, but it just stops suddenly one day.

The scheme founders simply disappear with the investor’s money.

The relative anonymity of transaction emboldens scammers even more.

This practically makes tracing them impossible.

So in many ways, this Bitcoin Scam is quite similar to the cloud mining scam.

Essentially this is also a type of Ponzi scheme.

Initially, they appear to be very promising, and the returns attract the users.

Just like in a Ponzi, often investors also reinvest the returns.

As a result of this, the resultant payout is much lesser than fund inflow.

Moreover, they keep paying small amounts on a daily basis.

This provides a certain amount of assurance for the investors.

They feel their money is in safe hands and are encouraged to invest more.

But eventually, the Ponzi scammer decides to fold up operation.

Payouts start lessening, and eventually, it stops suddenly.

As a result, the investor loses the entire investment.

This normally happens when an investor tries to withdraw the entire investment.

So if you want to invest in Bitcoin, thorough research is most important.

You have to make sure that a reputable company manages the scheme.

That is the primary requirement.

Moreover, be practical in your return expectation.

Don’t fall for schemes that promise spectacular returns or easy money.

Beware of Fake Exchanges

Credibility is one of the biggest requisites for safe Bitcoin trade.

The moment you tread out of the reputable and credible brand, you are exposing to risk.

The core idea to avoid Bitcoin Scam is to look for the right brand.

In this context, the choice of Bitcoin Exchange is also crucial.

The Bitcoin Exchange is primarily the marketplace that enables Bitcoin trade.

This is also the point that allows the exchange of Fiat currency for the cryptocurrency.

But this is also the point where there is maximum scope for fraud.

A fake bitcoin exchange frauds users by swindling the payment meant for Bitcoin trade.

They take the money but do not give any Bitcoin in exchange.

So the question is how they attract users?

Low processing fees and credit card transactions attract new investors.

Almost inevitably they are new players.

They do not have too much experience in dealing with exchanges.

So inevitably they easily get lured by the low processing rate.

So the best way to avoid this is to transact with a reputable exchange.

Look for exchanges that have good reviews.

If you can, try and connect with users who have dealt with the exchange.

Phishing Scams Using Bitcoin

When you consider Bitcoin Scams, practically any financial market scam can be replicated.

Bitcoin phishing scams are as much a reality as it is in case of other financial instruments.

What exactly do you understand by Phishing?

Most times in case of Phishing, personal information is stolen using emails.

In this case, a receiver gets an email claiming they have won a specific number of Bitcoins.

Many unsuspecting users fall into this trap.

They are so elated that they have won that they happily provide information that is asked.

Most times they have to access the Bitcoin wallet to collect the Bitcoins.

The link for this is provided in the email.

The email link is actually a fake link that instantly copies all the information provided.

As a result, the fake operator gets access to your personal Bitcoin wallet.

So now they transfer whatever funds you have in there to their account.

Therefore caution is the name of the game.

Do not disclose personal details on email links.

Always access your mobile wallets directly on the site.

Remember no genuine operator will ask you for these personal details.

Donations Doubling as Bitcoin Scam

Another Bitcoin Scam that’s gaining currency is donation scams.

Human emotions and feelings are the biggest targets for scammers.

They are experts at making the most of your emotions or nature.

It can be your greed, your need or simply the desire to own more money.

In case of donations, they capitalize on your compassion, your want to earn fame.

The mode of operation is similar to other donation scams.

They create a fake webpage pleading you for donation.

The only difference is in this case they ask you to pay in Bitcoin.

Invariably they target donation pegs based on recent news pegs.

For example, after the Orlando attacks, there was a fake page calling for the donation.

The page called for generous contribution to help the survivors.

But even in this case, thorough research is necessary.

Be very sure about the organization or people you are donating to.

If possible conduct a background search.

Be 100% sure about how genuine the organization is.


Bitcoin scams are the outcome of trying to latch on to the sudden rise in Bitcoin.

In many ways, you can liken it to the gold rush.

Everyone is running to grab a stake in it.

The sad part is anyone who fails to do the due diligence is exposed to the risk of a scam.

Therefore, we can conclude that human greed is the key trigger for Bitcoin Scams.