Any new industry is full of scams and the Bitcoin and Crypto industry is no exception. From scam coins to mining rigs and contracts there are a multitude of methods to steal your hard earned cash and pull the wool over your eyes.
So how do you identify a Bitcoin scam. Well it’s really difficult for anyone to know and the scam artists are becoming more clever.
There are a lot of sites that compare mining contracts for Bitcoin, Litecoin and Ethereum – but they are rewarded by the scam artists for sending potential users to their sites.
So these comparison sites don’t really mind running a fake advert for some scam artists as they get a share of whatever the victim hands over! They just quietly take the money and allow themselves to be led by the hand and not looking after their users.
With any industry the scammers have to stay one step ahead of those policing it. With Bitcoin it is incredibly difficult to get any distinct proof as the industry is geographically spread – but there are red flags we look for that usually mean somethings up.
Here are some of the tricks they use:
- The domain name is never registered to a real user but is instead hidden.
- They register a Company – a number have done so in London to give the illusion of prestige – but the Directors are often registered as foreign residents where identity requirements are easily faked.
- They are evasive when asked to show proof of their equipment (mining rig).
- They set aside funds and use initial funds from clients to make payouts to again give an illusion of respectability and honesty that then will generate more clients. They show a Bitcoin address that they make payouts from that is verifiable. One day the address stops paying.
- They use promotion over substance with, for example, videos using fake representatives and offices -again with no proof of equipment.
- They advertise with comparison sites who don’t fully check out the Company’s credentials as they are given a share of the profits from the scam . The Comparison sites say the site can be verified as it is making payouts from a particular Bitcoin address. See point 4.
Let’s be realistic about investing. First, don’t risk more than you can afford to lose. Don’t be too greedy, invest in yourself and learn more about Financial literacy.
CryptoPesos would like to here your thoughts about the above. Please feel free to add known investing scams in the comments section.