The rise of Bitcoin over the years has been astronomical to say the least and it has reached a market capitalization worth billion of dollars. As such, many people are getting attracted towards its appeal and value, both good and the bad people (such as scammers). The scammers often try to target victims who are not fully aware of all the details and as a consequence lose their Bitcoins.
So, how to avoid these scams? Let us find out in the following sections.
How to avoid Bitcoin fraud?
Avoid Fake Bitcoin Exchanges
Many times, you will find adverts on social media sites with links which say that you have the opportunity to purchase Bitcoins for a five percent lesser than market value and make considerable saving. This is a common marketing gimmick which is used to bring users to their exchange.
“Bitcoin is a remarkable cryptographic achievement. The ability to create something which is not duplicable in the digital world has enormous value. The Bitcoin architecture, literally the ability to having these ledgers that can’t be replicated is an amazing advancement.” – Eric Schmidt, Executive Chairman of Google, March 2014.
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So, how to avoid falling prey to such a scam?
First thing to do when you visit any exchange will be to check if it a secured site which uses HTTPS. Thus, you need to only visit sites which are secured and encrypted, if it is not then it will be a red flag.
You also need to be aware of the fact that there are fake exchanges which offer Bitcoin in exchange for PayPal. On this sites, you will be asked to provide your PayPal ID and send the amount for which you want to buy the Bitcoins, but after sending the money through PayPal you will never get the Bitcoins in return.
Lastly, these fake exchanges hardly stay live for long and you will find that they are gone the next day, to re-appear again the next day by a different name.
Avoid Fake Bitcoin Wallets
The Breadcrumbs of Bitcoin Transactions
Source: Science Mag
It is a bit harder to trace fake Bitcoin wallets due to the fact that wallets are mainly used for storage of Bitcoins and not for selling or buying the same. Thus, it is more about software you use instead of money that is part of any transaction.
Normally, the main purpose of these wallets is to spread malware into your computer so that it becomes easy to steal your private keys as well as passwords.