Should you be worried about the previous or the next Bitcoin Scam?
Bitcoin adoption is seeing a rapid surge across the world in recent months. The latest report of Juniper Research’s forecast on the Bitcoin community hitting 5 million users by end of 2019 doesn’t come as a surprise. As its adoption grows, the number of people trying to scam the users of their Bitcoin also grows.
Using Common Sense against Bitcoin Scams
No, you don’t have to be worried about Bitcoin scams. All you have to do is, ask a few questions and do some basic research to make sure that you have covered all your bases. You don’t have to be an expert to look for these answers. All it needs is some common sense and a few standard questions (or knowledge about basic internet search).
A recent report – There is No Free Lunch, Even Using Bitcoin: Tracking the Popularity and Profits of Virtual Currency Scams by Marie Vasek and Tyler Moore explains the extent of Bitcoin scams since the year 2011. It shows the prevalence and success rate of various Bitcoin scams.
Five steps that can prevent you from becoming a victim of Bitcoin scams
- Listen to your common sense – If something sounds too good to be true, then it is probably not true… If someone promises you ridiculously high returns for your investment, then it is probably a scam. Keep your cards close to you. Don’t give your private key to anyone.
- Don’t blindly believe in what the company’s website or information brochure says. Verify whether whatever they say is true by checking the company’s name in the respective country’s company information registry database. Make sure that the company lists its promoters and developers on its website. You can also search for their names on LinkedIn or other sites. A Google search for WHOIS information about the company and its domains will also help you find out who is behind it along with the hosting information etc.
- It is always advisable to opt for publicly audited companies. If a company provides its customers access to its proof-of-reserve cryptographic audit information which clearly shows the company’s Bitcoin holdings that can be readily verified.
- More transparent a company is with regards to its operations, the better it is to do business with them. Check whether the company follows best business practices, has all its policies and terms clearly mentioned on their website and communications.
- Mismanagement or Scam, both are dangerous for your money, even though the former doesn’t have any malicious intentions. Especially with the number of Bitcoin businesses growing exponentially, there are many Bitcoin startups that do not have the required funding or infrastructure to run a full-fledged Bitcoin business and some of them end up looking like a scam due to mismanagement. It is good to stay away from them, for your own benefit, but in case you find and conclude the site to be genuine , then by all means go ahead (at your own risk).
Following these steps won’t guarantee 100 percent protection against bitcoin scams, but it will surely reduce your risk of exposure to them.