How To Identify Bitcoin Scams

The total dollar value of bitcoin in circulation is currently at an all-time high. As bitcoin’s market cap hovers around $26 bln, it should come as no surprise that scammers are just as interested in the digital currency as its legitimate investors are.

While the speed, transferability, and permanence of the cryptocurrency have fueled its success, these same characteristics are also why so many bitcoin scams exist. Whether you are new to bitcoin or have been on the bitcoin train since 2009, you are still exposed to the same Ponzi schemes, phishing traps, and exchange rip-offs. Here are a few tell-tale signs that you are dealing with a bitcoin scam rather than a trustworthy bitcoin service:

As with any investment, nothing is ever guaranteed. That makes it easy to spot this particular red flag as sites will guarantee more than 20% in annual profit or make other unrealistic promises. Investors may pay a fixed deposit with high ROI assurances, only to have the site disappear along with their initial investment. A legitimate site will offer realistic projections of what your yield may be, but stay away from any site that guarantees returns.

These scams involve luring investors to make quick and easy money from bitcoin mining. Traditional bitcoin mining requires expensive equipment and is resource-intensive, but fraudulent sites will typically incentivize bitcoin cloud mining by offering investors a high percentage of mining profits. There are legit mining operators but they are extremely hard to identify. If you cannot easily verify who owns the machines, the public mining address, or there are exorbitant referral commissions, avoid the operation completely.

There are new wallets and exchanges that will appear in the market, but you should always use a site that is reputable to avoid being scammed. There are some wallets that will claim to securely store your bitcoins but will actually steal them and make it impossible to make withdrawals. There are also exchanges that will get users to sign-up and initiate transactions that will never go past the deposit stage. These scams often advertise themselves as completely anonymous or are nearly impossible to find any additional information on.

Any smart bitcoin user will take their time in researching where to put their bitcoins. There are a few tools that you can use to make verifying the reputability of a bitcoin site easier. Here is a Bitcoin review checklist of questions that you should ask yourself if you are unsure about a particular bitcoin site. Used correctly, you should decrease your likelihood of falling victim to a bitcoin scam.

Is the website privately or publicly registered?	➤	https://who.godaddy.com/
Is the site at least 6 months old?	➤	http://smallseotools.com/domain-age-checker/
What about the Alexa rank? Is it under 200,000?	➤	http://www.alexa.com/siteinfo?q=
Is the domain authority above 20?	➤	https://moz.com/researchtools/ose/
How many negative reviews does the site have on forms like Bitcointalk?	➤	https://bitcointalk.org/index.php?action=search