The recent pump across the cryptocurrencies was an exciting rally, that has since settled down a bit. However, it did expose Bitcoin and other cryptocurrencies to many new people who may not have known about it before. Many of these people may hear the term “trustless” and think that it only applies to the Blockchain. In reality many of these newcomers -and veterans alike- need to keep a watchful eye out for the multitude of Bitcoin scams. Here are some of the ways that I avoid getting scammed.
3. Do your homework, know your investment
One of the most famous investors ever once said “never invest in a business you cannot understand.” I wholeheartedly agree with this sentiment, and anyone investing any portion of their money or wealth should also.
It is especially applicable to Bitcoin and other cryptos, I believe. One scam that I heard about via some bitcoin forums was one where a buyer purchased a certain amount of Bitcoin, sends the money to the sell, and the seller sends the Bitcoin but with an extremely low transaction fee. The wallet suggested that the coins were sent, but they never get confirmed since it does not get picked up by miners. A knowledge of the technical aspects of Bitcoin may have discouraged some who fell prey to this from buying coins from an individual without an escrow.
Doing your homework goes for anything: ICOs, trading, wallets, etc.
2. Stay current with your investment
Many new people may be looking to buy Bitcoin as conveniently as possible. They may then look for places to purchase Bitcoin with Debit or Credit Cards. While the markups on such platforms -to cover fraud, chargebacks, processing fees, etc- are understandable, the steep degree of those markups may leave a buyer feeling scammed.
This could be avoided by cross checking the price on their site to various Bitcoin price tickers. This also blends into “doing your homework.” But staying current with your investment also means that you should be checking on the wallets/clients that you use to hold coins. Recently there was a story about a man who threw out a hard drive that had 4 million dollars worth of Bitcoin on it. Stay current on a theoretical level, but also on a practical one.
1. If you do not own the keys, you do not own the coins
This is probably the most important point that I and others will tell newcomers and veterans alike. The reasons why large scale scams can take place is because of the ways the keys are stored. We saw this with Mt Gox, and more recently -albeit it on a much lower scale- with the Dogecoin Tipbot fiasco.
Anyone who has the private keys for a wallet -and the coins within them- has full control over that. Though it may seem convenient to leave some of the maintenance to someone else or some company providing the wallet service, just do not do it. If for some reason you insist on having an account where you do not have full control of your keys, do not keep any amount on there that you are not willing to lose.
There are many other ways to keep yourself safe, but I think that these three are some of the most robust ways to keep you and your coins out of a scammer’s way.
Author’s Note: Scams can happen to anyone, and I don’t want this article to appear as victim blaming. However it is up to us to keep ourselves safe, we’re adults.
TheBitcoinNews.com – Bitcoin News source since June 2011 –
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