The prices of Bitcoin are looking bullish again which gets the attention of more and more investors. However, the spike in interest rates still comes with consequences. Just like other forms of investments, investing in Bitcoin comes with risks such as scams, hacks, and frauds. Even regular customers can easily become a victim of online criminals. But, while there are risks in the market, investors can mitigate them by being cautious. Also, they need to look for signs of scams to avoid the traps. Below are some of the common scams associated with Bitcoin and how to avoid them:
Bitcoin can be bought and sold at exchanges, which makes it easier to find the coins you desire, these exchanges are not regulated in many countries. Therefore, investors can be left penniless when they sign up for an exchange that is not legit. Some of them may withhold the funds without enough reasons and leave the user unable to access their holding.
Exchange scams are easy to spot. Exchanges that promise heavy discounts on Bitcoin are just luring in unsuspecting victims. You can also check the URLs of the exchange. Secure web addresses must start with HTTPS because this indicates the traffic is encrypted. Paychain is a legitimate and reliable exchange in the Bitcoin world.
Hardware Wallet Theft
Bitcoin investors prefer to use a hardware wallet to ensure their funds’ security and the privacy of their information. These wallets look like USB drives that provide an offline way to help investors protect their bitcoins further. But, some of these wallets come with built-in vulnerabilities that make a user’s holding accessible to hackers. That is why you need to accept wallets only from trusted sources.
Cloud Mining Schemes
New bitcoins are extracted through mining. This method makes it possible to get bitcoins without buying or exchanging them. However, mining has become a resource-intensive activity. Mining new coins takes a huge amount of processing power and electricity because of the way they are mined. This means more money for investors. But, a lot of companies are now giving regular users the ability to rent server space to mine coins for a set rate. Unfortunately, some of these companies make claims about the returns on investment without transparency. In fact, others even operate Ponzi schemes that result in massive losses. As a Bitcoin investor, you need to look into opportunities and have a clear understanding of the risks and costs associated with mining before you invest in it.