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Ultimately, please refer to this guide on overall Bitcoin security: https://www.swanbitcoin.com/canon/bitcoin-security/
Since Bitcoin is a nascent technology with irreversible transactions, it is an attractive vector for scams. If you withdraw Bitcoin from your custodial account, where you have legal ownership, the best place you should be withdrawing it is your own Bitcoin wallet (mobile, computer, or hardware wallet).
If you have been given a Bitcoin address and told to send Bitcoin there by another person or company, for any reason at all, you should assume that it is a scam until proven otherwise. Please read below to learn about some popular scams:
1. Impersonation giveaway scams
Scammers will impersonate a celebrity or other notable person and announce that they’re giving away Bitcoin for free, as long as you send them some Bitcoin first. The scammers will usually promise to send back double or triple what you send them. Although especially prominent on Twitter, this scam has also appeared on other platforms.
How to avoid giveaway scams:
- Generally, never send Bitcoin to anyone who you don't personally know. Your friend's accounts may be hacked to appear to promote a giveaway. Make sure you verify any Bitcoin send with a face-to-face conversation.
- Assume that anytime a celebrity is offering to give away free cryptocurrency on social media, it’s a scam.
- Double-check the user name of the suspected scam account, and compare that to the username of the celebrity’s real account.
2. Phishing scams
Be cautious of unsolicited emails that looks like it's from your bank, a Bitcoin exchange, or wallet provider. The email contains a link that takes you to a site that looks almost identical to the exchange or wallet you usually use but is actually a scam site.
How to avoid phishing scams:
- Always double-check URLs to make sure you’re visiting the genuine website.
- Before clicking an email link, use your right-click to copy the URL and paste it into a separate notepad to double-check that it goes to the right place.
- Never type in your seed words or private keys anywhere online. Use password managers such as 1Password, which will not auto-fill your password into scam websites.
- Never disclose your passwords to anyone.
- Be especially vigilant of emails that have a sense of urgency, or tell you that your account is compromised.
- If you believe you clicked on a phishing link, immediately change your email password and any passwords on financial accounts.
3. Social engineering / impersonator scams
You may befriend someone online who will try to convince you to open a new Bitcoin exchange account or send Bitcoin to an address. They can often make emotional appeals either to their own needs ("I'm living in poverty"), promises to make you more money ("send Bitcoin to this address and I'll send you more back in six months"), or threats of blackmail or compromising viruses ("You must liquidate your bank account and send your funds to this address to avoid your loss of funds").
Sometimes the impersonators will pretend to be officials such as government officials (FBI, IRS, police), bank officials (your bank account manager), or someone helping you with your computer (claiming to be from Microsoft, for example). They may claim that your funds are at risk and that you have to move them to avoid loss. Anyone asking you to wire dollars or send Bitcoin somewhere should be assumed to be a scammer until proven otherwise.
How to avoid social engineering scams:
- Never take instructions to wire money or send Bitcoin from anyone over the phone or email. Your bank will never tell you to wire money somewhere else.
- Never follow any instructions that pop up on your computer, such as instructions that indicate that your computer has been infected by a virus.
- If you receive a call from someone claiming to be from your bank or other trusted party, go to the official website for that company, find their phone, and call them back. Do not reveal any information over the phone to anyone who contacts you, whom you do not know.
- Do not send Bitcoin to anyone you meet online who is threatening you or promising you returns.
- Consult with trusted friends and family before sending your Bitcoin to others you do not know and trust.
- Be wary of anyone asking you to divulge personal or financial information online, even those claiming to be authoritative figures.
4. Malware scams
Rather than stealing credit card and bank account details, Bitcoin-related malware is designed to get access to your web wallet and take your funds, monitor your clipboard for cryptocurrency addresses, and replace your legitimate address with an address belonging to a scammer, or even infect your computer with a cryptocurrency miner.
How to avoid malware scams:
- Update your antivirus software regularly to protect yourself against malware.
- Never download and install programs unless you’re 100% sure they’re from a reputable, legitimate provider.
- Never download anything with the word "view" in it, such as TeamViewer or Ultra View. This software is designed to give hackers complete control over your computer, your finances, and more.
- Don’t open suspicious attachments.
- Be wary of popups with support numbers or emails from seemingly legitimate companies. Always double-check contact information on company websites.
5. Fake exchanges, wallet, trading platforms, and forex scams
Be wary of fake Bitcoin wallets or exchanges, or websites that promise you unusual returns for sending them Bitcoin. Anything with the word "Forex" on the website is almost certainly a scam. Unless you are a professional day trader and feel comfortable in evaluating the authenticity of these platforms, stay away completely.
Some will entice users with promotional offers that sound too good to be true. Beware of sites that offer incentives for you to send them your Bitcoin. Bitcoin is finite and fixed in supply, so companies or persons that promise to give you more Bitcoin than you put in should be immediately suspect.
Beware of anyone offering “bonuses” for depositing your Bitcoin. Once they have your money, these platforms might charge ridiculously high fees, make it very difficult to withdraw funds, or simply steal your deposit altogether.
How to avoid fake exchanges and wallets:
- Stick with well-known and popular exchanges and reputable wallets.
- Thoroughly research any exchange or wallet before creating an account — Who is the team behind the exchange or wallet? Where is the company registered? Are there reliable reviews from other users confirming its legitimacy?
- Type this into Google: "[name of company/wallet] scam" to see if anyone has reported them for fraudulent behavior.
- Don’t let yourself be pressured into depositing funds or providing any personal information.
- Never download a piece of software just because it appears at the top of a search result. Research it independently.
- Don’t randomly pick a wallet from the app store — only download apps and software from legitimate wallets and exchanges.
- Ask a friend who is knowledgable with cryptocurrencies and Bitcoin. If you don't have a friend like that, consider us that friend and drop us a line!
- Think twice before sending your Bitcoin to a wallet that is not in your physical possession (phone, computer, or hardware). A wallet in your name at another company or provider may not have the same level of legal ownership as your custodial account at Swan (stored at our custodian, a trust company).
6. Cloud mining scams
Cloud mining allows you to mine Bitcoin without having to purchase the expensive hardware required to do so. There are few legitimate cloud mining services that let users rent server space to mine for coins at a set rate. If you really want to invest in Bitcoin mining, you can research publicly listed Bitcoin mining companies.
You can read more about mining Bitcoin here: https://www.swanbitcoin.com/canon/under-the-hood-of-bitcoin-mining/
However, most Bitcoin cloud-mining services are scams. Some promise astronomical, implausible returns and fail to disclose a range of hidden fees, while others are fronts for Ponzi schemes simply designed to steal your money.
How to avoid Bitcoin mining scams:
- Avoid cloud mining and rent-a-miner schemes
- Don't look into Bitcoin mining at all until you fully understand what Bitcoin is, how it works, how to take your own custody by running your own wallet, and you have installed and are running a Bitcoin full node.