Because Bitcoin is a nascent technology with irreversible transactions, it is an attractive vector for scams. Please be aware and avoid the following 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 email 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 LastPass or 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 drain your account, 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.) 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 mining companies like RIOT.
However, most Bitcoin cloud-mining services are scams. Some promise astronomical (and implausible) returns and fail to disclose a range of hidden fees, while others are fronts for Ponzi schemes simply designed to part you from your money.
How to avoid Bitcoin mining scams:
- Avoid all cloud mining and rent-a-miner schemes under all circumstances.
6.) Fake exchanges or wallet scams
Be wary of fake Bitcoin wallets or exchanges. Some will entice users with promotional offers that sound too good to be true. Others pressure users into creating an account and depositing funds, perhaps even offering “bonuses” to those who deposit larger amounts. But 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.
- 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?
- Don’t let yourself be pressured into depositing funds or providing any personal information.
- Don’t just randomly pick a wallet from the app store — only download apps and software from legitimate wallets and exchanges.