Common Bitcoin Scams and How to Avoid Them

Common Bitcoin Scams and How to Avoid Them

Introduction to Bitcoin Scams

Bitcoin is the first ever cryptocurrency and originates from the blockchain of same name. Bitcoin is a digital currency meaning that it exists in the form of a code. Bitcoin has gained considerable market value and it has around 51% market dominance as well.

Many people have increased their earning potential using Bitcoin blockchain. However, Bitcoin investors are sometimes targeted by the scammers by attacking digital wallets or hacking their custodial services provider.

Bitcoin is a decentralized network meaning that it does not require traditional banking networks. Bitcoin network is secure by using consensus model called Proof-of-Work.

However, investors need to use digital wallets, exchanges, and other resources to operate and access Bitcoin. Therefore, scammers can target these trading channels and steal Bitcoin reserves from the real traders.

Common Bitcoin Scams

Here is a list of most common Bitcoin scams with added tips on how to avoid them:


Scammers may resort to using psychological tactics to steal their Bitcoin reserves. These tactics include issues such as blackmail and using threats to get the victims to voluntarily transfer their Bitcoin reserves.

Threat actors may get in possession of the some personal information that is associated with the target and or commit crimes such as kidnapping etc. They will contact the target and ask them to transfer their Bitcoin reserves in exchange for personal information or missing person.

  • Precaution and Prevention

Investors should use VPN and other good cyber security resources to keep their information away from the reach of threat actors. In case of a physical threat, they must contact law enforcement agencies rather than trying to negotiate with the scammers.

Fake Service Providers

There are countless service providers that offer various types of services for Bitcoin investors. Some are exchange platforms and custodial services providers among others. Scammers can fashion a fake website to look like the legitimate Bitcoin service provider.

The new investors who have heard about these services may end up downloading the fake application or creating an account at a fraudulent site.

  • Precaution and Prevention

Investors must make sure that the site or application they are using is offered by a verified service provider that has goodwill and positive reviews in the market.

Scam Giveaways

There are some instances where scammers impersonated famous personalities and asked investors to send them Bitcoin. The scammers claimed that they are going to return their Bitcoins to double or more times.

In other cases, scammers can ask investors to send them Bitcoin for a charity cause by impersonating or posing as a celebrity.

  • Precaution and Prevention

It is not advisable to send anyone Bitcoin without proper authorization and background checks.


Phishing scams are used to steal the cryptocurrencies by stealing the credentials of the investors. Phishing attacks can perpetrate using social media sites or emails.

Scammers can pose as real service providers and they can compel users to download malware that steals the log-in credentials for digital wallet.

  • Precaution and Prevention

Investors should install a strong and updated anti-virus on their operating system that scans every URL before opening it.

Computer Viruses

Hackers can use ransomware and malware to access digital currency reserves. Ransomware is used by the scammers to lock the operating system and blackmail their victims to send them Bitcoin for removing it.

Meanwhile, malware can transfer personal information and sensitive data of the victim to scammers such as private keys and log-in credentials.

  • Precaution and Prevention

This problem can also be prevented using a good anti-virus that blocks any spiked or suspicious link before it is opened. At the same time, users should close automatic downloads by going in their device settings.

Ponzi and Pyramid Schemes

Ponzi schemes are unrealistic investment offers that convince victims to invest into fraudulent projects. Pyramid schemes are multi-layered recruitment shams that scam people by asking them to bring more people for generating revenue. In this system, everyone continues to lose except for the initiator of the scam.

  • Precaution and Prevention

Traders perform their due diligence when they hear about unusually high or lucrative investment opportunities. The term DYOR or do your own research has been popularized in the crypto sector to ensure that investors do not end up falling into either of the aforementioned scams.


Bitcoin is a great investment product but it is not safe from the threat of scammers. Therefore, investors must share more information regarding scams and prevention techniques with their peers to make sure that everyone remains secure against these threats.

Richard Dodson
About Author

Richard Dodson

Richard Dodson, a titan in crypto journalism, delves deep into the blockchain ecosystem with clarity and precision. With an innate ability to simplify intricate details, Richard's articles demystify the world of digital assets. His authoritative voice and profound insights make him a go-to expert in cryptocurrency discourse.

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