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Is Bitcoin a scam? – Cryptocurrencies are NOT a scam. Learn how to avoid these types of frauds.

Is Bitcoin a scam?

It is NOT!

Unfortunately, it is very common to hear news about cryptocurrencies being apart of scam schemes.

Since there is a great lack of knowledge about this market, a number of criminals take advantage of ingenuity and misinformation to steal people’s money.

The scam scheme is almost always the same: a person hears about the possibility of making great profits in a very short period of time. Therefore, he decides to take the risk and invest all his savings in a crypto brokerage company.

Sadly, at the time of withdrawing the money from the brokerage company… problems! It is impossible to recover the funds. Then, the investor realizes that he has fallen into a scam.

In addition, there are other types of crypto scams: fake coins, viruses that steal your money, fake exchanges…

The issue is that this type of news ends up polluting the entire cryptocurrency market. In traditional media, it is not uncommon to read stories treating Bitcoin as a sort of crime or fraud.

In order to clear up this confusion, Cripto InterCambio blog has decided to address this question: Is Bitcoin a scam? And explain the most common types of scams in the crypto world.

Is Bitcoin a scam? Types of cryptocurrency scams

1. Financial Pyramids (or Ponzi schemes)

This is certainly the most common type of scam with Bitcoin and other cryptocurrencies.

A “cryptocurrency agent” promises a great opportunity for profit within a short period of time. Usually, they claim there will be fixed rates.

Regrettably, countless people invest their money in these schemes, expecting quick profits.

For a pyramid to work, the first people who put their money in it can withdraw it easily. In this way, the brokerage company gains confidence and manages to attract more clients.

The problem is that the broker just took the money from new clients to reimburse the old ones. In reality, no real value was generated.

However, when more people try to withdraw their funds, there simply won’t be enough money. Therefore, this type of scheme is unsustainable!

Why Bitcoin is not a financial pyramid

Bitcoin never promised high returns to anyone who invested in its project, nor did it try to attract customers to invest. Strictly speaking, Bitcoin is a cryptographic digital currency, which is generated independently of financial institutions, or any type of company.

The significant appreciation of Bitcoin in recent years reflects the adoption of and interest in this asset. In this sense, Bitcoin is no different from an expanding company whose shares gain greater value in the financial market.

How to avoid financial cryptocurrency pyramids

  • Be wary of performance rates well above the market;
  • Be careful with companies that offer fixed returns on your crypto investments. The price of Bitcoin varies widely, and it is unlikely that any broker can maintain fixed interest rates;
  • Keep your cryptocurrencies in your own virtual wallet. This way, nobody will run away with your money. Learn more about virtual wallets in our article: Virtual wallet: what is it?

2. Fake Exchanges

Another common type of scam in the cryptocurrency market is fake exchanges.

Basically, they are fraudulent custodial exchange houses (this means they store client’s money).

There have been cases of companies that, after declaring bankruptcy, just disappear with all their clients’ funds.

 How to avoid false exchanges

  • Use exchanges with a spotless record. There are several completely reliable exchanges around the world. We explain how respectable crypto exchanges work in this article: Exchange Platform – What are cryptocurrency exchanges and how do they work?;
  • Always keep your cryptocurrencies in your own virtual wallet!;
  • Give preference to non-custody exchanges. Since they don’t store your money, they certainly won’t lose it. Cripto InterCambio works this way!

3. Viruses and Scams

The growth of the cryptocurrency market has led thieves to use viruses and scams as tools to steal cryptocurrencies.

A virus is nothing more than software installed on the user’s computer or cell phone to steal data. Generally, people end up with a virus without realizing it. They can get it by clicking on emails with questionable files, or even installing infected software.

There are even scams sent via email or WhatsApp. Usually, they request personal data or money with an unlawful objective.

How to avoid viruses and scams

  • Have a good antivirus installed on your computer and on your cell phone;
  • Select hardware wallets that are not connected to the Internet;
  • Never send your data by email, SMS or WhatsApp;
  • Be careful with any type of data or money request online.

4. Fake cryptocurrencies

Cryptocurrency scams are very specific. Many cryptocurrencies have had fruitful growth in recent years. With that in mind, some scammers have created fake cryptocurrencies just to steal funds.

Usually, they are cryptocurrencies that claim to be in their early stages of development and promise high yields in a short period of time. Spoiler alert: it is a scam!

How to avoid fake cryptocurrencies

  • Get to know the cryptocurrency’s whitepaper, developers and its user community: transparency is essential when choosing a new cryptocurrency to invest in.
  • Be wary of cryptocurrencies that promise high returns: cryptocurrencies were not created as a simple mode of speculation, but as substitutes for fiat money. The ups and downs of the market are a consequence of its adoption.
  • Give preference to already consolidated cryptocurrencies. Also, if you’re going to take a risk with a new project, don’t invest all your money on it!

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