Recently a Perth, Australia, grandfather lost $5000 in a bitcoin scam. He had been contacted by someone who offered him a bitcoin. They had an Australian Business Number (ABN) and a website. Based on this, the grandfather decided it was a legitimate offer. It wasn’t.
What does a bitcoin scam look like?
Con artists and fraudsters have been scamming people since the beginning of time but as each new generation of technology emerges scams are becoming more and more sophisticated and are on the increase.
Bitcoin and other cryptocurrencies are a scammer’s dream for several reasons:
- Not many people understand Bitcoin.This makes it easier to make false promises and unusual moves without getting caught out.
- Bitcoin is mostly anonymous.It’s a lot easier for scammers to cover their tracks. Once bitcoin or other cryptocurrencies have been stolen, they are probably never coming back to their rightful owners.
- Cryptocurrencies are largely unregulated.There are ways for scammers to steal bitcoin without breaking the law, and there are few authorities that will ever go after these scammers.
How can I tell if it’s a bitcoin scam?
Most scams today are modern versions of age-old tricks. In the Middle Ages, a common scam was ‘pig in the poke’ and played on people who paid handsomely for a small pig in a bag. Once home and with the thought of a delicious meal, they opened the bag only to find they had bought a cat, which was not such a desirable dinner!
Whilst a quick look in the bag would have revealed the scam for what it was, these days more than a quick look is required as there are new risks we need to be aware of.
You should be very aware of bitcoin being used as bait.
For example, a post on social media where someone says you can mine bitcoin just by downloading a program, or a link to a supposed bitcoin exchange that offers freebies to get you started, should always be treated with suspicion.
How can I stay safe online?
Don’t buy a ‘pig in a poke’ do your research! Search with Google or sites you know you can trust, and always, always make enquiries of your own. Don’t trust the ones that come to you.
The grandfather in the article above thought that because the caller had rung from an Australia mobile number and had an ABN that it was legitimate so he didn’t research further. It is very easy for scammers to use someone else’s ABN so the scam looks legitimate. Scammers also create fake websites that look like existing legitimate business websites BUT they change the URL in a small way so that when clicked on you land on the fake website.
The URL is the part in the browser that begins with https:// Always double check the URL before tapping or hitting ‘Enter.’ If it looks slightly different then it’s probably not right.
There are plenty of safe, legitimate and secure cryptocurrency exchanges, but you won’t get to them by following strange links.
Lock up your wallet!
If you’re interested in using cryptocurrencies like bitcoin you’re going to need a wallet. This is not the wallet you keep in your back pocket, or where you have your Lotto ticket stowed. Cryptocurrency wallets are online wallets and they are either ‘hot’ – connected to the Internet, or ‘cold’ – saved to your computer, laptop, or phone.
Nothing on the Internet is 100% secure, so funds kept in a hot wallet are always at slight risk of theft or loss from software bugs. (See malware below)
There are a couple of very safe ways to help ensure your wallet is kept secure:
- Use multi-factor authentication every time.
- Use a “cold” offline wallet. Having multiple cold wallets in separate locations is usually considered best practice. This is often how exchanges, business investors and other people secure the most valuable wallets.
The Internet age brought a lot of viruses, malware and other nasties into the world.
Unfortunately, the value, anonymity and entire digital nature of cryptocurrency mean scammers can now make money a lot easier with dangerous downloads.
- As always, you shouldn’t click on unknown email attachments or potentially dangerous links.
- These easy security measures above, plus some common sense, can give you the upper hand over malware even if you’re not particularly tech-savvy.
Beware of too good to be true offers. Think about whether the promised returns are really sustainable, and what the numbers actually mean. If it seems too good to be true, it probably is.