Avoid Bitcoin Scams. Complete Guide

The rise in awareness and acceptance of Bitcoin has built the confidence of more investors to take a risk and invest in the cryptocurrency. However, for every positive side, there is a negative side; the recent rush of investors in the market also brought along a high rate of fraud and scams

There is an increasing number of people who are willing to look for all loopholes to exploit crypto Holders. The need to display an extreme level of care is necessary to avoid Bitcoin scams.

Although the blockchain offers a safe haven to investor’s assets through the use of cryptography, nevertheless, it can’t control the actions of the investors. Most of these scams are a result of personal actions taken by the holders of the crypto.

New investors and crypto traders are relatively new to the crypto market hence making them easy targets for the scam schemes. Still, past investors can also fall victim to the fraud.

The Bitcoin market is more crowded than in previous times; hence, the need to be careful and add more securities to protect your Bitcoin.

Common Bitcoin Scams

Hardware Wallet Theft

Hardware wallets are one of the most secure wallets to store your Bitcoin; hardware wallet is a USB-like device that helps to store cryptocurrencies.

The significant advantage that this type of wallet provides is the ability to stay offline at most times, except when attached to a computer as a result of this, reducing the risk of scams.

Storing Bitcoin in the hardware wallet is much more secure and perhaps the most secure wallet after the soft wallet/paper wallet. There are also complications when it comes to using a hardware wallet.

There might be built-in vulnerabilities that expose the device to hackers whenever they are connected to the internet.

Scamming with the hardware wallet is relatively easy. It can easily be avoided by getting the hardware wallet device from a trusted and reputable company.

Purchasing your hardware wallet from an unverified or uncertified company can leave your Bitcoin at risk. The developer can leave the wallet vulnerable with preset configurations to steal coins off people’s wallets.

This is like planting a seed and waiting for the harvest whenever the user is online.

Exchange Scams

The Bitcoin network is a decentralized network, which means a central authority does not control it; however, crypto exchanges serve as an intermediary between buyers and sellers of cryptocurrencies.

In many countries, there is no governing body overseeing cryptocurrency exchanges, which makes it an easy pick by scammers to scam people. A recent crypto exchange scam case in South Korea which involved a large sum of money approximately $386 million; the case involved duping thousands of investors through trading on the platform.

The scam case involving the South Korean exchanges has led to promises from the country’s authority for stricter regulations guiding all exchanges.

Bitcoin scams due to crypto exchanges can easily be spotted and avoided. Still, they can be very costly if they happen. The first turn-off or red flag on a fake cryptocurrency exchange is the high-end incentives they offer to attract investors.

Also, the security of the website is another factor that can guide users in choosing the right and safe cryptocurrency exchange. Web addresses should always begin with HTTPS; this depicts that the traffic on the website is encrypted, and any website without this must be avoided.

Visiting an unsecured cryptocurrency exchange can result in investors losing their Bitcoin.

Fake ICOs

One of the reasons for the increasing boom in cryptocurrency is the rise of the Initial Coin Offering (ICO) as a means for organizations to gather capital through investors.

Thousands of new blockchain-based companies have entered the cryptocurrency market with different and world-changing innovations through their projects.

However, the increased number also means increase risk to fraud and scams. Scammers will create a website similar to the original ICOs’ and request investors to deposit their coins or tokens to their exchanges.

Beware of the website that resembles that of the Bitcoin network and check the authenticity of any Bitcoin site you open.

Multi-Level Marketing

Multi-level marketing is also known as MLM, is another trending way people are being scammed off their Bitcoin. This scheme involves promising people an unrealistic commission or return on their investments.

This offer can be very enticing, but the first point to draw from the proposal is the feasibility of the company been able to give such a high return in short periods.

With the increasing rate in Bitcoin fraud in the world, extreme caution, and most importantly, in-depth research is necessary before investing in Bitcoin. There are very few perfect scams.

There will be some signs pointing to the fraud, but most times, new investors choose to look the other way if we let our emotions get the best of them, a decision that might come back to haunt the investor.

Doing in-depth research on an MLM company before investing can help to prevent participating in MLM scams. Investors should avoid the company without much information online to back up their claims.


Phishing is mostly utilized for websites and emails. It involves creating a similar website/replica to a reputable site to steal people’s details or prompt them to install an app containing malware.

Phishing email contains dangerous links often identified by most email service provider and sent to the spam inbox rather than the regular inbox. These emails contain links that might compromise accounts or as a means to steal login details of people.

Emails from untrusted sources should be avoided or, most advisable, contact the official website verifying the authenticity of the mail before opening the links.

Also, for phishing websites, you should not download apps and drop login details to uncertified sites.


Malware is one of the oldest and still very much active ways by which hackers get access to people’s accounts. This is done through posts that offer them to download an app to get things done quite easily.

Apart from browsing online, malware can be sent to people’s electronic mail, that is why most mails have a section for spams, which is where the message will be received.

Although not all emails in your spam folder are malware, 90 percent of them are, and you should avoid clicking on the link they contain to protect your Bitcoin wallet. Most malware will offer you an app to help you mine Bitcoin for free or perform other tasks for free while the real intent is to get access to your Bitcoin wallet.

The best way to stay off malware scams is by staying offline (not connected to the internet). This is almost impossible if you are not using a paper wallet. Therefore, the alternative solution is to stay off untrusted websites and be careful of apps without trusted credentials.

Old-school scams

The oldest and one of the first scamming methods fraudsters made use of in the traditional time is calling people claiming to be from a reputable organization.

The reasoning could be for tax purposes, exchanges, and others asking people to transfer money or Bitcoin to their wallet as payment. In Nigeria, sending text messages or making phone calls, especially the aged generation, requesting them to send their debit card number to verify their account was very rampant in 2017.

They were able to order things online using people’s bank account. This may sound like an old fashion of running scam, but it is still happening in the Bitcoin world. Therefore, it is vital not to give out your private wallet address or transfer Bitcoin to anyone posing as an organization when they ask for it.

No legitimate authority will ask you to transfer Bitcoin to their wallet as payment or verification.

Pump and dumps

This is a scheme where people tell you to invest with them because they can predict the direction of the movement of the price of Bitcoin.

Most times, a Pump and dump scheme aim to cause an up-trend in the market price artificially. Now they can dump their holdings for profit while most others lose their crypto with little chance of recovering.


This is a type of malware that gains complete access to your system and keep you locked out unless you pay a ransom in Bitcoin to the scammer.

In this case, the best way to go about it if you are already a victim is to consult the help of reliable and certified computer professional to remove the lock rather than paying the ransom.

To altogether avoid ransomware, extra care should be taken to applications you install on your system, as this is the primary source of the malware.

Pyramid Schemes

This is a scheme that promises returns to the participant based on the number of invitees or referrals they bring to the business.

This is only a way to grow the company rapidly; however, there is no yield of gain for members and the invitees.  It is essential to avoid investing your capital or time in this type of scheme.

Prize Giveaways

Prize giveaways work with the new rave; news bearing a free gift for less effort or cash tends to spread faster.

News that offers to give people free Bitcoin for investing in little money are most likely scams and should, therefore, be avoided. It is easier to gather $100,000 from 10,000 people than from 100 people because, in the first case, the minimum amount you need from each is just $10.

This can readily be dashed out by many while in the latter case, each person has to drop a minimum of $100, though still little but carries much weight over the former.

Prize giveaways work similarly with the above-given example; it requires investors to invest unsubstantial cash to earn Bitcoin, which, when summed up, will be a large sum of money.

See our post titled, “How To Earn Bitcoin,” for some legit ways to earn bitcoin.

Ponzi Schemes

Ponzi schemes are not only limited to regular cash but also extend to Bitcoin and should be avoided at all costs.

Any business that requires you returns in exchange for investing you Bitcoin is a Ponzi scheme and often results in many people losing their money.

Money Transfer Fraud

This is another standard method of fraud in modern days. This method involves telling a recipient to handle clearing or goods or moving of funds due to some illicit excuses.

In exchange for their service, they will be paid a portion of the funds or products. Scammers get people to fall for this trap by presenting a mouth-watering offer to be paid to the person involved after the deal.

Ninety-nine percent of this kind of deals are scams, and you might end up losing your Bitcoin or money in the process.

Meet in Person

The transaction involves cryptocurrency mostly happens on cryptocurrency exchanges. The transaction can also be done by meeting the other party in which you transfer your Bitcoin to the personal wallet, and you receive payment in cash or through cash transfer.

This is risky if the other party is not an acquaintance or not trustworthy. It can lead to you been robbed of your Bitcoin or been injured in worst-case scenarios.

Also, in an in-person exchange, scammers are known to utilize counterfeit currency. To avoid this type of scam, the transaction involving Bitcoin should be limited to a trusted and certified peer-to-peer platform. This way, you are assured you are not losing your Bitcoin.


There are many fake websites and social media accounts out there created by scammers to con people of their assets.

Social media is a more practical example, and most social media platforms now make use of a confirmation sign to differentiate real accounts from the fake ones to avoid scams resulting from impersonation.

Impersonators use giveaways as a medium to scam a lot of people and also through direct messaging on social media, presenting themselves as an essential personality in the community.

It is vital to stay away from giveaways to avoid scams or verify the correct social media handle of people involved in the giveaway before participating.

Bitcoin Blackmail Email

This a means in which fraudsters threaten you in exchange for your Bitcoin claiming to have an implicating or private material involving you as a leverage.

This can be better explained by relating it to kidnapping cases; kidnappers hold someone or material vital to the victim as hostage and request for what they want. In some cases, money, but this is not the only thing they can request.

In movies, to drive a judge’s judgment of the villain in the film, they employ these tactics by kidnapping someone close to the judge and request him/her to rule in their favor.

For Bitcoin, they often claim to have installed a key logger, which gives them access to your network, and it has been used to record something you don’t to remain private.

By threatening their victim based on this leverage to send to their contacts if the Bitcoin isn’t transferred. The best way to prevent blackmail is to be wary of apps you download on the Pc or mobile phone and also don’t click on links that are not secure.

It is important to note that, most times, the scammers bluff about the evidence they claim they have, and it might not be real.

Report a Bitcoin Scammer

Many websites claim to be able to notify people about Bitcoin scammer online by tainting their Bitcoin address and all future downstream transaction addresses.

In the case of a large volume of scammed Bitcoin, the investigative authority might be the best to report to as they can track down and handle the situation better.

Reporting a Bitcoin scam can help other people from falling to the same scheme even though you might not be able to recover the lost Bitcoin.

Can you Recover Scammed Bitcoin?

One of the main benefits of the Bitcoin network is the privacy and anonymity it provides to its users. Even though there are methods to track Bitcoin transactions, this is not an easy or quick process.

This anonymity can be a disadvantage to people who have been scammed of their Bitcoin as the odds of finding the scammer are low. They most likely will not be able to recover their coins since there is no central authority to regulate the transactions.

Nevertheless, reporting a Bitcoin scam by writing a petition to the government can help to track down the scammer or assist another person from falling victim to the same person.

Also, if the scam has occurred on a crypto exchange that makes use of the KYC verification, the identity of the scammer can be known

98 out of 100 people that have been scammed of their coin can’t recover their currency, and the remaining two will most likely only recover a fraction of the scammed Bitcoin.

Therefore, it is crucial to avoid any form of Bitcoin scam by being extra careful.

First Steps

Now you know more than most when it comes to protecting your Bitcoin. Use the following steps to help keep your crypto safe:

  • Use a trusted hardware wallet such as the Trezor Hardware Wallet.
  • Protect your communications by using an encrypted email provider like Proton Mail.
  • Protect your identity by using a high-quality VPN service like Proton VPN.
  • Use trusted services and exchanges to buy Bitcoin until you better understand the market, such as Cash App, Robinhood App, Changelly, and Coinbase.

Stay safe!