Bitcoin scams

What does scamming mean?

According to your dictionary probably something like:

a confidence game or other fraudulent scheme, especially for making a quick profit; swindle

(source: www.dictionary.com)

Scamming is relatively easy because of an appeal on greed or psychological tricks to earn trust.

There are many sources on the Internet to find more about scams. Scams are of all times.

Since Bitcoin is decentralized and relatively anonymous, there is a large attraction for criminal activity like scamming (or (illegal) gambling).

Most advertisement on faucet websites nowadays contain scam (or (illegal) gambling) related content.

But why are faucets presenting these scams? And how can one recognize potential scams?

Faucets

Faucets give away 'free' Bitcoin, but what does 'free' mean? Where are the funds coming from to keep the faucet alive?

The answer is, in most cases, simple and straight forward: Advertising income is keeping faucets alive.

Until mid 2016, it was easy to fund your faucet with Google ad advertisement. However, Google stopped payout of advertisement income due to not meeting their terms of service. Essentially all Bitcoin faucets were influenced by this action from Google. Many faucets disappeared and it became difficult to be profitable for faucet owners. Alternative, less profitable ways were found via alternative advertising third parties which essentially do not screen on quality at all.

Recognize potential scam

How can you recognize potential scam. The answer to that is also very simple: If it looks to good to be true, it most probably is.

The problem is, with so much advertisement, it might be difficult to decide what looks to good and what not. The most common types of scams are presented below:

  • Cloud mining scam – remember it is most probably not very realistic to expect a profit of more that 10% a year, let alone 10% per day. Totally unrealistic! Most cloud mining are Ponzi schemes. Just search on the Internet for Ponzi scheme.
  • Bitcoin security exploit scam – There is no Bitcoin security exploit. If there were one, it is illegal and unethical to abuse such an exploit. The only exploit is greed. Always remember that.
  • Investment scam – These scams are harder to recognize. Always keep in mind that very high interest rates are probably not realistic. Furthermore, since Bitcoin is relatively anonymous, payback can not be guaranteed at all.
  • Gambling – Online gambling is illegal in many countries. Again, remember that there is no regulation and due to the anonymous nature of Bitcoin, there is a big chance being scammed.

Basic principles for unveiling potential scams

What can you do to research a website before deciding to invest?

  • Identity - Scammers try to gain your trust by 'presenting' themselves as being trustworthy. However names and according pictures can not be found when searching the Internet.
  • Ownership of a website - can be found on https://www.whois.net/
  • Good news propaganda - Scammers will try to earn your trust by good news propaganda with false statements and reviews. Especially the combination of unrealistic profits with tons of false praises from (fake) users is a big sign to keep away!
  • Search Internet - Just search for reviews. An helpful website to use for investigation of reliability of a website would be https://netbusinessrating.com/en/
  • Use of safe connection - Be sure a SSL certificate is being used for sending personal information like passwords of email adres.

By no means I have the illusion of being complete, however, you can save yourself a lot of trouble by following these rules in combination with a healthy gut feeling.