Bitcoin Scams

There are many scams in the crypto world, and our previously-written article has a full list of real cryptocurrency scams you should be on the lookout for. Still, here are some of the most common bitcoin scams that we’ve found to be especially prevalent.

Bitcoin Ponzi Scams

Bitcoin Ponzi schemes try to extort money from victims with false promises of a rapidly growing, extremely valuable currency. Common targets for bitcoin Ponzi schemes include early adopters who earn small amounts of bitcoin while getting in on the ground floor of the new currency. These people get lured by scammers into purchasing large amounts of bitcoin that aren’t truly worth anything, using them to secure return investment payments.

The Seven Signs You’re In A Bitcoin Scam

1. Bitcoin Founder Been Arrested For Bank Fraud

Bitcoin is a kind of digital money that’s difficult to track and valuable for its scarcity. The first Bitcoin transaction occurred in 2009. With that high value and obscurity, some people falsely believe it’s easy to use Bitcoin to conceal the purchase of illegal goods. It’s a favorite scam of online loan sharks.

Often, Bitcoin startup scams become rampant because the promoters at the beginning of the cryptocurrency movement have nothing but a great story to share. But their clients become disillusioned, their promises to deliver do not come to fruition, and people begin to wonder if they’re actually investing in something worth anything at all. Many users have lost a lot of money investing in Bitcoin scams.

The Three Steps of a Bitcoin Scam

According to a July 2018 report from cybersecurity company Digital Shadows, which tracks these scams, these are the types of Bitcoin scam businesses that try to deceive:

Cybersecurity companies promising to protect you against hackers, malware, and other digital threats

Cryptocurrency investment companies that promise guaranteed returns

Bitcoin wallets that supposedly hold the key to a long-term return on investment

Cryptocurrency “wallet laundering” companies that provide fake access to cryptocurrencies

When it comes to the golden rule of cybersecurity, “if it sounds too good to be true, it usually is,” says Jim Reid, director of business development at Digital Shadows.

How to Avoid a Bitcoin Scam

On the other end of the spectrum, investing in a bad ICO is risky, too. It might seem like a good deal at first, but a bad ICO can be a bait-and-switch—the company may quickly drop its plans and declare bankruptcy or simply disappear. Like the above, you want to look for blockchain-related companies with strong development potential and track records, but it’s also important to look into the company’s credentials. For example, could it have raised significant amounts of venture capital before? Does it have a strong executive team behind it?

Lastly, be aware that many scams also feature fake digital currencies. Some companies promise that users’ crypto assets will grow exponentially if they send them to the fraudulent ICO, while others promise Bitcoin’s USD value.


At the end of the day, there’s no perfect way to invest in cryptocurrency. If you’re comfortable with the risk, there’s no reason you can’t play a role in supporting the growing industry.