By October 9, 2018

Identifying Bitcoin Scams And Fake ICOs

By October 9, 2018

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There is hardly an innovation that sprouts around the world that doesn’t receive some sort of criticism. The invention of the internet was shrouded in skepticism, and now it’s mainstream technology globally. Luno, a global cryptocurrency company spread across 40 countries with a strong presence in Nigeria, has recently reached a two million customers milestone. In this article, Owenize Odia, Country Manager for Nigeria at Luno, provides insights for safety and security best practice for consumers venturing into the Brave New World of crypto.

Scammers are increasingly finding Bitcoin more attractive given its anonymity. Also, the fact that not many people understand how it works makes it the golden fleece for making false promises and not be held accountable”. 

Bitcoin is attractive to scammers for the same reason it attracts so many consumers. It is fast, international, decentralised and irreversible. Not surprisingly then, as Bitcoin usage has grown so has sophistication around Bitcoin fraud.

So how do you identify a bitcoin scam? The firm says that same rule that applies to traditional money also apply to bitcoin. For instance, do not store cash under the mattress to prevent it from getting stolen and do not trust your money with strangers as they could be fraudsters.

Bitcoin scams often come with bogus promises of high returns or interest. It is crucial you question this promise and not take it at face-value. Think about whether the promised returns are sustainable and what the numbers mean. 

Bitcoin Ponzi, HYIP or MLM schemes

These schemes attract people with promises of low or no subscription fees and promises of sky-high returns on their deposits. They often rely on existing investors signing up new ones, which is the only source of revenue or growth. 

As with all Ponzi schemes, early investors get paid with the money from later investors. Inevitably when new investors stop signing up and depositing, the scheme collapses, since no more funds can be paid out. 

What to look out for:

  • Promises of very high returns/interest 
  • Guarantees that you “can’t lose money” 
  • Little verifiable information on company and owners 
  • Difficulties in withdrawing your funds 
  • Social signup links with high bonuses 
  • The sense of urgency to “invest now”

Scammers also set up fake websites that pretend to be a cryptocurrency wallet or exchange. Unlike companies like Luno, they have no actual product – it’s just a way of getting your bank details or your money.

Cryptocurrencies are an exciting new technology, but it’s important to understand them before you make any purchases. Investing begins with education so always take the time to research. If you’re not sure,

And remember: If it looks too good to be true, you probably should leave it alone.

 For more information on how to keep your Bitcoin safe, visit Luno,

Bitcoin Ponzi

If someone literally slides into your inbox and offer an opportunity that promises an incredible return on your money, raise an eyebrow. Thanks to the magic of Bitcoin which seemingly makes these people, many people buy into and at the end of the day someone carts away their money. The increasing numbers on your account may look like its working, and someone may occasionally give you the “It really works” kind of talk or even narrate to you how it has changed their life. But then comes the day when you try to get the funds back and you are bedecked by unresponsiveness. Either there are technical issues or the person says the money would be returned at a later date. Then, on a fateful day, the company disappears, along with your sweet cash. Ponzi schemes can be nefarious in the crypto world, and what bolsters these scams is that other than the millionaire success stories, people don’t know anything about the system. 

Fake ICOs 

The get-rich-quick talk is always the undoing of many crypto users. Fake ICOs may invite you to get in on a newly created coin that’s going to take off and be the next big thing. These can be very tricky because sometimes the perpetrators themselves might not even know that they’re peddling junk. You can avoid such scams by knowing precisely what you are getting into every time. Because you alone are liable for your wallet, you need to decide for yourself whether a new coin has the potential to take off and if the developers aren’t just using the gunshot approach. If you lack the know-how to make this judgment, you probably should take a pass on all ICOs. 

Fake Imitation Wallets And Exchanges 

The one way you can sidestep fraudsters might be to remain on a well-trodden path and use the largest and best-known services. Such services are generally safer, but there also tend to attract copycats. They pull efforts to try to trick you into logging, at which point they sublimely get hold of your account details and use them to access your wallet. This method is usually prevalent with common online banking scams. Scammers just send links to you, which lead to websites that look exactly like your bank’s. Should you unsuspectingly log in, that may very well be the apocalypse for your account. In the crypto world, whether you are on the lookout for a wallet or Bitcoin exchange, there are safe practices to keep to tabs with. Avoid too new stuff on the system and only engage when the early adopters take risks and prove their legitimacy. Use the most popular services and make sure you know what to expect. There is also a 2-factor authentication that you can use to get new codes each time you are logging in – hassle but significantly worth it. Lastly, always check URLs before you sign in on any network pertaining to Bitcoin.  

Scammers also set up fake websites that pretend to be a cryptocurrency wallet or exchange. Unlike companies like Luno, they have no actual product – it’s just a way of getting your bank details or your money.

Cryptocurrencies are an exciting new technology, but it’s important to understand them before you make any purchases. Investing begins with education so always take the time to research if you’re not sure. And remember: If it looks too good to be true, you probably should leave it alone.

For more information on how to keep your Bitcoin safe, visit Luno.

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