Hi dear. I am writing to you today from Nigeria. This may come as a surprise to you but I am the son of a king and I am wanting your help to lay into a great fortune of wealth…

Sound familiar? 

While many scammers may have moved on from the Nigerian prince inheritance scam in more recent years, and our email readers have become smarter at identifying spam, there are still people out there who prey on the not-so-tech-savvy. And sadly, they often still get it right to trick them out of their hard-earned money. 

Today, I want to highlight bitcoin scams and offer pointers on how to spot and avoid them! 

6 Tell-Tale Signs it’s a Bitcoin Scam 

  1. Guaranteed Returns 
  2. Exponential Returns 
  3. Urgent Call to Action 
  4. 'Team' Participation 
  5. 'Trustworthy' Testimonials 

Familiarising yourself with the tell-tale signs of a Bitcoin scam or Ponzi scheme will help you steer clear and guard your investments. Here are few examples of what should set off alarm bells:

1.  Guaranteed Returns

Any individual or business promising you a guaranteed return on a bitcoin or cryptocurrency investment should be considered with extreme caution. The bitcoin market is highly volatile, and it’s simply impossible to guarantee returns without a multi-level marketing scheme propping it up, which will inevitably lead to someone losing money. Don’t let it be you!

2.  Exponential Returns 

Closely linked with the above promise of guaranteed returns are exponential returns, especially in a short space of time. For example, “Earn 100% of your capital back in a week!” 

Be careful with evaluating “charts” based on historical data from internal sources. These are easily manipulated. Look at broader, more public sources for validation if needed. 

Once again, the bitcoin and cryptocurrency markets are highly volatile. There’s not an individual or business that can make these specific returns organically. As appealing as they may appear - stay away! 

3.  Urgent Call to Action

Any attempt to get you to part with your money as quickly as possible should be considered suspicious. These will typically include calls to actions like, “Don’t delay. Invest today!” or “For a limited time only. Buy now!”

A business with a genuine investment opportunity isn't likely to use “pushy” marketing tactics or rush you into making a decision on the spot. There may be valid opportunities that will have a reasonable time-limited offer, but this would be communicated in a better way. 

4.  Team Participation 

Any investment opportunity that relies on you continually bringing on new investors who form part of your team is highly likely to be a pyramid scheme of some sort. In these types of structures, the money obtained from new investors is given to previous investors who form the top echelons of the pyramid. 

These types of investments should be avoided at all costs as they’re not sustainable in the long run, and inevitably it’s the latest investors who land up losing the most. 

Introducing people to an investment opportunity isn’t always a scam, it’s working out where the return or payouts are coming from that’s key. 

5.  Complicated Conditions 

“Bullshit baffles brains” -  this is a technique that many scammers adopt by making their offering so confusing or complicated, but also doing so very convincingly. If you can’t quickly understand or establish the premise of the ‘elevator pitch’ then it’s advisable to avoid it. 

Legitimate investment opportunities will be clearly outlined and presented in a way that even newcomers to investment would be able to understand. 

6.  ‘Trustworthy’ Testimonials 

In today’s age, it’s easy to set up an online presence with a website and a few social media accounts. You can even pay for ‘followers’ to exaggerate your size. It’s also really easy to swipe images from the internet and ‘doctor’ them in Photoshop. Often, scammers will lean on similar designs when it comes to websites and branding. When reviewing the online presence of a company, check these elements carefully: 

  • Similar branding to an existing, genuine and legitimate company - for example, Coindeskminer (total scam site, btw) has coat-tailed on Coindesk’s success and tries to position themselves as linked to the publishing site 
  • Scrutinise word choices and grammar on the website or in social media posts - this is one area most scammers reveal themselves through lack of attention to detail 
  • Review testimonials for loose connections between all, similar tone and style, no way to link back to genuine people, and famous people’s photos alongside random names. Failure to respond to negative reviews should also raise the red flag!  
  • Use “Image Search” on Google to pick up on false photography 
  • Use a service like Who Is Domain Lookup to review registration details about the website’s domain - usually, there’ll be inconsistencies in the registration, age of the website and/or IP country 

This is not an exhaustive list by any stretch of the imagination, but I do hope that it gives you a few good points to evaluate any opportunity offering you bitcoin incentives or returns. Being scammed carries not only a tremendous financial burden but an emotional one too. At the end of the day, all investment comes with risk, but you can mitigate that risk with a few key checks. 

Avoid emotionally-driven investment decisions, especially when it comes to bitcoin, and never invest any more than you can comfortably afford to lose. 

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