On the Rise – Bitcoin Scams

With great powers come great responsibilities! These words from the movie Spiderman are also applicable to Bitcoin. The intentions behind development of Bitcoin might have been noble, but you can’t say the same about the people who use it. Bitcoin was developed as a decentralized alternative to fiat currency that revolutionize the way transactions happen between people across geographical boundaries. Bitcoin eliminates the role of a governmental or financial institution in these transactions, reducing costs of transaction, with an obvious increase in speed at which transactions can be completed.

However, as always, it didn’t go as intended. Soon after it entered the market, Bitcoin became the favored currency of criminals. Silk Road is one of the websites to make extensive use of Bitcoin and its qualities. Silk Road might not be there anymore, but that doesn’t mean there aren’t other similar sites and services in the deep web that are into borderline illegal or completely illegal business activities.

Bitcoin does have a positive ring to it. Take a look at the way Bitcoin based services are now providing access to financial services to the unbanked in developing countries, they are enabling foreign remittance at a fraction of cost charged by conventional money transfer services etc. Bitcoin is on its way, rebuilding its credibility while gaining worldwide adoption. As you grow comfortable with Bitcoin, there is a new set of problems emerging on the horizon. They are Bitcoin scams, something you have to be aware of, to prevent yourself from becoming a victim. Some for you:

• Since 2011, over 13,000 people fell victim to various Bitcoin scams.
• There were 42 Bitcoin scams that took their money/Bitcoins
• Over $11 million worth of funds were cheated out of these victims
• Most lucrative categories of Bitcoin scams include wallet scams, exchanges, mining and high yield investment /Ponzi scams.

Some of the Bitcoin scams in recent days include exchange scams like where the exchange claims to buy Bitcoins for a premium (10% or more above the market value). The customers are paid the promised amounts during the initial small transactions, gaining their trust. Once the customer decides to sell larger amount of Bitcoins, he won’t receive the proceeds for those sales, leaving him without money and Bitcoin.