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The adoption of Bitcoin and other cryptocurrencies has significantly increased over the last few years. Unlike fiat currencies, whose usage comes with several restrictions, crypto facilitates autonomous, more secure, reliable, and low-cost transactions. While the enhanced security guarantees make Bitcoin a more attractive currency for legitimate transactions, it also offers a cover for criminals. So, if you are planning to trade Bitcoin, you may consider using a reliable trading platform like Limmercoin App
Reports show more than 46,000 individuals have lost over $1 billion worth of cryptocurrency to scammers since 2021. That is almost four times more than any other payment method. Many say Bitcoin is the most used crypto to pay scammers, followed by Tether and Ethereum. So, what are the reasons behind the rise in crypto scams, and how do they occur?
Cryptocurrencies have several features that make them attractive to scammers. Bitcoin and other cryptocurrencies are decentralized, without any central authority to regulate or oversee transactions. Instead, transactions occur virtually on the blockchain, where they are verified and validated on a shared digital ledger.
The decentralized Bitcoin infrastructure ensures financial inclusion since it enables everyone to transact without external interference. However, it also means there is no central authority to flag or stop suspicious transactions before they occur.
The irreversibility of Bitcoin transactions is another feature that encourages scammers to use crypto for criminal activities. Crypto transactions are irreversible once complete, making it virtually impossible to regain the funds lost to scammers. Besides, Bitcoin transactions do not reveal users’ real-world identities.
Some leading crypto exchange platforms today implement Know Your Customer (KYC) rules. However, individuals can still easily create wallets and transact Bitcoin without revealing their true identities. That makes it extremely difficult to detect and track scams committed using cryptocurrencies.
The Common Bitcoin and Crypto Scams
Most cases of crypto-related scams usually originate from social media platforms, including Instagram, Facebook, Whatsapp, and Telegram. Here are the most commonly reported scams involving Bitcoin and other cryptocurrencies.
Investment scams
Bitcoin investment scams appear as legitimate investment opportunities. However, the architects of those scams usually promise huge payouts for small investments to attract large numbers of people. Scammers typically invite people to send crypto to their wallets as investments, promising huge returns over short periods. They use seemingly legitimate websites and apps that even allow investors to track their assets, but all that disappears as soon as you invest.
Romance scams
Like investment frauds, romance scams involve criminals presenting as wealthy people looking for spouses. When they find unsuspecting victims, they offer investment advice to lure you into sending crypto to their wallets.
Impersonation scams
Sometimes, scammers impersonate businesses and government agencies to attract their victims. Some scams may start with a text message about an unauthorized purchase from popular shopping platforms such as Amazon or even a security alert from a tech company. Then, the scammers tell you that the fraud is extensive and puts your money at risk. They may even impersonate your bank to make a claim seem genuine. Some criminals have even reportedly impersonated border patrol agents, telling people they would freeze their accounts as part of drug trafficking investigations. They advise their victims that exchanging them into crypto is the best way to protect their money. Scammers may then ask for your wallet address or even send a QR code embedded with their wallet addresses to steal crypto.
Bitcoin and crypto scams have significantly increased with the surge in their adoption. Thus, you should always observe all the given security protocols and exercise great caution when transacting cryptocurrency.
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