Investing in a virtual currency like Bitcoin can be lucrative, but scammers are also attracted in droves to the online market.
The Bitcoin exchange BitStamp reckons investors have around $11.3 billion salted away in electronic wallets, while the current US dollar to Bitcoin exchange rate is $708.
Although thousands of investors have lost millions of dollars of Bitcoin, many more have made an excellent investment return since the virtual currency hit the internet in 2009.
Staying secure online is not too difficult if you follow some simple rules.
In some headline grabbing hacks, repositories that stored bitcoin for other users have suffered some spectacular losses.
The biggest was Japan’s Mt Gox disaster in 2014, when hackers stole 850,000 bitcoin worth $450 million. Around 200,000 have been recovered, but the rest remain lost.
One way to safeguard bitcoin holdings from hackers is to split the cash across more than one trusted exchange.
Phishing scams are also a problem. In these cons, crooks try to dupe bitcoin enthusiasts to hand over their cash through fake Facebook pages and spam email.
Avoid clicking on links to dubious web sites to stop phishing attacks – and watch out for other crooks who claim to help phishing victims recover their cash as they are scams too.
Fake web sites
The ploy with fake web sites is to set up a domain that is just one letter different from the original, trusted site – such as Betfine instead of Betfinex.
The people at Betfinex had to send out a warning earlier this year to stop users going to a wrong site set up to scam them.
Check the link before transferring cash or typing user names and passwords.
Don’t be greedy
Ponzi schemes feed on your inner desire to profit from investments that pay just too much back to be true – and that’s because they are usually frauds.
The fraudster collects cash from investors and pays earlier investors out of the stakes put up by later ones, skimming off a profit.
Sooner or later the fraud catches up with the crook because the victims run out and then no one can be paid.
Don’t jump in early – if the offer is that good, it’s not going anywhere
The risk with bitcoin is the whole network lacks regulation and order imposed by a central bank.
Except from going to the police or civil action through the courts, there is no recourse to recovering lost money. That means you are on your own out there.