How to Avoid Bitcoin Scams in South Africa – IT News Africa


The bitcoin price surge in these recent months has drawn the interest of investors from different spheres. People want to buy bitcoin and quickly make money off it, which has left many people vulnerable to Ponzi schemes, quick money schemes, and other forms of scams.

The hype around bitcoin has given most people the impression of a quick and easy return on their investments. The hype has caused an increase in its adoption, as well as an increase in scams and frauds by people who capitalize on that perception to steal other people’s money.

Bitcoin and other cryptocurrencies being decentralized currencies are seen as the future of currency. It is created, stored, and distributed using blockchain which is a decentralized ledger, so unlike fiat currency, it is not regulated by the government. Cybercriminals can capitalize on the decentralized and anonymous nature of bitcoin to exploit and extort people.

People have fallen for different kinds of scams here in Africa, most especially, Nigeria and South Africa. In fact, in this part of the world, the first impression of Africans of cryptocurrencies is that it is a Ponzi scheme. This misconception isn’t far-fetched. Many people have lost their savings to different Ponzi schemes and other investment schemes that were perpetrated using bitcoin.

South Africans have lost millions of Rand to different Bitcoin investment schemes. The recent one being that of Mirror Trading International (MTI) which is a forex trading company that uses bitcoin as its base currency. MTI was said to have been established in April 2019 to help grow investors’ bitcoin. It gave a false promise of 10% a month to lure investors. The CEO of the project, Johann Steynberg closed down the platform and scammed investors as he absconded with their funds.

MTI is only recent and it isn’t the first time people have lost their savings to scams in South Africa. There was BTC Global which collapsed in early 2018 before MTI. It promised its investors a 14% return on their investment,

There’s a long list of bitcoin scams out there but you don’t have to worry about that because we will discuss how to avoid them. However, before discussing the tips on how to avoid bitcoin scams, let’s dig a little into the kinds of bitcoin scams we have.

You can also check out these popular crypto review sites to know which project to invest in or not.

Some popular types of Bitcoin scams

A Bitcoin scam is any criminal activity aiming to extort bitcoin and money from people’s wallets. There are several types of bitcoin scam and many are still being introduced, but the most common ones are:

In most cases, especially in Africa, people are introduced to bitcoin and other cryptocurrencies via a Ponzi scheme. A Ponzi scheme is a form of fraud where later investor’s funds are used to pay earlier investors as profit. The scammers create an affiliation to bitcoin to deceive people and collect their money. One of the biggest Ponzi scheme scams happened in 2019, where the investors got away with over $722 million in cryptocurrency using a platform called BitClub.

ICO stands for Initial Coin Offering. This is a stage that every cryptocurrency project must undergo. It is the crowdfunding stage where investors buy tokens to support new coins and in return, if the coin is successful they are compensated. ICO is one of the biggest scams in the world of cryptocurrency. Fake cryptocurrencies are created and marketed to lure investors.  After amassing enough investors and funds, the founders abandon the project. liquidate investors’ funds and disappear. Nowadays, ICO scams can be easily recognized, however, they can also be very innovative.

This is another way scammers use to exploit people, they introduce a fake coin as an alternative to bitcoin, with a cheap price, and people rush to invest in it and end up losing their funds. Make sure you conduct extensive research on any altcoin you are planning to invest in.

Fake cryptocurrency exchanges are one of the scams pulled in the crypto space. Fake exchanges scam victims by posing as an approved exchange, using different gimmicks such as pushing users to buy bitcoin and then steal the funds. You need to research a trustworthy platform to put your coin. Some of the trusted and secure exchanges you can buy bitcoin include Remitano P2P, Binane, and Coinbase.

There are other forms of scams that are being used, but these are the most common ones. The tips given below applies to all forms of scams

How to avoid all these scams

Always do your research well before investing in any coin

Anytime you want to buy bitcoin or any other cryptocurrency, always conduct extensive research on the coin and the platform, or exchanges you want to use. It is your money and you have to take responsibility for it.

 

Transparency is key

 

transparency is an important factor to consider whenever you want to enter an investment scheme. A legitimate project or business will publish its progress and activities for investors and users to see. Lack of transparency is a major indicator that the business or investment scheme is a scam. So look for a platform, exchanges with high transparency, and business with the best practices.

 

Buy bitcoin through trusted and reputable platforms

 

Use a platform that has been used and verified by people. Check if the exchange has been audited publicly and check reviews online before you use it. An example of an exchange that has been audited and trusted is Remitano which is a peer-to-peer exchange platform to buy and sell bitcoin.

 

Avoid unsecured and suspicious sites

Many sites are out there to steal your details. Be very careful of disclosing your details to anyone or saving your passwords on any site. Check the spelling of the sites very well. Cybercriminals have cloned legit exchanges in the past and used similar domain names to defraud people. Avoid sites promising you unrealistic high returns on your investment, anything too good to be true is untrue. 

 

Don’t Be Greedy: Everyone wants to make money but people who mostly fall for all these scams are people who are greedy and want to quickly make money. So be sensible in the ways you look for money. Whenever you want to buy bitcoin, be realistic and when something is overly cheap, or looking too lucrative, know that it is probably a scam.

In conclusion, these are few tips on how to avoid bitcoin scams in South Africa, follow these steps and you won’t fall for scams as many did in the past.

Staff writer





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