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How to Avoid Bitcoin Scams

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Since bitcoin’s inception in 2009, it has grown exponentially making it a widely popular digital currency that is used around the world. Unfortunately, it is due to the popularity of bitcoin and its market cap growth rate that scammers are realizing the monetary benefits they could get from it.

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According to Bitstamp, the first fully licensed bitcoin exchange, the bitcoin to USD market cap is more than $11.3 billion, with the cost of one bitcoin around the $708 mark, at the time of publishing. It goes without saying that the bitcoin space and its worth has attracted online scammers who want to get their hands on the digital currency by employing devious methods in the process.

Of course, regardless of whether you are a newbie in the bitcoin space or you’ve been dabbling in the technology for a few years, it’s always a good idea to keep yourself up-to-date on the bitcoin scams. Here we will highlight the existing bitcoin scams that people should be aware of and what you can do to avoid becoming a victim of one.

  1. Bitcoin Exchange Scams

These types of scams may not necessarily be easy to decipher simply because the organizations may have a high standing level within the bitcoin space. There are some, though, that do fall through the net. For example, in 2014, the digital currency exchange platform, Cryptsy, is reported to have lost 13,000 BTC and 300,000 LTC after the exchange was hacked; however, it then proceeded to fail to inform its users of the situation for fear of causing mass panic. This has led many to believe that Cryptsy is Mt. Gox’s junior.

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Mt. Gox, the now defunct Hong Kong-based bitcoin exchange, grabbed headlines back in 2014 when it was revealed that around 850,000 bitcoins were stolen, at the time worth around $450 million. While 200,000 bitcoins have since ‘returned’, many users of the exchange are still awaiting an outcome for their stolen money.

What Can You Do: In this situation, the best course of action is to only use the services that you completely trust. Unfortunately, with the above exchanges they were, at one point or another, trusted exchanges.

So what can a person do?

One solution is that instead of putting all your eggs in one basket, why not split what you have into different wallets. This way you can rest assured that not everything you own will be lost if an exchange does get hacked into. Also, research the failings of exchanges such as Mt. Gox and you’ll see that there were warning signs beforehand. By knowing what these are you can keep them in mind when checking out other bitcoin exchanges.

Of course, before parting with your money it’s wise to proceed with a level of caution, and be mindful of any exchanges that simply avoid answering queries in an attempt to ignore a crippling situation.

  1. Phishing Scams

Surprisingly, phishing scams have been known to target those within the bitcoin space. In 2014, the popular digital wallet, Coinbase, was reported to have allowed mass phishing while leaking user information. According to a report, users were receiving emails asking them to make a payment to another user.

phishing locks

In July, following the disappearance of bitcoin mining company, HashOcean, with millions of dollars worth of users’ bitcoin, phishers attempted to get victims to part with their money claiming they could recover their stolen bitcoins. In a bid to lure unsuspecting victims they used fake websites, Facebook pages, and phishing emails.

What Can You Do: To avoid becoming a victim of a phishing scam, don’t click on any sources that haven’t been verified. If something doesn’t seem right to you, always proceed with caution. After all, it’s much better to be cautious in the first instance rather than finding out too late that you’ve unwittingly lost your money.

  1. Fake Websites

It’s believed that if you scan a document that has words scrambled up you can still read what it says as long as the first and last letter are in their right place.

So, when it comes to someone trying to make a fake website appear real they may use some part of the genuine website’s URL, but take out one letter. An example of this was revealed earlier this year when a Reddit user announced that they had lost bitcoins after using a fake website unknowingly. The user believed that they were using the digital currency exchange ShapeShift.io; however, it was only after realizing that there was a missing ‘F’ in the fake website’s URL that ShapeShift was notified.

Not only that, but the Hong Kong-based exchange, Bitfinex, had to alert its users of phishing emails this year after phishing emails were being circulated from an address that appeared to be one of its own.

What Can You Do: Avoid clicking on sources that haven’t been verified. Even if a website looks legitimate, always remember to check the correct spelling of the URL before proceeding.

  1. Ponzi Schemes

A good maxim to live by is ‘if it sounds too good to be true, it probably is.’ That’s certainly the case with Ponzi schemes.

In most cases, it’s easy how to detect a Ponzi scam, and yet while this is the case, people still fall victim to them.

Why?

Because the operators of Ponzi scams know what to say to get people involved: the promise of great return on investments (ROI) without needing to do much to achieve it. Gavin Andresen, a well-known bitcoin developer, is reported as saying that he believes that ‘bitcoin cloud mining companies will turn out to be Ponzi schemes.

pyramidscheme

In 2014, Trendon Shavers was arrested, and later sentenced to 18 months in prison, after his involvement in a bitcoin-related Ponzi scheme. Reports state that he obtained around 146,000 BTC from investors, amounting to around $807,380 during the time of the scheme.

Another Ponzi scheme that has since ceased was CryptoDouble. In 2015, it ceased all operations after promising its users’ that it would double deposits within 100 hours. It was reported that around 2,233 BTC, amounting to about $500,000 at the time, had been cashed out leaving thousands of customers out of pocket.

What Can You Do: As mentioned before, if it sounds too good to be true, then it probably is. Avoid investing in something that over promises on ROI that guarantees a return. Even if a bitcoin company has received positive reviews, don’t jump in straight away. Be wary and do your research beforehand. You’ll thank yourself later that you did if an investment that you originally believed to be true turned out to be a Ponzi scheme.

Conclusion

Unfortunately, as the world of bitcoin continues to grow grabbing the attention of people who are keen to invest in a new technology that promises great things, bitcoin scams will also remain a prevalent factor.

This does nothing to help improve the space and is more likely to hinder its growth as scam victims shy away from any further investment in the currency. Furthermore, a lack of regulation also means that it’s easier for scammers to target people in the bitcoin space.

As such, it’s unlikely that scams involving bitcoin will stop anytime soon; however, by being aware of the different types of scams it makes it easier for someone to avoid becoming a victim and losing potentially thousands of dollars, with no way of recovery, in the end.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Altcoins

Bitcoin, Ethereum Lead Cryptocurrency Market Lower as Trade Volumes Plunge to Six-Week Lows

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Cryptocurrencies continued lower on Sunday after a stalled recovery limited gains to the low single digits, as weak trading volumes kept prices locked in a downtrend.

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Crypto Market Price Update

Digital currency prices were down across the board Sunday, with bitcoin and Ethereum leading the declines.

Bitcoin bottomed at $7,243.90, its lowest since April 11. BTC values recovered at $7,348, having lost more than 2% over the past 24 hours. The world’s largest cryptocurrency has lost more than $17 billion in market cap compared with last week.

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Ether prices bottomed at $562.23 over the weekend, giving back more than $200 from its most recent high three weeks ago. Ethereum is down nearly 20% in value over the past seven days. It was last seen trading around $569.63.

Bitcoin cash dipped below $1,000 after climbing back above the psychological threshold on Friday. At last check, it was valued at $995.88.

Stellar Lumens was down more than 5% to $0.276.

The crypto market cap is down more than $10 billion over the past 24 hours with total coin values hovering north of $326 billion. The market bottomed at $320 billion on Thursday.

Trading volumes have declined sharply over the past five days, with the market turning over just $13.1 billion on Sunday. That was the lowest turnover in six weeks.

The Bullish Case for Bitcoin

The latest market drama is once again forcing investors to think long and hard about their existing crypto holdings. Though the altcoin universe offers plenty of stellar projects, the bullish case for bitcoin remains stronger than ever, especially at current price levels. That’s because a growing number of use cases and increased institutional adoption make BTC an attractive long-term hold.

Though some have speculated that institutionalizing bitcoin is responsible for its marked decline since December, wider adoption is a net positive for the digital currency. Institutions today are exploring ways to offer bitcoin to their clients and developing new custody platforms that are designed to make holdings more secure.

Another interesting tidbit: bitcoin’s fees on Saturday briefly fell below rival bitcoin cash. Data from fork.lol show that BTC’s transaction costs were  lower over a six-hour period, with the discount widening over a three-hour stretch.

By Sunday, the picture had reverted back to the norm with bitcoin transactions costing more than its rival.

Though it’s not entirely clear why bitcoin’s transaction costs declined so sharply on Saturday, the average tx fee for the world’s largest cryptocurrency is extremely erratic. The fee on bitcoin cash, on the other hand, is usually much more stable.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 418 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Blockchain

Justin Sun Plans To Buy BitTorrent

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Justin Sun, the CEO of TRON, is finalizing an agreement to buy BitTorrent, inc. Most people know BitTorrent as the creator of the popular torrenting client, uTorrent, which at its peak had over 100 million users.

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According to Torrentfreak.com, BitTorrent has been in a steady decline to some poor decisions and potentially illegal missteps by their management.

In an interview with BitTorrent founder Bram Cohen, the management was painted by Cohen as incompetent narcissists who had no business plan and no idea what they were doing besides chasing some nebulous idea of celebrity endorsement.

This can be seen in Cohen’s statement, “They were just incompetent fuckups. I mean they’re losers. Basically, Accel took their share in BitTorrent and pretty much just gave it away to these total strangers who they didn’t know. And not only gave away their stock but gave away control of the company.

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Human beings are a bunch of starfuckers, right? The United States has become this celebrity-obsessed culture, and everyone’s all about, oh, we’ll gain access. That’ll be great, and we’ll make money off of it, everybody thinks this.”

It is against this backdrop that Sun’s alleged acquisition is taking place. The TRON projects alleged goal is to “decentralize the web.” Owning one of the most recognizable brands aligned with these goals would be a major coup for the ambitious CEO.

This is due to the fact that the most likely use case of uTorrent by TRON would be to simply parlay its user base into usage of the TRON blockchain.

Since a huge part of TRON’s model relies on advanced content search for media files, simply making use of the uTorrent brand but integrating it with Tron’s decentralized search would instantly transform TRON into one of the most actively utilized blockchains on earth.

The information stems from the fact that BitTorrent changed their company name recently to Rainberry according to their chief product officer. “Rainberry Inc is the official name of the company; it was changed right around the start of 2017.” He stressed that it was a purely corporate decision and that none of the existing product brands would change.

Despite this blanket denial, it seems like the acquisition was proceeding swiftly, and was even overcoming some initial hurdles. BitTorrent had already tried to find a better acquisition offer during the first round of negotiations, to the point that Justin Sun took them to court in an attempt to stop them from negotiating with other buyers.

However, it seems that these initial roadblocks have been overcome, as a new company called Rainberry Acquisition, (BitTorrent recently changed their official company name to Rainberry) was formed and registered directly to Justin Sun. How Sun plans to integrate the platform with Tron is an open question, but it is likely to result in some interesting synergies.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Long-Term Cryptocurrency Analysis: Correction Deepens but Leaders Remain Stable

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As the major cryptocurrencies got hit hard this week, losing around 20% on average, the long-term picture in the segment got close to an entry point for investors. The overbought readings that developed during the late-April rally are now cleared and although the short-term trends are still clearly negative, we still expect the coins to resume the recovery. With that in mind, long-term investors could start accumulating the relatively stronger coins.

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On a negative note, even the leaders violated key support levels during this week’s selloff, but the secular long-term trends are not yet in danger. The prior leaders Ethereum, EOS, and IOTA are still in the center of attention, as we expect them to form a bottom soon. Bitcoin and the other relatively weak coins, like Litecoin, Monero, Dash, and NEO are still lagging the form a technical perspective, but they are also well above the support levels that would indicate an end of the secular bull market.

BTC/USD, Daily Chart Analysis

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Bitcoin is below the key $7650-$7800 support level and it remains the biggest drag on the market, despite a brief period of relative strength this week. The upper boundary of the base pattern that we identified in April is found near $6150, with a weaker zone around $6500, and with the short-term trend clearly being negative, the latter might be tested before a bottom forms. Further resistance is ahead at $8400, $8700, and between $9000 and $9200, and traders and investors still shouldn’t enter positions here.

ETH/USD, Daily Chart Analysis

Ethereum is testing the $555-$575 support zone after violating the $625-$645 range, with the declining short-term pattern being intact. A bottom near the $500 would still keep the recovery intact, but the correction low might already be in, and investors could already add to their holdings here. Further resistance zones are ahead between $735 and $780 and near $845, while support is found near $450.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 257 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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