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Bitcoin Scams Targeting Investors: How to Verify and Avoid Fraud

Posted On   date15/01/2019

Bitcoin Scams Targeting Investors:  How to Verify and Avoid Fraud

Cryptocurrencies are lightly regulated and can be complicated and confusing even for experienced investors. As an investment, cryptocurrencies offer new and attractive opportunities, but not without a serious risk.  The lack of regulation also makes it a perfect currency for scammers and criminals.

Bitcoin started circulating in 2009 and it´s considered the leading digital currency. It could also be defined as electronic money that is independent from traditional banking. For traditional currencies there is a central bank who decides how much paper money to print based on goals like controlling inflation or boosting the economy of a country. However virtual currencies depend solely on people´s confidence in it.  There is no paper, no coins, only numbers on a computer screen.

There is a lot of innovation in the concept of Bitcoin itself, not only because there is no central authority governing the supply of the currency, but also because of the way it actually works. Bitcoin relies on a network of computers that solve complex mathematical problems. In this process the details of every bitcoin transaction around the world are verified and permanently recorded.

The year 2018 was not great for bitcoin investors. According to a recent Forbes publication, Bitcoin opened 2018 at $13,290 and later hovered around $3,800. This represents a 72% loss overall. By comparison, the Dow had a 6.2% loss overall for traditional investors. But further from the cryptocurrency performance, there is also the risk of falling victim to a bitcoin fraud scheme.

More criminals are requesting payment to be sent via Bitcoin to conceal their identities.  It is the payment of choice among those conducting fraud and scams worldwide.

How to avoid fraud when using bitcoin?

First of all, make sure the crypto website that you are using is not a scam. If the website uses an https connection the data that you send will at least be securely transmitted. Otherwise, if it is an http connection then your information is not secure and you should not use it.   That’s the first step.  Next, verify the company or website is reputable by checking with other agencies and networks, such as the Better Business Bureau, Chamber of Commerce and trade publications.

Watch out for promises of abnormally high returns! Promises of doubling your investment in a short period are major red flags, so even if it sounds like a great investment the best you can do is verify the facts. Reliable and accurate information from a due diligence investigation or company verification plays a key role in investments. Without it there is no way to accurately measure the risk and the potential reward. Up to now, online exchanges that bought and sold Bitcoin were not required to provide customers with annual reports of their transactions, just as stock brokerages and other investment firms had to.  Although this is slowly changing, there are still many uncertainties.

Companies and investors need to understand in full that any international deal brings serious legal, financial and reputation risks. International private investigators who investigate Bitcoin say that if the whole deal is taking place in bitcoin, where no jurisdictions apply, then the risks are even greater. Company verifications and due diligence will allow investors to find any questionable or illegal acts prior to signing a deal. Fraud happens with any currency and verifying the legitimacy of the business and investment conditions is a must always.  With Bitcoin and international business, the risk is much higher, so all foreign companies and representatives should be verified by a professional.

Are you considering investing in a company overseas that requires payment in Bitcoin?  Are you thinking about buying a business that specializes or operates with Bitcoin?  Don’t be a victim of Bitcoin scam or fraud.  Speak to one of our investigators today about how to get clear evidence.

Verifying the facts and obtaining evidence means lowering your risk, so you can make an informed decision.  Contact us today for a free and confidential investigation quote.

C. Wright
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