Bitcoin is surging once again, and thousands of Aussies are investing, hoping to make a fortune – but this one factor has seen losses of more than $328 million.
If you’re paying attention, bitcoin is everywhere. It’s in the news, on TV and flooding our social feeds.
And why wouldn’t it be? Bitcoin is widely considered the king of cryptocurrencies, making up roughly half of the market cap of all crypto available worldwide.
The fact that few people truly understand how bitcoin works and what drives its value means it’s ripe for scammers and fraudsters.
In 2020, Bitcoin investment scams accounted for an eye-watering $328 million worth of losses from Australians alone – and they’re only the ones we know about.
Despite the fact that almost 1 in 5 Australians own some type of cryptocurrency, there’s no formal regulation of crypto trading in Australia, so it’s important to do your research before you commit.
“Anyone can accept bitcoin payments from anyone, anywhere in the world, anytime. This opens up amazing opportunities for investors, but it also means it’s fertile ground for scammers too,” says Adrian Prezlozny, CEO of Independent Reserve, one of Australia’s largest cryptocurrency exchanges.
“Like any financial product, it pays to take the time to protect yourself and your investment. The best way to do this is to know what to avoid and who to trust.
“The most important thing to remember is that just because bitcoin is a digital currency doesn’t guarantee you’ll get rich quick. There’s no such thing as free money – if the offer sounds too good to be true, it generally is,” he says.
How to spot a bitcoin scam
There are many types of cryptocurrency scams – what to look out for and what to avoid.
• Ponzi or Pyramid schemes: Often sounds appealing because they will promise you a regular return on your investment. You might be told money is being generated by bitcoin trading activities, but in reality no real investment exists.
• Bitcoin flipping: Usually involves claims you’ll double your money overnight if you pay an initial start-up fee to exchange bitcoins for money. If it sounds too good to be true, it is.
• Offshore brokers/investment sites: cryptocurrency is a volatile asset. Companies promising big returns on a small deposit with little risk are lying. It’s that simple.
• Large account release: After an initial investment, scam sites may show you a large balance that they have run up through ‘investing’ or ‘trading’ your deposit. They’ll then give reasons for you to deposit more money before they can ‘release’ your funds.
• Anydesk: A broker or advisor asking you to install a screen sharing software, particularly ‘Any Desk’ is almost certainly a scammer. There is no need for any genuine company to see your desktop screen. It’s usually a ploy to retrieve your account information.
• Blockchain scam: Don’t trust anyone claiming they have ‘found’ a large amount of…