What are the types of fraud that can happen using Bitcoin?

What are the types of fraud that can happen using Bitcoin?

  • Bitcoin Ponzi Schemes – Even in the crypto-sphere, many multilevel marketing systems have been developed. They offer naïve investors excellent opportunities to earn larger amounts of bitcoin. As we know, MLM’s goal is to offer quick returns, but actually involve taking more money for the promise of even higher profits.
  • Cloud Mining – Some companies offer life contracts that keep costs at the same level and offer so-called exceptional returns. However, as the difficulty of mining increases, the same investment will yield smaller quantities each time. In addition, some companies make bold statements about their returns without being transparent about actual costs and decreasing returns. Others simply exploit Ponzi schemes that can lead to massive losses.
  • Brain wallet bruteforcing – Brain wallets are a few words in a row. Humans tend to be habitual and non-random, which makes them extremely weak against a dictionary attack.
  • Compromised Wallets – The loss of a portfolio without the appropriate security measures can open the door to anyone with the appropriate knowledge.
  • Double Spend – Users spend on an item for which the merchant sends an item before confirmations. The user returns the same bitcoins with higher transaction fees elsewhere. The transaction is confirmed in second place before the first transaction, the first transaction is rejected.
  • ICO – Fraudsters can separate investors from their bitcoin in several ways. One popular method is to create fake websites that look like ICOs and ask users to deposit coins into a compromised wallet.
  • Phishing Websites – There are websites that have tried to pretend to be legitimate websites for earning bitcoins.
  • Unsealed Hardware Wallet – A scam involves selling hardware portfolios to users with a preconfigured starter seed hidden under a scratch card. The new user is told that he must scratch the card and configure the wallet with the compromised seed. This creates a backdoor that allows hackers to simply drain funds once the bitcoins are sent.

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