Jason Stutman: Is Bitcoin a Scam?
May has been a big month for Bitcoin. The digital currency is up 30%.
Japan recognized Bitcoin as a legal currency. Russia is also eyeing legalization, a goal it will hopefully reach by 2018.
Bitcoin has become a global phenomenon. No longer is it lurking in the shadows of internet chat rooms. It has gained fame and enchanted millions of investors in the process.
That said, people are buying the currency at an unprecedented rate. I recommended Bitcoin at $600 back in 2016. If you had bought then, you would have tripled your investment. As I write this, Bitcoin is worth around $1,841.
But with the coin's upward momentum have come a slew of critics. And I don't blame them. Bitcoin is a new, uncharted investment. It's going to generate speculation.
Many critics are quick to point out that Bitcoin's creator never came forward. The currency was published under an anonymous pseudonym. Conspiracy theorists view Bitcoin as a scam created by an unknown enemy.
But in all actuality, Bitcoin can't be a scam.
It lacks the ability to be.
The Smoking Gun
Guns don't kill people... People with guns kill people.
More than likely you have heard this phrase. It's dropped whenever we are presented with a situation where someone is blaming a tool instead of the human yielding it.
Bitcoin is a technology, and, as a technology, it doesn't inherently have the ability to be a scam.
Bitcoin exists on a self-moderated algorithm. This algorithm allows the coin to regulate itself and avoid government tinkering.
Because of the algorithm, Bitcoin is more secure than any paper currency. It can't be manipulated to influence the market.
But that doesn't mean the currency can't be repurposed or exploited to scam investors. It has proven to be incredibly lucrative, and clever criminals will always find a way to cheat people when money is involved.
There is one scam that new investors should be particularly wary of... a smoking gun using Bitcoin as bullets.
A Review of Bitcoin Exchange Scams
Here at Wealth Daily, we use Coinbase to purchase or sell Bitcoin. The platform is easy to use. It is also secure and widely recognized.
In Bitcoin's early days, exchanges were popping up everywhere. They cycled in and out faster than tents at a music festival.
These websites were scams, and, sadly, many investors put money into them. They bought Bitcoin that never arrived, and the next day the website disappeared.
Prosecuting this kind of fraud is like chasing a ghost.
So investors should take steps to protect themselves. One such step is familiarizing yourself with the warning signs of fraudulent exchanges.
1.) The exchange is offering to sell Bitcoin below market value.
Offering digital currency at a lower price is an easy was to snare new digital currency investors eager to scrape up a deal.
In reality, Bitcoin almost always sells at market value. You invest and wait for it to rise. Exchanges that dangle lower prices like a juicy carrot are often fake. They take the investor's payment and then never send the promised Bitcoin.
2.) The domain is not secure.
In the internet world, very few things are actually secure.
But verifiable businesses have secure addresses. And the best way to check an exchange's validity is to look at the domain name.
When you search for a website, look at the search bar and make sure that the letters in front of the site name are HTTPS, not HTTP. HTTPS marks that the site is secure. The information is encrypted.
3.) The site makes outrageous claims.
Some scammers try to woo investors with outrageous promises. With digital currency, this is easy to do. After all, Ethereum saw a 1,100% rise. And Bitcoin has made millionaires out of paupers.
Those kinds of gains are real, and you will find testaments of them all over the web.
But investors should be wary of currency exchanges that promise an edge on the competition. These sites often guarantee dynamic returns — something no site can safely promise because they don't control the market.
And digital currency is still a high-risk investment.
Bitcoin has been the launching point for a lot of scams. The technology itself is innocent.
But a fear of scams shouldn't stop investors from capitalizing on digital currency. Just make sure to do your research. With a surge of interest in digital currency, there are more resources out there than ever.
We continue to produce weekly content covering the digital currency revolution.
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