Bitcoin and other cryptocurrencies are gaining more attention as days pass. Aside from the advantages of cryptocurrencies, like anonymity and easy international transactions, people are enticed because they can become a good investment. Apart from trading bitcoins for cash, you can also use bitcoins to buy gift cards, book flights and hotels, buy furniture, or even buy real estate properties. Bitcoin purchases are not taxed at the moment since there is no way for third parties to identify, track, or intercept transactions that use bitcoins. Transaction fees are considerably lower than credit card transactions or services like Paypal.

Although there are many advantages to using bitcoin or other cryptocurrencies, like any other investments, you should always be careful with your transactions. Since cryptocurrency is not regulated, many unscrupulous people have taken advantage of this, and fraudulent cryptocurrencies and other types of cryptocurrency-related scams have happened. One example is Prodeum, a cryptocurrency start-up that scammed its investors in just one weekend.

Because of these scams, law firms have now been involved in helping the victims. Cryptocurrency litigation has now become something that some lawyers specialize in. There are a lot of factors to consider when a cryptocurrency dispute arises. Aside from fraudulent Initial Coin Offering (ICO), lawyers could get involved if the cryptocurrency was used to launder money or hide assets; they could also get involved when there is an issue with the company, commercial, or intellectual property laws being violated about cryptocurrency.

Here are some things that you can do as a cryptocurrency user to avoid being scammed:

1. Research. – Just like with any other investments that you will make, research is essential. When investing in an ICO, read and dissect their white papers to ensure that you’re working with reliable people. Research the people behind the ICO, their whole team, board members, and other investors. You must learn as much as possible about the company before investing so that there will be no unpleasant surprises.

2. Be vigilant. – Cryptocurrency is still primarily bought and sold at exchanges. Because cryptocurrency is something new and the fuss around its value, many people get scammed by the promise of unrealistic prices. It probably is if an exchange promises incredible discounts or offers that seem too good to be true. Another thing that you can do to avoid bitcoin exchange scams is to check the exchange’s URL. If a website’s address starts with HTTPS instead of just HTTP, the traffic is encrypted and therefore has more protection.

3. Only use trusted sources. – Hardware wallet is a physical device that stores your private keys. Hardware wallets offer more protection from hacking since there is no way for hackers to access them when you’re not online. However, hackers have now found a way around that. Some hackers sell hardware wallets that have a backdoor for them to access all your cryptocurrency, and the best way to avoid this is only to accept hardware wallets from trusted sources.

Author: Arleen Atienza

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