Bitcoin and Forex are two hot names in the financial world. However, they also trigger associations with scams and may cause risk-averse investors to stay away. Are forex and bitcoin inherently problematic? Why are there so many bitcoin forex scams? Looking closely, it is clear that there are legitimate options for bitcoin and forex trading but it is essential to know what to look out for to avoid bitcoin forex scams.
We have al heard of bitcoin, may own some or trade bitcoin but may not be sure how it works. The technology behind bitcoin, cryptocurrencies, and the blockchain can be complex. Anyone who is considering getting involved with cryptocurrencies should find out as much as they can about them and understand, to the best of their ability, how they work.
To start with, bitcoin was the first digital currency introduced in 2008. Since then, there have been thousands of other types of virtual coins that have hit the market. These other coins are referred to as cryptocurrency.
They have no physical exchanges and are not regulated by governments but are managed by the blockchain, which uses ledger technology. All transactions are encoded and anonymous, which can make some users feel more secure but can provide others opportunities to hide illegal activity.
Forex stands for “foreign exchange.” Forex trading involves trying to make money on fluctuations in value between two currency pairs, such as the euro and the U.S. dollar. Forex is a huge yet volatile market. Government and institutional investors can move the market in just minutes without warning with huge purchases or sales. Natural disasters and political events can also affect the value of a currency.
Individual investors can make money on forex, but they usually have to gain skill and experience before they see returns. Since many changes can occur outside of a trader’s time zone that can affect their currency pairs, many traders opt for day trading and avoid holding currency pairs overnight or use bots that can buy or sell automatically. These bots, however, still require human intervention to trade successfully.
People who want to get away with defrauding the public usually take advantage of people following a hot trend. The idea is that among the huge mass of people wanting to get in on forex or bitcoin, there are going to be a few people who are easily persuaded or who are so desperate for a chance to make some money that they may not pay attention to details or investigate brokers before signing on.
Where there is excitement, there is also hype and scammers can make extravagant promises that seem to validate rumors they have heard. For instance, many people have heard stories about traders making a fortune on forex and bitcoin. We may not know them personally, but it sounds familiar. The broker can pretend to be that person or to have the secret to make these stories a reality for their lucky clients. However, these clients are not so lucky when they discover the broker is taking their money.
There are plenty of bitcoin scams and forex scams, but the two are used together in cases of scam brokers that offer fake opportunities to trade bitcoin and forex. They will use the words “forex” and “bitcoin” copiously in their advertisements to capitalize on the trendy topics and insist to prospective clients that they have extensive knowledge and experience in trading bitcoin and forex and can use their advantages to make money on behalf of their clients.
At this early phase, it is possible to sense a bitcoin forex scam from the language and the emphasis. Fraud brokers tend to emphasize guaranteed returns when with these volatile trading instruments, there are no guarantees. They also make it seem as if they are the ultimate experts and the traders are wholly dependent on them.
Another sign of bitcoin forex scam brokers is that they are not regulated or poorly regulated. There is no question that any broker with no license should be avoided, but also investigate the kind of license the broker has. If it is not the first or second tier, avoid them. Third and fourth-tier regulators often do not take prompt action if there is a complaint about bitcoin forex scams.
Be careful to check actual licensing and not where the broker claims to be located. Some bitcoin forex scams will say they are located in Cyprus to make it appear they have a license from CySec, a top-tier broker. However, looking closely, it may be obvious they do not hold a license from CySec but a third-tier license or none at all.