Bitcoin is somehow suspicious and I hear people say it's a scam.
Bitcoin is legally recognized in many countries around the world, and its uses are expanding, including the acceptance of bitcoin donations by UNICEF.
On the other hand, however, some people recognize that bitcoin itself is a scam, as there are people and organizations that misuse bitcoin for fraud.
In this article, I'll show you some of the scams that have misused bitcoin, their modus operandi, and the reasons why people mistakenly believe that bitcoin is a scam.
This article was written in Japanese and converted to English using a translation tool.
Date of writing (Japanese version): December 2023
Bitcoin Fraud Cases
What kind of Bitcoin fraud cases are there?
There's been a case of a scam that's been going on for a while now, demanding bitcoins instead of cash.
A Scam Email Demanding Bitcoin
There have been an increasing number of cases of fraudulent emails demanding bitcoin by pretending to have hacked a computer or smartphone and threatening to "release videos of you accessing adult sites."
It seems that the scammers are trying to steal assets by distributing emails to an unspecified number of people and inciting anxiety like a furikome scam.
I know these scam emails have been around for a long time, but there are also criminals demanding bitcoins.
It looks like they're asking you to send bitcoins to the bitcoin wallet address listed in the email.
If you receive a scam email, do not panic and ignore it.
Pyramid Scheme Inviting You to Invest in Bitcoin Mining
A person involved in "BitClub Network," which lured people into investing in bitcoin mining equipment and defrauded them out of a total of nearly 80 billion yen, was arrested in 2019.
*Mining…a system for performing calculations necessary for Bitcoin transaction approval and obtaining Bitcoin as a reward.
The pyramid scheme, which encourages people to join the sales organization, attracted investors in the form of a pyramid and caused victims all over the world.
Source：仮想通貨のマイニングに誘うマルチ商法、詐欺被害を拡大させた5人の手口
Besides Bitcoin, there's also been a string of mining investment scams for other virtual currencies.
"The latest technology!" "You'll make money if you invest!" I have to be careful with all those swell stories.
SNS Money Giving Away Scams
There are a large number of posts on Twitter and other social networking sites with the main idea of "giving away bitcoins."
If you respond to these posts, you will be put on a list as a target of the scam.
Also, do not jump on these types of posts, as there have been cases where people have been used as recipients of scams.
It's a suspicious money distribution scam to look at, but something about the bitcoin being put in it makes bitcoin look suspicious too.
It's a very bad thing that people are abusing bitcoin, but it's as if some people think that bitcoin itself is a scam, and that's a very misleading notion.
A Foreign Woman I Met on a Matching App Recommended Me to Invest
A woman who met a foreigner on a matching app recommended investing in Bitcoin and defrauded her out of 147 million yen worth of virtual currency.
The victim was asked to transfer virtual currency through a fake website that resembles an actual exchange.
- A foreign woman, who claimed to be Taiwanese, recommended investment and sent Bitcoin to the designated site.
- When she tried to redeem her profit on the site, a person claiming to be in charge of the site told her that she could not withdraw the money without remitting 45% tax of the withdrawn amount, and remitted a total of 147 million yen worth of virtual currency multiple times.
出典：1億4700万円の投資詐欺被害 送金したのは偽の暗号資産取引所
It's really a terrible trick to find a target on a matching app and lead them to a fake website.
If you meet someone of the opposite sex on a social networking site and they offer you an investment, it's a scam! It seems to be a common tactic.
It's one of the scam's tactics to encourage you to deposit money in an unknown exchange.
Never use an exchange where you can't find any information even after researching.
Woman Arrested for Receiving Bitcoin as Proceeds of Special Fraud
A 23-year-old woman has been arrested for knowingly receiving bitcoins as proceeds of a special fraud crime.
The suspect apparently had approximately 500,000 yen worth of bitcoins sent to a bitcoin address under her control.
In 2021, a man in his 70s had his cash card stolen and withdrew 5.11 million yen from his account.
Source：特殊詐欺収益の暗号資産受け取り、容疑で23歳無職女を逮捕 愛知
Special fraud is when criminals pose as relatives or the police to swindle you out of your cash card or blackmail you for settlement money.
So bitcoin was used as a way to transfer the money obtained in the scam.
[important] Bitcoin itself is not a scam.
It seems to be true that bitcoin is used for fraud, but is bitcoin a bad thing?
Bitcoin itself isn't a scam.
It is misused in crimes and sometimes misunderstood as "bitcoin is bad", but it is a wrong perception that bitcoin currency and mechanism itself is a scam.
Although bitcoin is still not very familiar in Japan, it is recognized as a legitimate digital asset in many countries, including Japan, and is actually used for international money transfers, investments, and other financial activities.
In addition, bitcoin futures ETFs have been approved in the U.S. and Canada and are traded on stock exchanges after rigorous screening by regulatory authorities.
Bitcoin is characterized by properties not seen in previous currencies, such as technology that is extremely difficult to tamper with and a system that is decentralized and managed by thousands of computers around the world.
Companies around the world are engaged in Bitcoin-related businesses, and the cities of El Salvador and Lugano, Switzerland, have adopted Bitcoin as legal tender.
Even in Japan, famous companies like Rakuten, LINE, and Mercari have bitcoin-related businesses.
Twitter and Tesla's Elon Musk also seem to be in the bitcoin mining business, and many companies may be looking forward to bitcoin's expansion.
Incidentally, the U.S. federal agency, the Securities and Exchange Commission (SEC), has taken a tough stance against other virtual currencies, asking the virtual currency exchange Coinbase to stop trading all coins except Bitcoin.
Bitcoin is perceived as a commodity, like gold, because it has no operator and functions on computers around the world.
Other virtual currencies, on the other hand, have a substantial operator, so some people argue that they are more like securities issued by a corporation.
To begin with, many people may not know that bitcoin is a commonly used currency in other countries…
I hope the day will come when many people in Japan will know that there are many people in the world who think "Bitcoin has value."
Why Bitcoin itself is misunderstood as a scam
If Bitcoin itself is not a scam, why do some people think "Bitcoin is a scam?"
Maybe it's the Japanese way of thinking and the media's reporting attitude that has led to the negative image of Bitcoin, you know.
The idea that "it looks somehow difficult and suspicious."
In Japan, people shy away from things they "don't understand" or that "seem somehow difficult," and many people seem to think that because they have heard that it is suspicious, it is somehow suspicious.
Below are the results of a survey of attitudes toward Bitcoin by country.
From a global perspective, it can be seen that Japan has a very high percentage of people who feel "Bitcoin is suspicious" and far fewer people who answered "I am optimistic about Bitcoin."
That's by far the lowest number of people who are optimistic about bitcoin.
It's very disappointing that the image is so bad…
It's kind of Japanese to have so many "neither" answers.
I've heard that in the early days of bitcoin, a lot of bitcoins were traded on Japanese exchanges… but now it seems like we are completely backward in bitcoin.
Japan and the U.S., surveyed a total of 3,000 men and women aged 20-59 (survey conducted in 2021).
A survey conducted by the virtual currency exchange bitFlyer. In Japan, 78% of respondents answered "negative" about virtual currency, while in the U.S., 76% answered "positive.
I'm getting totally different results compared to the US!
It's amazing how much they disagree so far…
Some Japanese people think "investment is evil" and Bitcoin, which has a strong image as an investment target, might not be a good match.
Negative media coverage
Title: "Bitcoin" CEO Arrested on Suspicion of Massive Disappearance and Tampering
Major Japanese media outlets often cover Bitcoin in a negative light, and in the past have published articles with titles that misrepresent the facts.
*Supplemental image above: Bitcoin has no operator and no president. Above is a news story about the arrest of the president of an exchange that provides bitcoin trading services (exchanges are also located overseas, and "this is not the only exchange where you can buy bitcoin").
The news is also written in such a way that "people who made a lot of money in the Bitcoin bubble are hit hard by a huge loss," and the news focuses on Bitcoin as a "dangerous investment product that can cause losses" rather than on its technical characteristics.
Incidentally, Japan has a very high level of trust in the media.
It is amazing that only Japan has a trust level of almost 70% while other developed countries have a trust level of almost less than 50% for newspapers and magazines.
The fact that so many people believe the media means that the wrong news is believed as it is…
Japanese people are negative about investment
Japanese and U.S., a total of 3,000 men and women aged 20-59 (survey conducted in 2021).
In Japan, many people have a negative attitude toward investing and are cautious about investing in general.
According to a survey by Bitflyer, a virtual currency exchange with offices in Japan and the U.S., less than 70% of respondents in Japan said they were not investing, while more than 80% of respondents in the U.S. were apparently investing.
Currently, bitcoin is mainly bought and sold for investment purposes, and there may be a widespread perception that it is a dangerous thing in which one might lose money by investing.
Indeed, there may be a tendency to think that working is noble and investing is a fun way to make money.
There are many people who will reject the mere word "investment."
In the past, if you deposited your money in a bank, you used to receive a high interest rate, but now the interest rate has completely dropped.
We need to face asset management, but people in older age groups have a strong perception that money should be kept in the bank, so it is possible that the same idea will be passed on to their children and grandchildren.
It is believed to be used for money laundering
Virtual currencies, including Bitcoin, are sometimes used for money laundering, but the percentage of use is said to be limited compared to cash.
Money laundering…laundering money (disguising the source of money obtained through criminal activity)
According to Chainalysis, a blockchain analytics firm, $8.6 billion worth of virtual currency was used for money laundering in 2021.
Chainalysis points out that $2 trillion worth of legal tender is laundered every year in crimes such as drug trafficking*, and when compared to the scale of such crimes, the claim that "Bitcoin is a fraud because it is used for money laundering" seems a bit far-fetched.
*Compared to virtual currency, money laundering using cash is difficult to determine the number itself.
It's the banks and other established financial institutions where most financial crime occurs.
For example, it has come to light that the largest bank in Denmark laundered $230 billion in money.
When you hear the word "money laundering," it sounds kind of complicated, and you might think, "Is Bitcoin a scam after all?" But it's probably not a good idea to be so definitive.
The image of other scam coins gives a bad impression.
There are so many "scam coins" among virtual currencies created for the purpose of fraud, and indeed there are many scams.
For example, "XXX coin is more powerful than Bitcoin! If you invest in it, you will make money!" and other such claims are used to lure people into buying them and steal their money.
Most altcoins (virtual currencies other than Bitcoin) have an operator, and the operator makes money when the price of the virtual currency issued by the operator rises.
Reports of virtual currencies other than Bitcoin being used for fraud may give some people the impression that "virtual currency is a scam = Bitcoin is a scam."
Scam Coin M.O. (Example)
- Induce customers to purchase fraudulent coins by promising their future potential, then run away with the funds or fade away with the excuse that they have been "hacked."
- Over-promoting partnerships with large companies or collaborations with celebrities.
- Raise the price temporarily by advertising on social networking sites, etc., and after manipulating the price, the operator or initial investors sell out in large quantities (the price plummets, and those caught up in the publicity lose a lot of money).
As an example of a scam coin, there is, for example, a coin that raised 4 billion yen, mostly from Japanese, and has not been heard from since.
The only exchange where you can buy the coin has been shut down, the funds cannot be moved, and the official source has deleted their Twitter account.
The more fraud cases there are, the worse the image of virtual currency gets…
Besides, I've seen excessive advertising of how shady virtual currencies, NFTs, etc. are.
[Summary] Bitcoin itself is not a scam! Beware of scammers who abuse it.
Key Points
- Bitcoin itself is not a scam.
- There have been incidents of scams abusing Bitcoin, such as robbing people of their funds by encouraging them to invest in Bitcoin, and Bitcoin-related investment scams (pyramid scheme solicitations).
- Critical media coverage of Bitcoin and the image of Bitcoin as "somehow suspicious" and "dangerous to invest" have led some people to mistakenly believe that Bitcoin is a scam.
It's true that bitcoin scams are happening, but it's not like "bitcoin itself is a scam and the coins are gone overnight" or anything like that.
Many of the scams I've described aren't bitcoin-specific scams, but scams that are mainly done with cash.
It's a shame that people think like "bitcoin scams are bitcoin's fault" when it's the people who misuse bitcoin in scams that are at fault.
I know there are a lot of people out there with different ideas.
I understand that there are many people who think that "all virtual currency is bad!” But I think it's better to know more about Bitcoin before making a decision.
Learn more about Bitcoin!
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Writer：Sigeru Minami
Creator of "Bitcoin-zukan.com."
Active as a handmade craftsman of Bitcoin goods.