Beehive Buzz

Sadly, this will be a continuously edited PSA to the public.

Bitcoin has an image problem due to the scammers, fraudsters, grifters that are so prevalent out there preying on the unaware. It is up to the Bitcoin community to police for this type of activity and call out the bad when we see it. Bitcoin, as the fastest growing asset over the last 15 years, is a magnet for this type of activity. If people see a way to profit, they will find a way to get it as easy as they can, and usually that means through illegal and immoral means. If it’s too good to be true, it probably is.

Take a look at this list and protect yourself from the bad guys out there.

Any promise to pay you back more than what you paid in.

There is a persistent scam out there asking you to send in Bitcoin and get double back (or more) what you sent in. There is no legitimate free Bitcoin out there, it has too much value now. One exception would be when groups give it out with no reciprocal request such as when we teach about Bitcoin wallets and send you some free Bitcoin)!
Do not send your hard earned Bitcoin to scammers.

Hacker Infiltrating High Profile Bitcoin Accounts to Shill AltCoins

If your favorite personality all of a sudden starts shilling altcoins, when he’s been a Bitcoiner thru and thru, it’s a scam. Don’t buy the coin.

YouTube “LIVE” Broadcasts Featuring Celebrities Shilling Token Investment Opportunities

This is outrageous. But it also shows a lack of understanding and education on the celebrities part to know what they are hawking to the public. I won’t name names here (you can search easily enough) but know that Bitcoin doesn’t need your endorsement. The US Securities and Exchange Commission has brought the hammer down on these celebrities and token creators for shilling unregistered securities. One such instance of a clawback on money paid to celebrities to hawk an altcoin…

Unsolicited Text and Social Media Scammers (Pig Butchering)

A horrendous term for an equally horrendous scam. Pig-butchering. This is so sad and unfortunate when it happens. An unsuspecting target will receive a text message or social media message promoting making money with solid returns. They will send a link to an exchange. The unsuspecting victim will send money to the exchange and watch as the returns magically ratchet up and up and up. But when you go to withdraw, they ask for more money to release the funds for compliance costs or some such nonsense. Don’t trust a text message with your hard-earned money. Attend a Bitcoin meetup and get good advice on legitimate ways to put your money into Bitcoin safely.

Return on Investment Percentages That Appear Too Good To Be True

Have you been promised 127% returns for staking your Bitcoin? Or even 1000% returns? These returns are not legitimate. Companies such as Celsius.Network, FTX, and various defi exchanges promised high returns in exchange for your coin being held by them for staking and liquidity. The reality was your money was then rehypothecated (taken from you and used for other purposes) as leveraged trades for the company to pay their other holder/investors… a ponzi scheme. These companies gambled your money and lost it all.

If Someone Asks For Your Private Keys, it’s a Phishing Scam

Criminals pose as reputable organizations or individuals to trick users into sharing personal or financial information, such as login credentials or private keys.

The Pump N Dump Rug Pull

Pump and dump schemes are when scammers buy crypto at a low price and then artificially inflate its value through false marketing, only to sell their holdings at the new, higher price, leaving others to lose money. Typically with celebrities or pretty women shilling it. These are also known as Rug pulls – scammers create a project or token, attract investors, and then abruptly remove their assets, leaving investors with worthless tokens.

Fake Exchanges

This is a hard one to determine. Fraudulent websites purporting to be legitimate exchanges, where users can buy and sell Bitcoin, instead steal user funds or personal information. If you have to use an exchange, find a name-brand one such as Coinbase or Gemini. But Bitcoiners can also buy Bitcoin from Bitcoin-Only sources such as Strike App, CashApp, River.com, Swan.com.

Fake Wallets

Bogus wallet apps or websites claim to store Bitcoin securely but instead steal user funds or compromise their private keys. This could be another hard to spot scam. Ask a knowledgeable friend, check app ratings, do research on the wallet. Lots of legitimate wallets are out there such as Blue, Mutiny, Breez, Phoenix, Wallet of Satoshi (not in the US), Blink (not in the US).

Fake ICO’s

Fake ICOs (Initial Coin Offerings) are fraudulent companies that claim to have revolutionary ideas and ask for Bitcoin investments, but ultimately disappear with the funds. This was much more prevalent during the 2017 crypto bull run.

Social Engineering

Scammers use psychological manipulation to trick users into divulging sensitive information, transferring funds, or sending Bitcoin to fraudulent addresses. I’ve heard of one scam where the scammers get everybody in a text message network to send money to the scammer and the scammer will “manage” their funds and tell them when it is good to invest, acting as an illegitimate financial advisor.

Mining Equipment Scams

Fraudsters promise high returns on mining investments but instead siphon funds or fail to deliver promised services. Typically I see this in the mining hardware sales industry. If buying equipment, use reputable sellers. If possible, use an escrow service to hold funds until product is delivered.

It’s a Wrap

To protect yourself from these scams, always research a project, exchange, or individual thoroughly, check for red flags, and exercise caution when dealing with unfamiliar entities. Store your private keys securely, use reputable wallets, and never share personal or financial information with strangers. Stay informed about the latest scams and fraudulent activities in the Bitcoin community to stay ahead of the scammers.

Bitcoin/Lightning Wallets Download this as a PDF

Bitcoin holds value and also transmits value as a medium of exchange.  For simplicity sake, the Bitcoin network has 2 layers.  The main Bitcoin network (layer 1) is called “on-chain” as its blockchain is where transactions post approximately every 10 minutes via decentralized consensus and verification.  The layer 2 network hosts the much faster Lightning Network and is “off-chain” as transactions are not published to the Bitcoin blockchain. Bitcoin is considered a bearer asset; if you hold the private keys to Bitcoin, you control that Bitcoin. Conversely, if you lose the keys, you lose control of that Bitcoin.  The Lightning layer transmits Bitcoin as ‘sats’, the smaller denomination of Bitcoin (think pennies to a dollar as sats to a Bitcoin*). This key management and payments function is managed through wallets that transact on both on-chain as Bitcoin and off-chain as Lightning payments.

A Bitcoin wallet is an app that acts similar to a real world wallet in that it is used to hold and spend your money.  These wallets come in various packages with differing abilities and risks.  There are HOT wallets and COLD wallets.  A hot wallet is one that is present on the internet via your cell phone or computer, or perhaps your trading exchange such as Coinbase, and has live funds that are easily accessible without needing the complexity of private keys to transact.  A cold wallet is not easily accessible and has to be transferred using private keys and several steps to create a transaction, and more secure due to these extra steps of access.

These hot and cold wallets also can be segmented into CUSTODIAL wallets and NONCUSTODIAL wallets.  CUSTODIAL signifying that a trusted 3rd party is holding keys to your Bitcoin in their storage wallets on your behalf such as an exchange, a bank, or even a trusted hot wallet, and can provide support if you lose your passwords or experience problems accessing your funds.  NONCUSTODIAL (self-custody) means that you are the sole holder of your keys to the Bitcoin wallet and it is up to you to secure access to your wallet. Noncustodial also means that you are self-sovereign – you control access and security to your Bitcoin. As we use and understand Bitcoin properties, a majority of Bitcoiners promote self-sovereignty as the end goal. You are the ultimate protector and manager of your money, not the state, or a corporation.

Examples of common Bitcoin Hot Wallets:

• Muun Wallet – a self-custody hot wallet, with support features, that is easy to use and is capable of Bitcoin and Lightning Network payments, protected by a pin#.  
• Aqua Wallet –  a self-custody hot wallet that is easy to use and is capable of Bitcoin and Lightning Network payments, and adds Liquid functionality, & USDT Tether stablecoins as optional payment methods.
• Blue Wallet – a self-custody hot wallet that works well and has MANY features such as multisig, plausible deniability, and is capable of Bitcoin & Lightning payments.
• Breez – a self-custodial lightning wallet with on-demand payment channels
• StrikeApp – a custodial hot wallet with the easiest and cheapest way to buy Bitcoin and spend/send Lightning payments. Mitigates capital gains internally. 

Muun Wallet

While the above wallets are all good choices, we use the Muun Wallet for teaching as it is a very easy to use wallet, is secured easily, and works as soon as you Create a Wallet.  Go to your app store and search for “muun wallet”.  Go ahead and install the app and then open it.

Click ‘Create a New Wallet’, and it will prompt for a pin#. Add and confirm a 4 digit pin#.

Congratulations! You created a new Bitcoin wallet.

The simple interface is ready to send and receive Bitcoin.  Let’s receive $1 in Bitcoin via the Lightning Network.  Click Receive.  On the next screen, Enable Notifications, as you will want to receive alerts that you have received payments.

Muun will show a Bitcoin QR code, and the text version of your Bitcoin address (note the prefix of bc1 for the address signifying a Bitcoin on-chain transaction). You can send this to anyone or have them scan this and send any amount of Bitcoin on-chain. Depending on the network congestion, and fees, this type transaction will typically take 10 to 30 minutes (or a day or more if the sender chooses to send with low fees). Note – the sender pays the fees in most instances (unlike credit cards where the business typically pays the fees). If you want to set an amount for the sender to pay, then click Address Setting to put into a specific amount. The Address Type setting is beyond the scope of this document, use the default Segwit for now.

For our example, we are going to use the Lightning Network as it is much faster and makes for a wow factor when completing the transaction. Click the Lightning tab at the top. The QR code is regenerated for the Lightning network and also has a text address but this starts with the prefix lnbc signifying a ‘lightning network bitcoin’ transaction.  Most lightning wallets can read and send payments to this QR code.

 To set an amount to invoice someone to pay, click Invoice Settings, then Add+. Put in $1 and it will show the current price in Bitcoin also. Confirm the amount, and a new QR code is generated that can be paid.  Have someone pay your invoice in order to receive an instant payment with no bank involvement, only between you and the person sending you Bitcoin! 

This exercise shows many properties of Bitcoin:

1. The Lightning Network is a fast way to send Bitcoin.
2. Sending a Bitcoin transaction is peer to peer with no bank involvement.
3. Once Bitcoin is either confirmed on-chain, or received as a Lightning Payment, this money can never be retrieved, voided, or changed.
4. *Bitcoin’s smallest denomination of sats is 100,000,000 for 1 Bitcoin.

You can read up on the properties of Bitcoin with the Little Bitcoin Book.

For More Information, please reach out to a BEE:

August 10

Bitcoin Charleston Meetup – Frothy Beard Brewing Co, 1401 Sam Rittenberg Blvd, Charleston, SC 29407 from Noon to 3pm.
https://www.meetup.com/charleston-bitcoin-meetup/events/301887476/

August 17

nonprofitpalooza – Bitcoin outreach and education booth at Striped Pig Distillery and Event Center, North Charleston, SC from 11a-3p. Nonprofitpalooza spreads the word about all the great organizations helping the community and really engage the community to brunch, browse, learn and give. This will be the biggest gathering of nonprofits doing fundraisers on one day under one roof.
https://www.meetup.com/north-charleston-meetup-group/events/302259024/

August 27

Bitcoin Charleston is hosting a weekday social at Frothy Beard Brewing Co, 1401 Sam Rittenberg Blvd, Charleston, SC 29407 from 6pm to 8pm.
https://www.meetup.com/charleston-bitcoin-meetup/events/301887472/