Cryptocurrency Market is on Boom, and so are the Scams
The cryptocurrency market is booming, and with it comes a lot of scams. As the market is unregulated, it can be quite difficult to identify a scam coin or token out of hundreds that exist. There are many factors to consider when investing in cryptocurrency and not just the use case or technology behind it but also its credibility and whether it has a solid development team behind it.
All these factors make identifying scam coins difficult, but here are some tips which can help you avoid scams when investing in cryptocurrencies:
- Research before investing – if there is no whitepaper on their website, don’t invest in that project as there could be something fishy about it, or they haven’t yet fully developed their concept/product, etc.
- Check for team members – check if anyone from your own country is part of that team because this proves legitimacy.
How to Spot a Cryptocurrency Scam
- Scammers will often use fake names, email addresses, and phone numbers.
- Scammers will often create a fake website with the same name as the cryptocurrency.
- Scammers will often create a Facebook page or Twitter account with the same name as their company’s name, so look out for this!
Identify Red Flags Early
Since cryptocurrency is a relatively new industry, there are many scammers out to capitalize on the fear and uncertainty that new investors experience. One of the most common red flags is if a company is using an ICO (Initial Coin Offering) to raise funds for their projects. It can be identified by looking at their social media accounts, website, and white papers. If they don’t have any activity or content related to their project, it may be a scam.
Another red flag would be if an exchange has been hacked before or has bad reviews online about its customer service or fees charged for trading cryptocurrencies on its platform. Many exchanges require users to verify their identity before making trades. It means that criminals looking to steal money will often try stealing funds through other methods such as phishing schemes.
They send emails with links designed like those from popular crypto sites but are fake websites trying to steal your credentials or log-in details so they can access your account later on when you try logging in again!
Review the Project’s White Paper
A white paper is a document that describes a project and its goals; including cryptocurrency prices, cryptocurrency value over a few years, market cap, etc. It should be written by the team, not an outsourced marketing firm or anyone else. The white paper should be available for public review, and it should be clear and concise, with no technical jargon or phrases that don’t make sense to those not familiar with the crypto world.
The white paper should also be updated regularly as more information about the project’s progress becomes available.
Examine the Investment and Team Behind It
Before you invest in a cryptocurrency, it’s important to look into the team behind it. You want to make sure that they’re qualified and have a good reputation. The best way to do this is by examining their credentials and background.
- Check the credentials of the project advisor(s). These are people who guide your investment. Ensure they have at least ten years of experience in their field, especially if they’re being paid for their advice!
- Check out how long the project has been around (and what it did before). Companies tend to start up when there’s demand for their services or products—so if yours was first founded three months ago but already has an impressive website with lots of buzzwords on it, be wary!
- Look at its partners and investors and see if there are any red flags here (e.g., do these companies even exist?). You shouldn’t be investing with someone trying to scam others out of money. These people should be reputable sources within industries so that you feel confident they’ll continue supporting whatever product or service you’re buying from them.
For ICOs, Look for These Warning Signs
- The project is not registered. Look for the name of the company, its founders, what their roles are, where they are based, and how long they have been in business.
- Lack of transparency. How much money has been raised so far? Are there any upcoming events or conferences where you can meet a representative from the team?
- Team members are anonymous. If you cannot find out who your potential partner or investor is, it’s probably too good to be true!
Know What Your Money is Going Toward
The first thing you should do is find out what the money is being used for. If an investment opportunity sounds too good, it probably is. If you can’t get a straight answer about what the money is going toward, or if it seems like they are just trying to sell you something, this could be a scam. The SEC warns investors that “fraudsters often use social media channels or chat rooms to lure investors by touting a new and exciting virtual currency product.”
You should also ask yourself: Do I really believe in this company? If not, then steer clear!
Tips to Avoid Cryptocurrency Scams
- Don’t invest more than you can afford to lose. Investing in cryptocurrency is risky, and the market can be unpredictable. So if you’re thinking about investing, make sure that you have a plan for how much you’re going to invest and when.
- Look at the exchange’s reputation or platform where the cryptocurrencies are being traded. Is it trustworthy? What kinds of measures does it take to keep its users safe?
- Never give out your private keys or passwords; they should remain confidential at all times!
Crypto Scams are Difficult to Identify, but Proper Research Can Keep You Safe.
As with any investment, it’s important to be informed and do your research before committing. Unfortunately, in the world of cryptocurrency, scams are often difficult or impossible to identify until after they’ve occurred. However, some warning signs can help prevent you from falling victim to a scammy crypto-investment scheme
Check out the company’s website. The first thing you should do when considering whether or not to invest in a company is to look at its website. Does it have an address listed? Do they list their phone number? Are there any contact options listed that don’t seem legitimate? Scammers often use fake addresses and phone numbers to hide their true identity, so it could be a red flag if something seems off about the website—like when all of the contact information is missing.
Look for evidence of legitimacy. If there’s a social media presence for what seems like an up-and-coming crypto startup (like Twitter), look at how active those accounts are and what kind of interactions take place on them before investing anything into their business model. Suppose these accounts don’t exist within popular networks like Facebook or Twitter. In that case, this could be another strong indicator that something isn’t right with this particular cryptocurrency startup brand!
