Today, many companies are starting to incorporate cryptocurrencies into their businesses as a means of diversifying their portfolios and improving efficiency. Most people will agree that the technology behind crypto is revolutionary and promising. However, this new technology has made it easier for scammers to take advantage of investors in the market. Here are some ways to get ahead of a potential crypto scammer before they strike.
What is a crypto scam?
A crypto scam happens when someone makes false promises to investors in the cryptocurrency market. The most common type of crypto scam is known as a pump and dump. This scam occurs when a person or company with little knowledge of how to use blockchain technology buys up large quantities of coins and then quickly sells them for an increase in value before anyone else can see that the price has skyrocketed.
In contrast, many legitimate companies are trying to help investors diversify their portfolios and make it easier for them to invest in cryptocurrencies. They’re also looking for more efficient ways to pay employees internationally, which is where they first started thinking about integrating cryptos.
It’s important to know what can be considered a potential crypto scam so that you can spot those happening around your business before it’s too late. With the way cryptocurrencies are growing, it’s only a matter of time before these scams turn into bigger problems for businesses and individuals alike.
How to identify a crypto scam
Crypto scams are becoming more and more common. In fact, cryptocurrencies were involved in nearly three-quarters of all scams in 2018.
Unfortunately, it’s not always easy to identify a crypto scam. Scams are often hard to detect because they tend to masquerade as legitimate cryptocurrency ventures. You can identify a scam by asking the following questions:
Is the project simple or complicated?
Is the project feasible given its goals?
Does the project have a team who can achieve their goal?
Does the project seem like an obvious scam from its name or description?
Is there enough information provided about the project?
How to avoid being the victim of a crypto scam
There are many ways that scammers initiate cryptocurrency scams. Some of the most common methods include:
1) Social engineering
2) Fake websites
3) Fake news
4) Ponzi schemes
5) Coin-hacking
6) Email phishing scams
7) Crypto exchange hacks.
As you can see, it’s not hard to get caught up in a crypto scam. To avoid being a victim of one, here are some simple tips to follow:
1) Don’t trust anyone outside of your business who requests payments in crypto. This includes friends, family members, and people on social media. If someone approaches you with an investment opportunity involving crypto, they may be trying to initiate a scam. Make sure to talk through the details with them before investing any money.
2) Make sure that any website you’re visiting is legitimate. If you come across a website that claims to provide information about cryptocurrencies but it appears to have been made with no effort or budget, chances are it’s fake! Similarly, if you see a website advertising coins with no information about the coin itself or its future plans, this is also likely a scam.
Don’t trust too much in your trading app
It is not uncommon for cryptocurrency traders to use a trading app to help them find the best deals in the market. However, these apps can be deceiving and lead investors down the wrong path, so it is important to make sure you are not relying on them too much.
For example, one of the most popular trading apps is Coinmarketcap. This app does seem legitimate at first glance with its clean design and easy-to-navigate interface, but upon further inspection, it has several red flags that should raise your suspicions. For starters, Coinmarketcap actually owns a lot of cryptocurrencies listed on their site. This makes it difficult to know how fair they are when reporting prices or listing updates. Secondly, this app often shows listings without any credible sources attached as “coming soon,” which could be anything from a scam coin to just something that hasn’t been released yet.
It’s always a good idea for individuals looking for crypto investments to do due diligence before making any financial commitments with their money or time. Keep an eye out for potential scams and make sure you research your investments before you put your trust in any one platform or app.
What are some common signs of a crypto scam?
If you’re new to the crypto market, it’s easy to get tricked into believing that you’re investing in a legitimate company. Here are some signs that should raise red flags:
1. Promises of quick and easy profits
You should be wary of any company promising to make your life easier in exchange for your investment. Many companies will say they offer high returns on investments as a means of enticing investors. In reality, these returns are often illusory and don’t materialize for most people in the end.
2. Complicated processes and terms
Many scams will use complicated terms and processes to persuade people into investing their money with them. They may also have a lot of “teaching” videos or other resources designed to inform potential investors about the process so they can better understand what’s happening. It is likely that these resources are directed towards those who are naive or new to the crypto market, not those who know how it works already.