How to know if it is a scam or not? How to spot the red flags? Is this or that ICO legit? And how can you distinguish between legitimate crypto investment opportunities and scams?
As the blockchain revolution grows, so does the number of cryptocurrency scams out there. If you’re thinking about investing in an ICO, be sure to read our guide on how to tell if it’s a scam or not first!
How to tell if it is a Cryptocurrency scam
4 ways to determine if a Cryptocurrency Scam
Before investing in any cryptocurrency, you’ll want to make sure you do your research. There are plenty of resources online that can help steer you clear of scams and how-to articles that will give you tips on how to invest wisely. For example, let’s say a new crypto network launches and they want investors.
They offer some sort of bonus or incentive when people buy into their currency using Bitcoin as an intermediary currency. If there are other currencies out there, why use bitcoin?
Also, try and find out what everyone else who has invested feels about their investment by searching for reviews online – if too many people complain about issues like security breaches then chances are it might be best to avoid.
On your hunt for good crypto investment, you should take things slow. Don’t jump in at just any old opportunity that comes along and don’t invest more than you can afford to lose. Yes, there are lots of success stories out there where people have made millions from cryptocurrency investments,
but these come from people who know what they are doing – they do their research and they only put in what they can afford to lose. So don’t try and emulate them! Doing so could be disastrous – especially since cryptocurrency trading markets aren’t regulated by financial authorities like banks, insurers, and stock exchanges.
Tip 1
Understand what cryptocurrencies are. Investopedia defines cryptocurrency as an encrypted decentralized digital currency transferred between peers and confirmed in a public ledger via a process known as mining.
There are three key parts of that definition that you need to be aware of: they’re decentralized, they use encryption (to keep your money safe), and they are secured by miners (who confirm transactions).
Investing in cryptocurrencies can be risky. Like in any investment, you should do your research and talk with people you trust before putting money into an asset that you don’t fully understand. Just because companies such as Overstock (NASDAQ: OSTK) accept payment in Bitcoin doesn’t mean that it’s a good idea for you to invest in Bitcoin.
In fact, just last month, after reporting third-quarter earnings, Overstock’s CEO stated that he expects cryptocurrency prices will eventually come down from their current highs. Cryptocurrencies are very volatile, meaning they can swing significantly up and down on any given day — sometimes even losing 10% of their value overnight!
So how do you protect yourself from cryptocurrency scams? Here are some tips:
Tip 2
Use specific numbers in your title. Here are examples of titles using numbers: 7 ways you can promote your product, 3 things that businesses should avoid before hiring freelancers, 5 tips for choosing SEO services, and so on.
Your content will automatically be ranked higher because these keywords are being searched more often on Google. The readers of your articles will also find what they’re looking for easier as well. For example, people who want to learn how to promote their products through social media channels will click on an article called 7 Ways You Can Promote Your Product.
This way you provide more value by catering directly to those looking for information about a particular topic instead of giving them general advice based on broad keywords like digital marketing.
In addition, you can also use numbers and statistics in your text. I have noticed that these tend to rank well on Google searches.
If you’re writing about cryptocurrency scams, for example, instead of saying people are losing their money online by investing in crypto schemes, you could mention how many people have lost large sums of money
because they didn’t do proper research and ended up paying someone who was scamming them. Here’s an example: 3 Million dollars has been lost since Bitcoin was created.
If you write your own content and have Google Analytics installed on your website, you can see what keywords people are using to find your website.
For example, I noticed that many people were searching for tips for hiring freelancers in Google when they arrived at my site. This then became an interesting topic for me because I knew there was a real need for that information.
Tip 3
Scamming can be profitable, which means scammers will continue to make their attempts. The main thing that sets scams apart from legitimate businesses is that scammers want your money and will use any means necessary (including deception) to get your money.
If you’re investing in an ICO, find out everything you can about who’s running it and what business experience they have (and don’t rely on a white paper alone). The same goes for investments in stocks and private companies.
You should also check with other people who might know more than you—family members, friends, and professional acquaintances (e.g., accountants), etc.—to get their opinion on the matter.
If you’re getting pressure from someone to make an investment, especially if they’re offering you incentives (e.g., free tokens, money) to make that investment, then there’s a good chance it’s a scam.
Don’t forget that scammers want your money and won’t let go easily. If you think you might be facing some sort of deceitful pressure when making an investment—online or offline—then don’t just pull out; instead, contact law enforcement right away.
If you think you’ve been deceived, defrauded, or scammed by someone offering an investment opportunity on behalf of another company, then contact law enforcement.
It’s also a good idea to warn others about scammers who are operating in your area (e.g., making calls and leaving voicemails). Scamwatch offers more information on how to protect yourself from investment scams.
Tip 4
How to know if an ICO is a Scam or Not (and how to protect yourself) – The Ether Review: It’s hard to be sure whether you’re being scammed when investing in an ICO. There are some signs you can look out for, though. Things like fake team profiles and plagiarized white papers can give clues as to whether something’s fishy.
If in doubt, ask on social media channels for people’s experiences with an ICO; people often post about which ones are legit, too. And of course, there are forums where people discuss scams and which sites have unbiased reviews of coins—for example Reddit.
This can be done on social media channels. One thing to look out for is fake team profiles. If they have no team profile on their website and yet claim they have some sort of track record, there’s usually something fishy going on. If in doubt, ask fellow investors about how trustworthy an ICO looks; that way you know where you can get your information from!
Forums like Reddit also contain unbiased reviews of coins and tokens. And if you find that someone who’s supposed to be one of the big players behind an ICO doesn’t actually exist, watch out! Tip 5: How do I know when my crypto investment has gone sour?
Also Read: 6 Tips To Prevent Hackers From Intruding On Your Crypto Wallet
Conclusion
When trying to figure out if a cryptocurrency is a scam, there are five questions you should ask yourself. The first: Does it exist? The next four are: What problem does it solve, what proof exists that shows it solves that problem, who’s behind its development and marketing,
and finally, what makes people want to use/buy/mine (or whatever) in the first place? If you can’t answer those five questions satisfactorily—because either A) your answers are all I don’t know or B) your answers just seem too good to be true—you should probably walk away. And avoid any website that promises guaranteed returns of 100x. Because they’re lying.
So, how do you know if your investment in a cryptocurrency is actually worthwhile? Well, that’s what we’re here for. CoinCentral is a publication that specializes in providing accurate and up-to-date information on cryptocurrencies like Bitcoin and Ethereum,
as well as other blockchain technologies such as initial coin offerings (ICOs) and smart contracts. Since we want you to succeed with your cryptocurrency investments (which at their very core are supposed to be risky but profitable),
our mission is simple: provide you with education, information, and analysis so that you can make informed decisions when it comes to cryptocurrency investing.
