Where money is concerned, scams always follow. And the same is true with cryptocurrency.
Confused about cryptocurrencies like Ether (linked to Ethereum) and bitcoin? It’s not just you. Learn how cryptocurrencies differ from cash and other payment methods before using or investing in them. You should also be aware of cryptocurrency scams and how to spot potentially compromised cryptocurrency accounts.
How to spot cryptocurrency scams
Promises of guaranteed returns
Because investments can go up as well as down, no financial investment can guarantee future returns. Any cryptocurrency offering that makes a guarantee that you will profit is a warning sign.
A poor or non-existent whitepaper
Since a whitepaper is one of the most important components of an ICO, every cryptocurrency should have one. The cryptocurrency’s design and operation should be covered in the whitepaper. Be cautious if the whitepaper doesn’t make sense or, worse yet, doesn’t exist.
All companies market themselves. But investing heavily in marketing, like internet advertising, paid influencers, offline promotion, and so on, is one way that cryptocurrency scammers draw people in. This is intended to reach as many people as possible in the quickest amount of time and to quickly raise money. Consider stopping and doing more study if you think a crypto offering’s marketing is pushy or makes grandiose claims without any evidence.
Unnamed Team Members
It should be possible to identify the primary individuals behind the majority of investment businesses. This typically entails accessible bios of the investment’s managers as well as a vibrant social media presence. Be wary if you can’t identify the owner of a coin.
Whether in cash or cryptocurrency, any investment opportunity promising free money is likely to be fake.
Finally, any and all ICO or for that matter, any business investment carries the risk of turning sour and the money invested may never come back.