7 steps to avoid cryptocurrency scams
New York City : Cryptocurrencies are an increasingly popular way to transfer money quickly and easily, but they also represent an attractive target to those hoping to scam unsuspecting investors out of their hard-earned money. When you’re dealing with something as new and exciting as cryptocurrency, it’s easy to feel like the only person in the world who doesn’t know what you’re doing – which makes you much more susceptible to scams targeting people who might not be fully informed about how cryptocurrencies work. If you want to keep your money safe from cryptocurrency scams, follow these tips for avoiding them.
1) Do your due diligence before investing
There is a lot of misinformation about cryptocurrency scams in the press, but there are also plenty of scam warning signs you can watch out for. Here are seven tips that can help you avoid investing in a cryptocurrency scam. Do your due diligence before buying any tokens or coins. If it’s too good to be true, then it probably is! Do not rely on anything posted on social media or forums as trustworthy information. Use Google and other search engines to research everything. Don’t just take someone else’s word for it and never send crypto to an email address – crypto needs two keys (a public key and a private key) and no one should ever ask for either from you via email. Watch out for pump and dump schemes: they’re when people artificially inflate prices of something by creating fake hype around it so they can dump their holdings at inflated prices. Research whether something is actually what it claims to be: don’t just blindly trust an ICO team because they say so. Check if the project has already been successfully completed with a different coin or token.
2) Don’t get caught up in hype, you can buy at any time
Don’t get caught up in the hype. You can buy any time. Check out CoinMarketCap for a list of prices for bitcoin, ether and other cryptocurrencies. It’s always better to do your own research before buying, but here are some things you might want to consider:
Does the coin have a future? Think about whether the cryptocurrency has a real-world use case or is just trying to be all things to all people. Can this token realistically achieve that goal? What differentiates it from competitors? What will make it succeed? If there’s no clear answer to these questions, then think twice. Make sure you’re comfortable with the team behind the project: What makes this team qualified to pull off what they say they’ll do? Do they have past successes or experience related to their project goals? Are their credentials verified by others who are knowledgeable about blockchain technology and cryptocurrency markets? Take a look at who supports them with money, such as venture capital firms or angel investors.
3) Read between the lines
The same way you would avoid most any other scam, such as a fake job offer or a fraudulent sale of goods, the following tips can help you avoid cryptocurrency scams:
-Don’t share your private key with anyone. -Only invest what you are willing to lose. -Remember that there is no guarantee that any particular cryptocurrency will be successful. -Never invest in something just because it sounds too good to be true. -Beware of coins with low volume and market cap. You might want to consider these pump and dump schemes instead. -Be wary when investing in ICOs (Initial Coin Offerings). Just like regular IPOs, they have the potential for significant profit but also significant risk if their goals are not met within time frames outlined by the company issuing them.
4) Use basic common sense
1. Know that a good rule of thumb is that if it sounds too good to be true, it probably is.
2. Research the company and people behind the offer. 3. If something sounds too complicated or technical, look for an easier-to-understand explanation or contact the company for more information before investing. 4. When considering the merits of an investment opportunity, don’t just focus on the positives; consider both the pros and cons. 5. Remember that while blockchain technology offers great potential, not every new technology turns out to be game-changing. 6. And finally, always do your own research and invest what you can afford to lose—don’t invest money you need for living expenses or other important financial goals!
5) Ask yourself questions like ‘why?’ and ‘how?’
How can you tell if a coin or token is a scam? The SEC has three main criteria for determining whether something qualifies as a security.
Is there an expectation of profit from the investment in the form of dividends, interest, or capital appreciation?
Are purchases made with an expectation of profit reliant on the managerial efforts and actions of others?
Are buyers led to believe that someone else’s income may be necessary for their investment in this asset to generate a return? Do they rely on action by those other people to realize any potential profits? If so, it is likely a security.
6) Research established companies/brands first (make sure they exist!)
1. Verify the company or brand name with a search engine and through social media sites like Twitter, Facebook, LinkedIn, etc. 2. Do not trust links posted on forums or from people you don’t know. 3. Use a search engine that supports site: searches (e.g., Google) 4. Review the company website for contact information and addresses 5. Look for something in writing from the company or someone associated with it 6. Check out reviews of the company and associated products 7. If an offer seems too good to be true, then it probably is! 8. If you’re still unsure about what the investment is all about, talk to an expert before making any decisions 9. Watch out for promotional language and unsupported claims
7) Check out reviews on Twitter, Reddit, Medium, Youtube etc.
Checking reviews on social media is a great place to start. You can also do an internet search for articles, videos or podcasts discussing the company and see what people are saying. Another way to know whether or not it’s legit: use common sense! If you would not give your credit card number out over the phone, don’t put in your cryptocurrency wallet information either. Be skeptical of projects that seem too good to be true (they usually are) and ask yourself these three questions before investing any money: Who am I giving my money to? What will they do with my money? How will they make more money with my money?
Conclusion
1. Make sure you are investing in something that aligns with your goals and is a good fit for your risk tolerance. 2. Do not invest more than what you can afford to lose, no matter the investment. 3. Always be cautious of investments that promise extremely high returns with little-to-no risk involved 4. Remember: there’s no such thing as a get rich quick scheme or free lunch 5. Use common sense and ask questions about things that don’t make sense 6. If it sounds too good to be true, it probably is 7. Try doing some research on companies before making any purchases . Find out if they have been around long enough to see how they handled their past success and if they have seen major successes recently. Doing this will help ensure that when you do decide to buy, the company is worth purchasing from.
