NewsRed Flags to Look Out for When Buying Cryptocurrency

Red Flags to Look Out for When Buying Cryptocurrency

-

- Advertisement -

CNBC report shows that there are 19,000 crypto coins present on plenty of blockchain networks. Unlike typical financial institutions, cryptocurrencies are not government-insured. Thousands of them disappeared like TerraUSD and Luna. Outright scams are common with badly conceived, received, or managed cryptocurrencies. With such a large number mentioned above, even specialists can make mistakes with these enormous options.

So spotting crypto scams is vital. Don’t overlook early warnings. Read more about the list of ten warning signs that your crypto investment might be a fraud.

1. Unrealistic assertions

Crypto scams often make exaggerated claims. If a crypto sales website promises the moon, run. Never trust a deal that makes a lot of empty promises. Advertisements guaranteeing tenfold returns on investments quickly are a red flag. Be wary of any investment that promises guaranteed returns. 

Another case is a venture pledge to revolutionize blockchain with its “new and advanced” system. Invest cautiously till the project team can prove its claims.

2. Without a listing on a trusted exchange

Before buying cryptocurrency, check its presence on trusted exchanges like Coinbase and Gemini. You may want to rethink your investment if cryptocurrencies are not present and traded on reliable platforms, they are likely fraud. Scammers rarely fill out the paperwork to join an exchange.

3. Shortcomings in the ICO white paper

If the white paper for an ICO is inadequate, you should reconsider investing. The whitepaper should explicitly describe the project, staff, and cryptocurrency. When details are missing, an ICO is probably not worth investing in. Do your research before investing in an ICO. Investing time and effort in a project takes trust.

4. Incomplete or no ICO white paper

When an ICO lacks a whitepaper, it’s a warning: the project hasn’t been given enough attention, the team is incompetent, or it could be a fraud. Before investing, read the ICO’s whitepaper..

5. Taking the money and running

Pump-and-dump ICOs should be avoided. These techniques boost cryptocurrency’s value. If the price rises and attracts more buyers, current owners may sell, leaving new buyers with lower cryptocurrency value. If you want to know if a cryptocurrency is a hoax, you should look into who is marketing it and how much it is worth.

6. Controversial celebrity support

Celebrity endorsements can be dishonest. DJ Khaled and Floyd Mayweather were paid to spread the word about Centra Tech in 2017 without revealing their financial ties. Say a renowned individual pushed a coin and you want to acquire some. Look for these:

Step 1: Check if they have sponsored frauds or dubious charities.

Step 2: Identify project problems if they have any warning signs.

Step 3: To get a second view, talk to a financial advisor.

Celebrity endorsements can help you identify intriguing new investing possibilities, but they shouldn’t be your only consideration.

7. A small, dormant community

Before investing, consider the size and activities of a cryptocurrency community. A tiny group, lack of support, or belief could kill the project. A large, active community indicates significant involvement. Success is implied for those projects. Due diligence must consider the area’s community and activity level.

8. There is little to nothing available about the company’s history or its founders

A website should introduce the project’s creators. If online information is scarce, act with caution. Secretive teams may have something to hide. You shouldn’t invest in projects whose authors are unknown.

9. Team members that are disorganized or lack experience

If the team is disorderly or inept, that’s a red flag. The company’s leaders must have expertise and skill. Look online for investor reviews to augment your research. The social media pages of the team show how they communicate with fans, investors or other stakeholders.

10. The source code is not publicly available.

Anyone is free to read, download, and modify the source code for open-source projects. For the project’s credibility, this openness is mandatory. However, in a closed-source one, the source code is not made available to the public.

It’s hard to tell if the project’s legitimacy is threatened by the lack of information provided. Fraud is unfortunately ubiquitous in the technological sphere, and scammers frequently try to obfuscate their methods.

Because of this, you should exercise caution before committing to a closed-source endeavor. When in doubt about a project’s reliability, it’s best to go with an open-source option out of an abundance of caution.

Conclusion

Perhaps you might avoid becoming a victim of a crypto scammer by keeping an eye out for any of these warning signs. Never put in more money than you are willing to lose without first doing some research.

Keep these considerations in mind when you evaluate potential crypto investments. There are more trustworthy ways to increase your wealth, so if an opportunity seems to be exaggerated with high profit or improbable, it generally is a scam.

Andrew Edney
Andrew Edneyhttps://moviesgamesandtechcom.wpcomstaging.com
I am the owner and editor of this site. I have been interested in gadgets and tech since I was a little kid. I have also written a number of books on various tech subjects. I also blog for The Huffington Post and for FHM. And I am honoured to be a Microsoft MVP since January 2008 - again this year as an Xbox MVP.

Stay connected

7,137FansLike
9,169FollowersFollow
27,500SubscribersSubscribe

LATEST REVIEWS

You might also likeRELATED
Recommended to you