While some still debate the quality of cryptocurrency investments, there’s one aspect everyone can agree on: scammers are everywhere. It may become overwhelming to learn the ropes of cryptocurrency; not to mention having to dodge the pitfalls of illegitimate coins or scam artists. We’re listing 2 of the most common cryptocurrency scams, as well as how to avoid them. Safe investing is better investing.
What it is: Initial Coin Offerings (ICOs) are great opportunities to involve yourself in new cryptocurrency projects early on. ICOs are fundraising ventures for new cryptocurrencies. While many are completely legitimate, ICOs are also an easy way for scammers to disguise fake projects among real ones.
How to avoid it: Avoiding ICO scams is very dependent on the amount of research you do. Legitimate projects will have business plans, early-release products, or may be backed by people with experience or professionals in the field. ICOs with little or no explanation of their vision, no team members, no business plans, or lack of any ideas for products could very well be a scam.
What it is: Unregulated exchanges are inevitable in a world of virtual currencies. These scams are typically easy to spot as they are masked as the ‘too good to be true’ offers. If some stranger is offering you a ‘once in a lifetime deal’, let’s just say they probably aren’t doing so out of the kindness of their heart. The motive is most likely coming from inside their pockets.
How to avoid it: One of the easiest ways to avoid this scam is to never go through any random person. Again, do your research before you invest. Use trusted and secure applications for investments. Many scammers build a presence among cryptocurrency groups across social media and will target beginners, people asking questions, or people advertising having money to invest. Typically the best investments will be ones you seek out, and not the ones that come running to you.
Tips for safer investing
Completing your research is a valuable way to spend time before choosing to invest. Many scammers can be lazy, which means it can be easy to spot an illegitimate offer, or perhaps they have already been identified as a scammer. Investing safely also takes steps of precaution, regardless of avoiding scams. These 3 additional tips ensure a safer experience when investing:
1. Never invest money you can’t afford to lose. Any form of investment has some amount of risk, meaning there’s always a chance of losing what you give. To play on the safe side, you should never spend money on investments if you can’t afford to lose it.
2. Invest in established products. While ICOs are a great opportunity to involve yourself in a variety of projects, some might never get off the ground. Conduct research before investing in ICOs or early-stage products to understand the business model of the project. Another option is to wait until the project is in its later stages before investing.
3. Try micro-investing. Investing doesn’t always have to be a large, intimidating process. Micro-investing is a perfect opportunity to emerge yourself in the investment world with baby-sized steps. Applications like Skraps.io help users avoid the scams, invest what they can afford, and create a safe environment for investing.