How to avoid Cryptocurrency scams
Do you still remember the craze that was going on last year about cryptocurrencies? It was complete madness, everybody was trying to get their foot into the door of cryptos. Some of these people were met with a warm embrace of a professional company, but for some, the door just led to a massive black hole.
Yes, it is no secret that cryptocurrencies are connected to scams, we are able to admit that, but it doesn’t mean that it isn’t a good industry to look into. Just remember all of the Forex scams you’ve heard about, even pyramid schemes and etc. No matter what there are always scams connected to a financial industry and it is your responsibility as a user to be prepared to avoid them. Here we will discuss how you can avoid crypto scams online.
Common ways people get scammed
Initial Coin Offerings (ICOs)
ICO is short for Initial Coin Offering, they’re mostly like IPOs Initial Public Offerings. These acronyms are used when companies are selling their core product to the public at an initial price in order to gather funds for future plans. Pretty much like an investor meeting, you offer them some of your money and they promise to double it or triple it. In this case, you won’t be buying a part of the company, you’ll be purchasing their tokens, their main product and hoping that they will be able to grow its price down the line so that you can sell them later for a profit.
However, there are numerous problems connected to ICOs. Sometimes a company that has absolutely no future plans will announce an ICO and take the company in a completely different direction than you would expect, maybe even close down the company the moment it reaches its fundraising goals, leaving you with worthless coins nobody wants to buy. We’ve already made an article about choosing the right ICO and recommend you look through it to get a better understanding.
However, the most important things are still needed to be mentioned here. Always look at the white paper of the company, check their team and their backgrounds, see if they’re being considered for a license and most of all, review their future plans. Only after these are taken care of, can you start investing.
Cryptocurrency companies knew what was driving their core customer base to invest in their cryptos. They knew that building up enough hype, spending a lot of money on marketing and featuring a few actors here and there would help them achieve their goals for gathering large amounts of money.
Look at BitConnect, their conferences used to be an internet sensation. They hired a few hypemen to drive the character of the company, made it relatable and actually displayed themselves, trying to show a lot of transparency. However, their primary selling point was their promise for winning of more than 200%. Now, what’s so weird about it? cryptos have done even more in terms of percentage, but it’s important to always know how these companies are going to achieve it. BitConnect’s main argument was the hype, they were going to increase the price by popularity only, which ultimately turned out to be a lie obviously.
Now everyone involved with BitConnect is trying to hide away from the media as much as they can as they realize, that they contributed to a scam, some willingly some unwillingly. Therefore, always make sure that the company is promising realistic gains, don’t get sold for the “get rich quick scheme”.
An alternative to crypto trading
Trading cryptos may be very pleasing on an individual platform or a crypto exchange. But it is no secret that these platforms aren’t very reliable. Sure the fact that you own the crypto and can do whatever you want with it is nice, but it still doesn’t outweigh the security issue.
The next best thing you can do is crypto CFD trading. You’ve heard about it, right? If not, let us explain it a bit.
Crypto CFD trading is normally provided by regulated and reliable brokers, which means that in terms of security you are covered the moment you sign up. The biggest minus is that you won’t be actually buying cryptos, you’ll be buying contracts and trying to guess the price increase or decrease.
Although ownership can be a deterrent, there are a lot more positive aspects that crypto CFD platforms have. The moment you start comparing crypto CFD platforms, you’ll see that all of them provide Leverage trading, which means that you can trade with more money than you deposit, increasing your profits. Now, this could sound sketchy, but it’s like this pretty much in any other market.
As a conclusion, we’d like to say that we have nothing against cryptos. They are an amazing asset that every emerging trader should consider looking at. What we’re trying to imply is that, like any other asset, it is prone to scams, so always keep an eye out. No matter which option you go with, always remember to look at the future of the asset, look at its current state and review the company that is offering it. Don’t always rely on influencer as they may not be aware of what exactly they are promoting. Stay safe!