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How To Identify A Cryptocurrency Scam

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How To Identify A Cryptocurrency Scam

Feeling hesitated while entering the world of virtual currencies? It’s not just you. You can make giant rewards by trading your crypto assets safely. All you have to do is to be cautious while investing. It’s important to understand how cryptocurrency is distinct from cash and other payment methods, as well as how to identify suspicious activity in cryptocurrency accounts, before using or investing in the technology.

Even seasoned investors may struggle to keep up with the ever-changing terminology associated with blockchain and cryptocurrencies. Even though there’s no way to know for sure whether a cryptocurrency or blockchain-related firm is real or will succeed, the following methods may help you reduce the risk of being duped.

Note: Here are some of the best hands-off passive crypto investment options to go for.

Tips To Recognize Fake Cryptocurrencies

How can you recognise a cryptocurrency scam? Well, we’ve bent over backwards to help you know cryptocurrency scams. We’ve gathered together some great con tricks that fraudsters use to prey on you. Let’s put the spotlight on them.

Some of the red flags to spot in a cryptocurrency scam

1. Promises Of Guaranteed Returns

Investments may go down as well as up in value, so investors should be cautious of any investment that claims to offer a return. It’s a red sign if a crypto product guarantees you’ll earn money.

2. A Poorly Written Or Missing Whitepaper

Whitepapers are one of the most important parts of an ICO, thus they should be included with every cryptocurrency. The cryptocurrency’s whitepaper must discuss the protocol’s architecture and implementation. You should proceed cautiously if the whitepaper doesn’t sound right or doesn’t even exist. Scammers often create typos and other mechanical errors.

3. Overmarketing

All firms advertise. Yet, crypto scammers entice victims by pouring resources into marketing including sponsored advertisements, influencer outreach, traditional forms of advertising, and more. Do not rush into investing in a cryptocurrency without first verifying any promises made in marketing materials.

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4. Unidentified Team Members

It should be able to determine who the driving forces are behind most investing firms. In most cases, this involves having an active social media presence and a page where the investment’s management team can be easily identified. Be wary of a cryptocurrency if you cannot determine who controls it.

5. No Effort On Your Part

In general, it’s best to assume that any investment opportunity that promises “free money,” whether in fiat currency or cryptocurrency, is a hoax.

6. Claims Without Evidence

It’s definitely a fraud if someone is trying to sell you on an “opportunity” without providing any specifics. If you try to gain additional information by asking questions and you don’t receive any answers, it’s definitely a fraud.

PS: Find trusted brokers who offer fair trading conditions and are fully backed  by the trading community. 

7. Impulse To Act Quickly

Many con artists use the pressure of time constraints to get their victims to comply with their demands. Keep your guard up if someone attempts to pressure you into doing anything right away.

Don't be a victim of cryptocurrency scams

8. False Claims Of Celebrity Support

Scammers in the cryptocurrency industry frequently use the credibility of well-known public figures, successful entrepreneurs, or influential opinion leaders to fool their victims. In some cases, this entails peddling fake coins to unsophisticated buyers. These frauds may be rather elaborate, with fake celebrity backers like Elon Musk and well-designed websites and pamphlets.

9. Predatory Cloud-mining Schemes

In cloud mining, you rent mining gear from a third-party provider in return for a fee and a percentage of the profits. In principle, this opens the door to remote mining without the need for specialised gear. In spite of this, many cloud mining services are fraudulent or at best inefficient, with users losing money or making much less than was promised.

10. Initial Coin Offering scams (ICOs)

Young crypto enterprises may acquire capital from potential customers via initial coin offerings (ICOs). In return for donating operational cryptocurrencies like bitcoin or another established cryptocurrency, clients are often given a discount on the new crypto coins. Criminals behind some ICOs have gone to extensive measures to trick investors, including hiring bogus offices and producing high-end marketing materials.

How To Avoid Becoming A Victim Of Bitcoin Fraud

Unfortunately, many crypto scams are complex and persuasive. These are some preventative measures you can take:

1. Keep Your Wallet Safe

Having a crypto wallet with private keys is essential for any cryptocurrency investment. It’s probably a fraud if a company needs you to hand up your keys before they’ll let you invest in anything with them. Protect the secret code to your wallet.

2. Use A Legit Digital Wallet

Be sure a crypto wallet software is legitimate by merely sending a little amount the first time you use it. While upgrading a wallet app, if you detect any unusual activity, you should stop the update and delete the software.

3. Do Research Before Investing

Don’t risk your money on something you don’t fully grasp. Wait until you fully understand how a cryptocurrency works before deciding whether or not to invest in it.

4. Do Not Rush

Fraudsters often pressurise users through various strategies to get their victims to part with their money, such as the promise of immediate rewards or a reduction in the cost of future purchases. Before putting up any cash, be sure you’ve done your homework.

5. Avoid Clicking On Social Media Ads

Crypto fraudsters often utilise social media to advertise their fraudulent schemes, so you should avoid clicking on any ads you see there. They could offer freebies or money out of thin air, or they might utilise stock photos of famous individuals without permission. Do your research and have a healthy dose of scepticism when crypto chances are presented on social media.

6. Don’t Bother Answering Unsolicited Calls

An investment opportunity in cryptocurrency offered to you out of the blue is likely fraudulent. Never give out personal information or provide money to someone who approaches you over social media.

7. Get Your Apps Only From Verified Marketplaces

The Google Play Market and the Apple App Store are two of the safest places to get programmes, even though phoney apps may and do make it into these markets.

8. Stay Away From “Get Quick Rich” Schemes

There is no magic that can make you rich quickly. Guaranteed profit schemes and “get rich quick” schemes are red flags for fraudulent businesses. You should be aware of anything that appears too wonderful to be true.

10. Invest Small

Last but not least, like with any financial venture, you should never risk money you can’t afford to lose. Cryptocurrency is volatile and speculative, so it’s important to recognise the dangers even if you’re not being scammed.

Final Words

Popular cryptocurrencies are not fraudulent schemes. But, if you’re unfamiliar with a specific cryptocurrency, it’s in your best interest to learn more about it. Read the project’s whitepaper, learn about the team behind it and how the currency works, and check out what others have said about it. To avoid being duped, you should always trade your crypto assets using a reliable crypto trading platform like Ethereum Code. 

 

It is crucial to take immediate action if you have fallen victim to a bitcoin scam and have paid or exposed personal information. Criminals that commit crypto fraud often resell the information they steal to others. Changing your login credentials is a necessary step in stopping any additional harm. You may notify the site in question if you’ve been the target of a crypto scam on social media. 

Note: Cryptocurrency trading robots can give you an edge over other traders thanks to their accurate signals.

Drop a comment or contact us with any queries.

 

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