Scammers are everywhere, and the cryptocurrency world is no exception. Fraudsters often pose as new or established companies that offer fraudulent cryptocurrencies or tokens, claiming that the company is entering the crypto world by issuing them. Whenever you trade Bitcoin on a legitimate exchange, the chances of fraud are small. However, the more you dive into the unregulated pool of unknown cryptocurrencies, the greater the risk of fraud in your investment.
Investment scams involve a bad actor who incites people to send their cryptocurrencies to the fraudster with the promise of “huge profits”. Crypto scams are a type of investment fraud that can take many forms, from identity theft scams to carpet thefts. Since cryptocurrency blockchain technology is not regulated by a central authority such as a bank, bad actors can easily take advantage of hopeful investors. Scammers also send emails that claim to have a record of adult websites visited by the user and threaten to report them unless they share private keys or send cryptocurrency to the fraudster. The cryptocurrency and ICO spaces offer enormous opportunities for investors who have done their homework and can make wise investment decisions.
Especially if you're just starting out, it's best to stick with the most liquid and well-known cryptocurrencies that have real utility and that you can track accurately. So how do you know which cryptocurrencies are legitimate? Here are some tips to help you identify trustworthy cryptocurrencies:
- Check out the developers and management team behind the project. The more experienced and reputable they are, the better.
- Do your research on the Internet for the name of the company or person and the name of the cryptocurrency, as well as words such as “review”, scam or “complaint”.
- Be wary of any offers that seem too good to be true, such as cryptocurrencies 5% below market value.
- Stick with well-known cryptocurrencies that have real utility and that you can track accurately.
- Be aware of any emails or messages that threaten to report you unless you share private keys or send cryptocurrency.
Bitcoin and Ether are well-known cryptocurrencies, but there are many different cryptocurrencies and new ones are still being created. If you detect crypto-related scams, it's important to report it, as it helps officials to investigate fraudulent companies and prevent them from attacking other people. By taking these steps, investors can protect themselves from becoming victims of crypto scams.