Know the Signs of Cryptocurrency Scams
Unfortunately, there is no agreed-upon “perfect” level of quality control when it comes to crypto products, especially when it comes to startups or small businesses that are running off the black market. Since the product you’re investing in is a cryptographic token — often referred to as “a crypto coin,” “a coin,” “a coin store,” or “a coin exchange” — it can be difficult to verify its legitimacy. This is especially the case for small businesses that may be run by individuals who can’t afford the high cost of properly vetting security. You’re also taking a risk if you’re getting into an ICO because there’s little to no regulation at this stage.
Check if they’re Blockchain-powered
If a blockchain startup doesn’t clearly explain what it’s about, then that could be a sign that it’s a scam. Crypto experts also recommend vetting a cryptocurrency-focused company if it can’t explain how it uses blockchain technology or the source code that powers its platform. Blockchain is a highly technical field that requires an understanding of cryptography to learn. That’s because there’s no single, standard definition of blockchain technology, and each company using it could implement a different algorithm.
Blockchain’s complexity isn’t always a problem, as large corporations like IBM and Deloitte are making their own blockchains, and this technology is helping them streamline their businesses.
Beware of Fake News Sites
A fake news story that makes its way around the web may actually be the latest fraud from a big player on the cyber crime market. Phishing sites can deliver an unexpected surprise, like malware or a keystroke logger that steals your banking and credit card information.
Some scammer operators have become particularly savvy and have been directing their scam campaigns towards crypto users. Below are some of the most common websites, along with advice on how to identify a phishing scam.
Fake Hashcash: This website doesn’t exist. Instead, the site pretends to offer free Hashcash with a download link. However, a malicious site was recently spotted offering users real Hashcash without any apparent intention of actually providing it.
Always Double-check the Source’s Credibility
Your best protection against cryptocurrency scams is good-faith research by people you trust. You can look up organizations on the Better Business Bureau and, if you’re feeling a bit more skeptical, you can also call your local Better Business Bureau, check with the publication Cryptocurrency & Blockchain News, and, as mentioned, consult a site like Crypto Scam List. If you see an obscure startup, take the time to research the organization before you give your money. Also, consider whether the product that they’re marketing is truly solving a problem you face. Always double-check the source’s credibility.
Watch for Misleading Marketing Ploys
These days, there are a lot of cryptocurrency and blockchain startups that are downright deceptive, but not all of them.
Beware of Red Flags
When searching for a financial advisory or a cryptocurrency trading company to manage your money, there are certain signs to look for:
Demanding some kind of fee up front , such as a minimum purchase amount or a monthly subscription.
, such as a minimum purchase amount or a monthly subscription. Hiring an accounting firm, web design firm or developer instead of a crypto expert. This practice is very common for novice investors, but it’s usually a red flag.
instead of a crypto expert. This practice is very common for novice investors, but it’s usually a red flag. An influx of new customers on startup websites, as if the company is going through rapid growth. The truth is, a startup rarely uses this tactic, and even experienced firms are quick to point out it.
Of course, nothing that goes on in the cryptocurrency world can be completely predicted, as with anything blockchain-related. As always, making purchases should only be done when you’re 100% sure what you’re getting is the real deal. The value of a cryptocurrency, and the investment you make in it, should be guided by sound knowledge and guidance. A mix of education and your own judgment can take you far.