Warning! How to Spot The Signs of Cryptocurrency Scam

Jihan Rienita . June 06, 2022
Cryptocurrency Scam. Picture: USA Herald

TechSpace - Investments in cryptocurrencies are increasingly being favored by the people of Indonesia and the world. Having good prospects supported by various corporate actions from big companies in the world makes the level of trust of the world community higher to invest in this sector. However, investors still have to be careful because there are still many forms of counterfeit crypto currency or what is often referred to as "Cryptocurrency Scam".

A cryptocurrency scam is an act of deception through conveying untrue facts or intentionally creating misunderstandings to deceive investors into being interested in buying crypto money. The purpose of this action, of course, for personal gain.

Signs of Cryptocurrency Scams

Picture: PCMag

We've rounded up five common characteristics of cryptocurrency scams. If you meet one or even all of them, then you have to reconsider whether the choice is safe or not. Here are five common characteristics of cryptocurrency scams:

1. Promised High Return Guarantee

Picture: Teller Report

One way fraudsters attract investor's money into their hands is by making false promises such as one of which will guarantee a very high return. Investors, especially beginners, are definitely still new to this and most will be tempted by offers like this because they hope to get big profits without any prior consideration so that they get trapped and end up losing their money.

Basically, every investment actor must instill the idiom "there is no free lunch" which means that there is no free profit and no effort or effort in the investment world and this reminds potential investors to be more observant in determining the standard value of crypto currencies. Learn the details and prospects so that you are not lured in by the temptation of guaranteed instant profits that are too large.

2. Doubtful Initial Coin Offering (ICO) Whitepaper 

Picture: Mr Cryptopedia

The whitepaper is one of the most important parts of an Initial Coin Offering (ICO). The ICO contains the design of the cryptocurrency project, how it is planned to grow the cryptocurrency, and how the cryptocurrency will potentially generate money. That way, potential investors can get an idea for the future and can judge the right price or decide not to buy it.

However, if the whitepaper feels suspicious, then you must analyze it first in order to identify whether the product offered is fake or not. Moreover, you should immediately leave the offer if there is no whitepaper at all.

3. Suspicious Founder, Company and The Team

Picture: The Newyorker

Just like any other business or investment, we as investors generally can easily identify who is the founder of the company or who is the team behind the trade. This means we can observe the projects they are working on, see what their background is, check their social media profiles, the age of their accounts, who follows them, how many followers they have, and so on.

This is solely in order to provide an overview and gain a level of trust before investing in the crypto currency they run. Be careful if you find a cryptocurrency with a founder and team that is not trusted, has no clear company history or does not even appear to the public.

4. Too Much Promotion and Marketing

Picture: Affiliate Grand Slam

Another way of other most common cryptocurrency scams is to do a lot of marketing to attract investors' attention quickly. The goal is to gather potential buyers quickly. Various promotions such as through large advertisements on online sites, through massive referral ads, to paying influencers who are even less credible to talk about investments.

On the other hand, a reasonable cryptocurrency coin does not need to over-advertise the product and develop in a hurry. Because basically the market will look for the cryptocurrency.

5. Package Offers Outside of Cryptocurrency Transactions

Picture: Toptal

When developers make offers outside of cryptocurrency products, this is where potential investors must be very careful in understanding how it works because it is outside the mechanism of buying and selling crypto currencies. What is worrying is that special packages are not sustainable, or slowed down, or even stopped to the detriment of investors.

Read also : Recommended Cryptocurrency Exchanges for Beginners!

(JR)

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