How to spot a crypto scam
Many people who are unsure of whether a business is a scam use the Internal Revenue Service’s guidance for scam tax schemes to help you identify a scam. Below is a cheat sheet of some of the red flags you should look out for in a crypto scam, according to my research.
Symbols
In most cases, a legal company won’t be able to purchase or sell crypto coins as a business. Many crypto scams target start-up companies that haven’t put in place all the legalities of an actual business. If a company starts off with its own virtual coins or tokens, it’s usually using your money to finance a business with no business operating right now. Be wary of any company that has logos with the company name or its phone number on them, as these logos have a definitive history of scam activity.
How to invest in cryptocurrencies
The complexity of the emerging cryptocurrency market, along with its fluid nature, makes investing in cryptocurrency risky. But if you have some basic knowledge about what you’re getting into, and if you can’t afford to lose a lot of money, investing in cryptocurrencies can be worth it. Here are a few basic rules to follow before you invest in cryptocurrencies.
Research the tech
You should have a clear understanding of what you’re getting into before you dive headfirst into the cryptocurrency world. What is it, and why would you want to use it? Is it just another one of the “fads” that came and went in recent years, or is it something you can really see yourself using on a regular basis? Don’t become distracted by the flashy, oddball cryptocurrencies you’ve read about on online forums.
Cryptocurrencies are the future
There’s no doubt that cryptocurrencies are growing in popularity. But while their market value has increased substantially, it’s still a relatively small market that has yet to attract a significant amount of venture capital. These coins might seem like a brilliant investment if you’re considering using your savings to put some away, but make sure you’re ready to lose that money as you get older.
You’re an easy target
Cryptocurrencies are so new that everyone is susceptible to scammers. If you’re a young professional, you can get involved in scams through social media, or participate in websites run by people who sell unregulated ICOs.
Conclusion
When it comes to ICO scams, it pays to be skeptical. Startups are always hustling, and the law enforcement is powerless to investigate every company that pitches investors on a vision. Still, we can spot red flags like too-good-to-be-true promises and poor team chemistry.
Crypto scams are difficult to avoid altogether, but it’s possible to cut the risk down significantly if you proceed with caution and ask a lot of questions. Good luck with your crypto adventure!