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How to Identify Cryptocurrency Scams

By Scam Awareness | May 10, 2018

Even with new cryptocurrency scams uncovered every month, the cryptocurrency craze hasn't died down. And as with any other trend, the current infatuation with digital currencies give plenty of opportunities for scammers to take advantage of you. With over 1500 different cryptocurrencies on the market, how do you navigate and avoid the pitfalls?

It's always important to do your research when investing and cryptocurrencies are no different. Read their whitepaper thoroughly and check well-known industry sites to verify claims that a cryptocurrency has made and that their whitepaper isn't plagiarized. A whitepaper should disclose things like risk factors, qualifications of the team, and a detailed statement of where the issuer and key management are located. It should ring warning bells if a whitepaper is vaguely worded and promises high returns without technical details.

Another key thing to look for is an open source code base. This helps build trust and safety in a blockchain network since it allows for many different people to take part in its development. Also, the ability to trade and purchase currency via reputable and well-known exchanges is important. When there's no transparency, you could lose money to hidden fees and other shady practices. Some other red flags you might encounter include mystery investors, an anonymous team, or an overall lack of openness from the company.

Remember, if it sounds too good to be true, it probably is. Do your homework and make sure information matches, even if it's as simple as verifying their contact information. Arm yourself with all the knowledge you can to protect yourself from potential scams.

Stay safe!

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