What Is a Scam?
Here is the top way people have been scammed on the internet in 2018:
Cryptocurrencies are complex. It’s easy to understand why some have chosen to buy into them. Not only is the underlying technology incredibly powerful, but the returns can be significant—$600,000 per bitcoin, according to this BBC story. Many newcomers are drawn to the benefits of being part of a growing industry.
There’s also the promise that you don’t have to go through banks or brokers. This can be appealing, but if a company hasn’t been vetted and if it’s missing crucial verification details, the deal can turn sour. Blockchain startups also generally don’t issue refunds or give reasons for refunds, so when something goes wrong, you don’t really know what caused it.
Trust is the Key
The heart of investing is taking a leap of faith, trusting the people involved and investing because you think they will do what they say they will. Unfortunately, for many, putting trust in blockchain startups has turned out to be a fool’s errand.
With over 2,000 cryptocurrency scams reported and only 4 percent of them having been reported, is it time to give up on blockchain? Not necessarily. If you are specifically interested in decentralized businesses, chances are high that the company in question is going to be transparent. Then, and only then, would you know if your money is going to a scam.
Bitcoin scam companies will always be out there. That’s just the reality of it.
How do you know if it’s a scam?
It is crucial to be skeptical of any company you’re considering, and to be certain they are legitimate before you invest in their projects. There are still a number of cryptocurrency startups that are based in China, which has always been the epicenter of digital scams. Research companies before you make any kind of financial investment. You can use a site like GoKash to research startups that have venture capital funding and who were formerly valued in the billions. Once you’ve narrowed down your company research to a small handful of possible candidates, make sure to read every single word they have to say before you make your final investment decision. There are several resources that help weed out companies that are running a scam.
Tips for avoiding scams
Never pay money upfront to get cryptocurrencies, especially in exchange for coins or services that have yet to be delivered. In fact, just because an online startup is on the list of popular and reputable companies doesn’t mean that it’s a legitimate cryptocurrency provider. The list of reputable and trusted cryptocurrency companies can be found on Coindesk.
Be wary of obvious phishing scams and fake websites. Research the company that you’re working with before handing over any personal or financial information.
Check the transparency of the online company by checking the latest press releases, social media accounts, and websites.
Make sure that your cryptocurrency investment is insured.
Lending platforms and platforms to invest in cryptocurrencies
Some people use services that loan cryptocurrencies such as bitcoin to borrowers who can’t afford to secure their own capital. Although the loans may be legitimate, if they’re just a front for fraudulent activity, you may not get your money back.
Pump-and-dump scams occur when someone buys or creates a company’s stock without first selling it to the public. The person then creates a speculative narrative that convinces the public to buy the stock and sends the price soaring before the stock eventually plummets.
Digital cryptocurrency companies that rely on token sales, technology and/or networking are the most likely to be scams.
So there you have it! It’s worth keeping in mind that bitcoin scams and blockchain scams are both out there. It’s easy to get the idea wrong and invest your hard earned money on some vaporous blockchain. But you shouldn’t let that happen! Cryptocurrency doesn’t just represent a new way of storing your money or an idea for storing value, it’s an exciting way of doing business. If you’re looking for an easy way to invest in the crypto space, then start looking into bitcoin and blockchain projects. You might find something you like.