Introduction
Digital currencies are particularly vulnerable to scams because they’re so new. Some of the oldest cryptos on the market were only recently launched, and the most popular cryptocurrencies have had years of development behind them. Others have only just gone live.
The bright-eyed investor may be easily seduced by the high investment returns offered by online scams, so be wary. Seek out reputable digital currency investment firms, such as those described in this article, which offer the best service and support.
Section 2: How Cryptocurrencies Work
The simple fact that cryptocurrencies operate on an open, decentralized network makes them less predictable and more susceptible to manipulation than centralized currencies.
Types of Scams
There are several types of cryptocurrency scams, from boiler room operations, to value investing frauds, to simple money laundering. These scams affect a wide range of people, from those new to investing, to those who’ve been around the block. One scam we uncovered involved a scammy Apple customer service scam that has apparently claimed thousands of users.
Here are some of the most common types of cryptocurrency scams and how to avoid them.
Super Bowl Crowdfunding Scams
This scam targets hard-core fans of a sports team or an event. The scammer takes advantage of the passion and loyalty of the victim, hoping to cash in with some fake promise for a highly sought-after product or discount for a club membership.
How to assess a scam
As you research companies, be wary of email messages promising quick and easy riches. Always ask for a private phone call or email correspondence instead. Sometimes the scammers will use social media to make themselves seem more credible. But be extra careful to look at their public social media presence and web presence in their own domain name. These have been verified as authentic by other users.
Even scams in the crypto space should have a strong message, mission, and mission statement. If it’s a scam, these shouldn’t be stated at all. Instead, you can find out more about it by reading it carefully and finding out how they’re operating. Verify their blockchain technologies as well as the website on which they’re operating.
How to avoid scams
The first thing to do is contact your bank and ensure that the company you’re looking into is licensed. If they’re not, or if you don’t know if they are, this is a red flag.
If you’re looking into using cryptocurrencies, and have looked into the cryptocurrency you plan to invest in, then you’ll want to be able to identify a crypto scam from a crypto company. Here’s how to do that:
Ask for references. All businesses and startups want to avoid bad press. Ask the people who have dealt with the company for a good experience. If they were happy with the company, chances are the company is legitimate. Ask if the company has published online reviews. More reputable companies tend to share information about themselves, or be associated with reviews about the products they sell.
Conclusion
As the digital currency industry gets more crowded, and more tech-savvy consumers are looking to cash in on these new technologies, it’s more important than ever to research digital currencies before trusting any company with your personal or financial information. While there are plenty of legitimate and reputable startups and startups that have earned their place on the industry’s radar, there are also unscrupulous actors and unscrupulous scammers. Make sure that you’re properly protected when doing your research.