Cryptocurrency prominence is increasing and, as more people are coming into the trade, the more predators prey on innocent traders. No wonder top digital companies are banning crypto ads in their platforms.
And it’s not just the innocent ones who get preyed, even for the specialists themselves, if you are not keen enough, you may fall into scammers’ traps.
Needless to say, there are certain precautionary measures you could take to easily notice these traps and avoid them altogether. Some of these tips give you some basic knowledge of the problem itself and how to best protect yourself. Even so, be on the lookout because it is never 100% safe.
Cloud Mining Services
Let’s put it this way. If you find yourself in a community of people who prefer cloud mining to hardware mining, then it’s best to remain vigilant.
This is because there are numerous scams masquerading themselves as legit cloud mining websites with aims of defrauding vulnerable amateurs.
They mask themselves by keeping domains open and not being registered to real users.
Otherwise, there are other clues that raise eyebrows. For example, if you find the company registered in a reputable place like New York but has foreign directors, run!
Multi-Level Marketing Services Schemes
Then there is Bitcoin multi-level marketing. Also commonly known as direct selling which exploits Bitcoin’s popularity. Like common market networking scams, they are always full of exaggerated claims and make you feel you can make more money quickly and efficiently.
It’s relatively easy to identify them. They are not actually selling anything, a just complex group with levels and a fee to climb up the ladder. At the end of the level, there is nothing really there.
Bitcoin Investment Package
These are like Ponzi schemes. They promise huge returns and pay out in small daily packages, then one day, they stop paying and before you realize, they have fled with the remainder of your investment.
So, be on the lookout for investments that seem profitable at first. They use this trick to draw the user into re-investing their earnings for more profits. If you want to invest in any, make sure the firm is adequately incorporated with reputable individuals running it.
Also, take a look at their investment strategy and make sure it is coherent and clearly outlined to be on the safe side. Lastly, never trust anyone who guarantees a return. Nothing is ever certain in the world of investment
This is where it gets real. Scammers are getting smarter and harder to identify. Many of fake ICOs, in fact, have white papers, so how do you know who’s fake and who’s not?
You see, reputable companies are bound by government regulations. So, in case they want to defraud, they wouldn’t get far with it. Also be sure to check out the senior management, whether they have a strong social media presence with reputable reviews.
Pump And Dump Schemes
This one is kind of a simple scam that also applies to the stock exchange. What happens is, someone inflates prices of a less popular coin by spreading false information about it in order to generate interest
Culprits doing this are known as pumpers. They purchase significant amounts and pump it in social media sites, then when the token rises in value, they dump it to unsuspecting investors and flee.
To elude this trap, look out for coin market caps. If it is low and the coin’s price is high with a random surge, it’s likely doctored.
Using the third eye will greatly reduce your chances of being duped but all in all, research and common sense is all you need to avoid these common fraudsters.