With the good comes the bad. Everything has got its own flaunts and flaws and the same applies for Cryptocurrency too. Cryptocurrencies are that digital gold which are said to be the dawn of a new economy. But with all of this comes the fear factor as well. There come a few risks of investment in cryptocurrency. Just like any other place, even here you will find fraud individuals whose only motive is to earn money. Most cryptocurrency traders also make a lot of money through a CryptoSoft but we would recommend you to .
Along with the basic things like- having patience and not expecting huge results soon, not investing in early free coins, not falling for investors that call you, not concentrating your eggs all at one place and so on, there are a few things that you should specifically look for but which gets ignored most of the times. Here are 5 things to look out for in Crypto world.
ICOs is the abbreviation for the term- Initial Coin Offerings. These ICOs are meant to raise startup money amounts by overestimating values of the investment gains. Although mostly people get an idea if an ICO is overestimating and fraud but we tend to get carried away.
DAO stands for Decentralized Anonymous Organization. It was in 2016 when DAO had completed its ICOs for the year but then a few users illegally moved one-third money from it to other account.
DAO is now delisted from important exchanges and is in the examination of the SEC
According to SEC (Security and Exchange Commission), following are some signs you could tell through which if the ICO is fraud or not-
- Lack of reliable information and info regarding the coin.
- Dubious trading practices like market manipulation, insider training, etc.
- Unreliable public information including press coverage and media.
I would like to bring it to your notice here that not all the ICOs in the world are fraud. Like filecoin there come good ones too but again it’s very difficult to separate the water from the milk.
2. Ponzi and Pyramid Schemes
Due to a great positive media coverage, lack of understanding of technology before them and highly fruiting investment schemes, that include schemes like Ponzi and Pyramid mostly, people have lost a huge amount of money.
We tend to think that we can detect a scam but the technology people are using to hack and hoax investors in crypto world is far beyond our imagination. Schemes like Ponzi where you are assured an increment in actual input every other hour and Pyramid where you are shown to be the new boss of a chain attract people of all kinds.
It is always better you stay away from such schemes.
3. Pump and Dump Schemes
Another peculiar fraud in the crypto space is the Pump and Dump schemes. These schemes apply the mechanism of choosing a coin, pumping (rising it’s value), and then dump selling their over-valued currency which leads to fall in prices and consequently the investors facing loses.
Here’s how you can identify Pump and Dump schemes- low market cap, sudden breakout of cryptocurrencies with low volume and no warnings, fake news, buy-sell walls quickly appear and disappear and so on.
Trustworthy exchanges do not have to call people and ask for trust. This basic thing is what we ignore. And this ignorance results in loss in no time.
The next time you get a call for investing in crypto business and buy digital currency, note the details and call SEC.
5. Insecure Exchanges
I am not advertising any particular exchange but it is better you go for whatever you think is right. These are some of the reliable exchanges that will aid you-
Coinbase, Cryptopia, Bittrex and Kraken are some of the trustworthy exchanges you can go for in a blink of an eye.
I still recommend you to do your own research.
These were the major 5 scams and threats you should look for in crypto world. isn’t anything bad as such. If you learn to look for threats like above, there isn’t anything you should be worrying about.