Don’t be lured in by the promise of big profits
Cryptocurrency’s lack of regulation naturally means that the industry is rampant with fraudulent behaviours. Here are some tips on keeping your money safe while investing in cryptocurrency.
Avoid anything which ‘guarantees’ profits
If any website, coin, or ICO suggests that profits are guaranteed, you`d better keep watch. Cryptocurrency is too volatile to ever guarantee such a thing.
As an example, Martcoin project promised a huge return on your investment. The idea behind it was that you give the company money and in return they let you spin a wheel which determines how much of a percentage you make in profits. Those types of gains are impossible. Currently, the company fully transformed and closed `guaranteed` wheel profit.
Be sure to read the whitepaper and fact check any claims
If you want your money to stay safe, it is your responsibility to fact check every statement made on company`s website and in its whitepaper. The Micromoney ICO was uncovered as being fraud for these reasons. Within their whitepaper, they state that their premise is to help unbanked individuals develop a credit history, but it is still unclear how their idea will work. Just because they give people a credit history doesn’t mean banks or other businesses will accept it.
Undoubtedly, the credit rating industry is tough to break into. Furthermore, it was discovered that Micromoney founded by Anton Dzyatkovsky had lied about a partnership with reputable Everex (another cryptocurrency). The official spokesperson for Everex on Reddit stated that “We are not affiliated with, nor do we endorse…MicroMoney”. Everex also does not list MicroMoney as a partner on their About Us page either. So fact check is essential to stay safe and not lose money inevitably.
Investigate the team members behind the cryptocurrency startup
The team members behind a cryptocurrency are the most important people you need to research. You need to check whether they can be trustworthy and whether they have a good track record. Search for their previous jobs, any university education they may have, and if they have ever won any awards. What do past employers/employees say about them? Are they well respected in their field?
Unfortunately, there will be times when a cryptocurrency does not show its team members. This should make you cautious as an investor. Why invest in something where you can’t find who is behind it? Take a look at cryptocurrency PagareX, for example.
No matter how hard you look you will not be able to find the CEO, it may mean that the founders do not want law enforcement knocking at their door. PagareX promises that if you hand over your money to facilitate their ‘trading bot’ they will give you a small return on your investment every time the bot makes a lucrative trade. Of course, there is no trading bot, the money you make simply comes from other users handing money over to the business.
No respectable company would ever hide the identity of its owners. Keep that in mind when looking for a new investment opportunity.
Hopefully, with this advice, you can feel more comfortable searching for a new cryptocurrency to invest in now that you know the types of scams to avoid. Overall, the most important thing you can do is research each coin that interests you. As you can see, almost every scam can be spotted if you critically analyse them.
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