There is no doubt about the growing popularity of cryptocurrency. A lot of money has been made by people who invested and traded with different cryptocurrencies. However, like any investment or trade, cryptocurrency has its downfalls too. Crypto-scam is one of the popular methods that some have used to make money from innocent cryptocurrency investors and traders.
Although it is difficult for a layman to identify them, we list out the warning signs that you should look for. These warning signs are potential and popular methods that anti-social elements use to scam people with cryptocurrency investments.
Top 5 Warning Signs That Indicate A Potential Cryptocurrency Scam
We have listed the top 5 warning signs you should watch out for as a cryptocurrency investor or trader. By looking and watching out for these, you can avoid becoming the victim of scams. You can visit this site to become wiser with your trades and investments in cryptocurrencies.
1. A Sudden Increase in Value
It is one of the common methods that scammers use to con people in the cryptocurrency market. It usually happens with a cryptocurrency that does not have a reliable track record. A burst of speed or an increase in the value of a specific cryptocurrency can be a warning sign.
Traders and investors should consider these red flags when investing in cryptocurrencies. It usually happens with the less popular cryptocurrencies in the market. If you see a sudden increase, you should beware as it is aimed at people trying to make quick profits.
Therefore, exercise caution when you see a spike in the price of specific cryptocurrencies. Yes, the cryptocurrency market is not stable and can fluctuate erratically. However, a sudden rise alone does not necessarily help you make massive profits.
2. Only Internal Exchange
Cryptocurrency should be a form of currency that can be exchanged against others in the market while you trade. Any cryptocurrency that does not offer external exchange means that the chances of you being scammed are higher. If that is the case, it certainly is a warning.
So, it may be a wise option that you do not invest in a cryptocurrency that only offers an internal exchange. The buying value of the specific cryptocurrency is not likely to go above the selling value. It would only lead to a person losing their investment and not earning a profit.
Also, look for a cryptocurrency that can be exchanged into your local currency. Genuine cryptocurrencies such as Ethereum and Bitcoin provide you with this cushion. Consider this as a rule of thumb when you invest in cryptocurrency to avoid financial losses.
3. Unreal Promises
One of the main things you ought to know about cryptocurrencies is they are volatile. It simply means that there is no guarantee when it comes to making profits. The market keeps fluctuating every second and can not guarantee profits.
So, if you are offered guaranteed promises of returns or profits, you better watch out. These are often a method that conmen use to lure investors or traders who are naive or inexperienced. Upon investing, they would understand that the promises could not be kept.
In the end, you will end up losing a significant part of your investment when you fall for these unrealistic promises. Only invest in cryptocurrencies when you are ready to trade the market with the risks that come along with investments or trades.
Yes, there have been significant increases in the prices of cryptocurrencies in the past. However, you should also remember that there are significant drops in the value of cryptocurrencies too. So, keep your eyes open for any promises that may be too good to be true for you.
4. Background Information
Any cryptocurrency that does not have this basic information is not to be trusted. If you research any cryptocurrency, you should be able to find its origin. Information like the headquarters of the founder and the owner’s name can be critical information.
If you are not able to find information about a specific cryptocurrency, it is not wise to trust it. Investing in these cryptocurrencies that do not have a background often turns out as a loss for investors and traders. So, it is a red flag if no proper information is present.
It would be better if you invested in cryptocurrency that has a solid background. These are cryptocurrencies you can trust to trade the market with minimal risk. There will be risks involved, but not as big as with a company with no background.
5. Active Social Media Presence
You should not trust any information that you find on social media. These days, scammers use social media aggressively to target traders and investors alike. Anyone who deals with cryptocurrency should be aware of these things and not trust them instantly.
Find out about the social media accounts and see if they speak only about the pros of a specific cryptocurrency. It means they are promoting a cryptocurrency to find people who will fall for it. An aggressive presence should be something to be aware of.
Do not fall prey to the information you find on social media platforms like YouTube, Facebook, or Telegram. Verify and see if they are authentic before you begin to trust them. Even if you find a few negative posts about crypto, you must reconsider your investment.
Knowing your chances and the risks involved with cryptocurrency is very important. The market is relatively volatile and can make a person a millionaire or go bankrupt in no time at all. As a result, make sure you do not put your life savings at risk by investing or trading with cryptocurrencies. Always adhere to specific rules followed by experts.
It can help you make profits with cryptocurrency and also avoid undue risks. Educate yourself properly before you begin to invest or trade with cryptocurrencies. There is no better way to understand the cryptocurrency market than by learning. You can also find platforms that operate for free to help you understand how trades work with cryptocurrencies.