How to avoid cryptocurrency scams
When it comes to avoiding cryptocurrency scams, the best defense is a good offense. This means that it is imperative for crypto users to take the time to educate themselves on the cryptocurrency market, blockchain technology, and the many forms of cryptocurrency scams. Investing in cryptocurrencies can be a risky game, so understanding the underpinning principles of digital currency and the digital ledger technology is key to staying informed and savvy while trading in the crypto market.
Verify Your Trading Partners
Never send cryptocurrency funds to an anonymous trading partner or exchange. Prior to sending funds to any crypto trading partner, take the time to verify they are legitimate. Some exchanges and traders openly display their contact information and license or registration details online, which provides assurance the exchange is trustworthy and your funds won’t disappear.
Cover Your Trading Basics
Cryptocurrency trading scams appear in many forms, but one of the hallmarks of a deceptive exchange or contract is a promise of unusually high returns. These scammers often target inexperienced traders who may not be aware of the risks associated with certain forms of trading. It’s important to remember that cryptocurrency funds can vary in value, so the promise of large investment returns is typically too good to be true.
Understand ICOs
Initial coin offerings (ICOs) aren’t necessarily scams, but they do represent a risky form of investment. Before diving into an ICO, it’s important to do your research and fully understand the organization and nature of the offering. Organizations that have undergone a rigorous security audit are typically the safest and most reliable investments.
Trust your Gut
In the world of cryptocurrency, there are no hard and fast rules when it comes to identifying scams. This means that it is important for users to use their best judgment and “trust their gut” to determine if a potential investment is too good to be true. Cryptocurrency exchanges are risky, but with the right research and common sense it is still possible to find reliable investments and avoid fraudulent exchanges and scams.