Bitcoin Scams

How to avoid being scammed

Beware of promises too good to be true. It may sound too good to be true, but it often is. Crypto scams can involve the promise of a wide-ranging payoff for little to no effort, or special deals or bonuses, or massive returns in a short period of time. On the other end of the spectrum, you may encounter companies or charities that claim to have a special discount or super-simple or special offer, which means a small purchase will reap large returns.

Crypto scams can involve the promise of a wide-ranging payoff for little to no effort, or special deals or bonuses, or massive returns in a short period of time.

How to tell a scam from a legitimate company

An in-depth comparison between a crypto startup and a financial institution is a good idea, especially when it comes to asking for an investment. “In terms of crypto, it’s easy to look at the white paper and feel you can use it like your credit card,” says Sam Kneen, chief security architect at Blockchain.info, a leading cryptocurrency wallet and service provider. He notes that these types of companies tend to make less lofty claims, so they can get away with it. “It’s hard for me to see someone doing very complicated things, like blockchain, and think they’re not going to be fraudulent,” Kneen says. “The way the system works with these new startups is that people might feel like they have something tangible to support it, that it’s worth $10 million, or $50 million, or $100 million.

The importance of blockchain

Though bitcoin wasn’t the first cryptocurrency, it is still the most successful and widely used today. Because it was the first crypto that worked on a blockchain, it’s been the blueprint for thousands of other coins. In fact, an estimated $70 billion has been invested into blockchain companies. But Bitcoin is not the only cryptocurrency around. Bitcoin Cash and Ethereum are also cryptocurrencies that work on blockchain.

Skepticism

Not every blockchain startup will deliver on their promises, and that’s why it’s important to do your research before making any decisions. Before investing in a crypto startup, weigh whether or not you trust the people behind it, and if you have a history of trusting these people.

The importance of KYC

The formation of an LLC may sound intimidating, but it’s actually pretty easy. Once you’ve decided on the type of company you want to form, take your time and develop a well-thought out plan, including an abbreviated summary. Keep it short and sweet.

Check for adequate security

Sufficient security is important in all business sectors, including cryptocurrency. While cryptocurrencies have been on the rise lately, they’ve also suffered from hacks and scammers. When considering an investment, consider at least four legitimate methods of securing your digital coins, including secure hardware wallets. Moreover, make sure that the network you’re working with is secure, which is typically built around blockchain technology.

What do cryptocurrency scams look like?

Well, there’s plenty of ways that scammers can trick you. Here are some common cryptocurrency scams:

Cryptocurrency companies offering “early-access” to your investment. It’s actually easier to invest with a large number of people at the same time.

It’s actually easier to invest with a large number of people at the same time. Another crypto scam is crypto-lending, where you receive interest payments on your bitcoin investment that you don’t actually own.

Cryptocurrency companies pretending to be using the blockchain for something other than its intended purpose. This is called “front running,” or pretending to use your coins to trade for goods or services.

Conclusion

It’s important to keep the above tips in mind when you’re looking for the best cryptocurrency investment opportunities. Even in the face of the ever-changing nature of the space, it’s important to ensure you’re making the most informed investment choices you can.

If you’re already involved in the space, keep an eye out for your friends or coworkers in the crypto community. These are the people you want to be doing business with. Hopefully, this guide will help you make good choices.