One-stop" Guide to Avoiding Crypto Scams

Crypto scams are nothing new, and unfortunately, they will probably never go away. The blockchain space is fairly unregulated, which means investors need to be extra cautious when dealing with ICOs, crypto wallets, and other similar services. New scams crop up all the time, but thankfully there are plenty of ways to avoid them. This guide will give you a quick rundown on common red flags to watch out for when dealing with any company or individual in the crypto space. Remember - if something seems too good to be true, it probably is!

Research, Research, Research
You should always carry out thorough research before making any investment. If you are considering making a high-risk investment, you need to make sure that you understand every aspect of the investment, and how (and if) it will generate returns for you. Always do your due diligence, and be sure to check out the company or individual behind the product. This includes checking out the team members, their track record, and their previous experience. You should also research their target market, the size of the market, potential competitors, and their business model. If you aren’t fully confident in your understanding of the investment, it’s best to walk away. Moreover, you should also check what the company’s long-term plans are, and how they will achieve those goals. If a company seems to have no long-term plan, or only has a vague idea of what they are trying to achieve, that is a huge red flag. It is also important to find out how the company plans to generate revenue, and if it has any competitors. You should also check the regulatory framework surrounding the product, as this will dictate the future of the product.

Be very careful with whom you share your private keys
One of the most important aspects of any crypto wallet is the security of your private keys. If a wallet provider promises to store your private keys for you, or take control of your private keys, you should run in the opposite direction. Private keys are the “key” to accessing and controlling your funds. If a wallet provider has control over your private keys, it can take your funds whenever it pleases. You should only ever share your private key with a wallet provider that you fully trust, and who has proven to be a secure and reliable service. This is especially important when considering online wallets. Always check reviews, do research, and make sure you only ever use a wallet from a trusted provider.

Don't fall for celebrity endorsements of ICOs
Celebrities are often paid to advertise products, and ICOs are no different. It is important to note that in most cases, celebrities have no idea what the product even is, let alone whether it is a legitimate investment opportunity. There have been countless cases of celebrities promoting ICOs that have turned out to be complete scams. You should be extremely sceptical of any ICO that has a celebrity endorsement, and do thorough research before investing in it. It’s also important to note that many celebrities now have strict “no ICO” clauses in their contracts, which means they aren’t allowed to promote products like this anyway.

Beware of overly optimistic predictions about the future
Crypto is a new industry, and as such, we don’t really know how it will progress in the future. ICOs often make overly optimistic claims about how their product will be used in the future, and how much demand there will be for it. These predictions are often based on faulty assumptions and other misleading information. Remember - nobody can accurately predict the future. Even the most trustworthy and well-researched prognostications may not come true, so take these kinds of predictions with a grain of salt. If an ICO is making over-the-top predictions about the future of their product, you should be very sceptical.

Be sceptical of any software that requires you to send your crypto before using it
This one is very common in the crypto world. Scammers will create fake software or applications that promise you will be able to earn a lot of money with little effort. However, before you can use this software, they will require you to send a certain amount of crypto to an address. This is a common tactic used to trick people into sending their crypto to a scammer. Remember - if you have to send your crypto to someone before they will let you use their software, it’s probably a scam. In some cases, scammers may even steal a legitimate piece of software and re-brand it as their own. They may then claim that you need to pay a certain amount of crypto in order to use the software. In reality, the software does not belong to the scammers, and you will never receive the product that you paid for.

Don't fall for MLM schemes (e.g. Crypto lending platforms)
Multi-level marketing (MLM) schemes are common in the crypto space. Scammers will advertise various crypto-related services and products, such as lending platforms, “software” that will allow you to earn a full-time income, etc. However, these services are almost always overpriced and/or useless. They will also often require you to pay some amount of money up-front, with the promise that you will receive a large return over time. However, in reality, you will almost never receive any return on these investments, and they are a complete scam. There may also be some crypto lending schemes out there, but they will probably soon be banned by regulators. Crypto lending platforms have been rife with scams, and many have not properly vetted their investors. Many of these platforms have already been shut down.

Dangers of trading platforms and exchanges
Entrances to the crypto trading world are convenient, but come with risks. Trading platforms, such as Coinbase, Binance, and Kucoin, are convenient ways to get started trading crypto, but they also come with risks. One of the most common scams in the crypto space is a fake trading platform or exchange. Scammers will create a fake trading platform or exchange, often using a similar name as a legitimate platform. They will then try to entice new traders to deposit their funds on the fake platform. Always make sure you are trading on a legitimate platform, and take the time to properly research the exchange before depositing funds. Exchanges have also been hacked in the past, and some have shut down completely. This can result in you losing all of your funds. Be sure to do your due diligence on any exchange you use, and check if they have a history of security breaches or server issues.

Summing up
Crypto scams are unfortunately very common, and there are new scams almost every day. It’s important to do your research before investing in anything. You should also be very careful whom you share your private keys with, and be sceptical of overly optimistic predictions about the future. Don’t fall for MLM schemes, and be wary of trading platforms, as they can come with their own set of risks. Remember - if something seems too good to be true, it probably is!