The crypto-space can be rough. Regardless of the great amount of knowledge out there regarding cryptocurrency and blockchain, it’s always important to know that there will always be some people looking to profit out of peoples ingenuity and naiveness. So this article is for you if:
- You’re starting off in the crypto scene and you need some general hints on what to look after
- You’re searching for critical advice if you want to start trading
- Looking for suggestions or recommendations for reliable crypto platforms to trade cryptocurrency
So let’s get started…
What are ICOs, STOs and other tokens?
Initial Coin Offering (ICO) is a token used to support of an idea of a business model which promises to provide returns. A Security Token Offering (STO) ,in concept, is the same as an ICO. The main difference relies on an STO has a fungible asset supporting your investment in the form of bonds or stocks. Similar to the way you would acquire stocks from a SP500 but instead of a printed document, your purchase would be recorded in the blockchain through a smart contract. Other tokens can be divided into: platform tokens, cryptocurrency and utility tokens.
How to recognize Token SCAMS?
There are several variables that you can use to diagnose crypto token scams. Some of them might include the following: 1. Declaring and promising a specific amount of return: A lot of these scams promise you that if you put x amount of money in you will receive x% of return each week/month/year. 2. Advertising their affiliate program and telling you you should definitely get your friends involved 3. Website design is usually very poor quality. How to verify them: 1. Do a simple google search of “[Coin Name] Scam?” 2. Go to the About Us page, check whether they have a Team page and then google the members 3. Check what exchanges you can buy the coin on-trustworthy and regulated exchanges won’t trade scams.
How to recognize Exchange SCAMS?
Recognizing overnight or “shady” exchanges can be a difficult task. We can use however some of the lessons from the past to try to understand what happened on each and try to find a pattern: 1. Mount Gox (hacked) 2. Cryptopia (hacked) 3. Quadriga CX (no accounting records). So it basically comes to the following variables: 1. Security: Make sure your exchange can amply talk about their security measures. If you’re able to understand them that means that they have really put some effort to it and it’s one of their value propositions. Another great way to tell if an exchange has good security measures is by trying to access your API keys. The reason being is that accessing your API keys should be easy enough for you to access them but hard enough for others to reach out using several security loops. 2. Trustworthiness: This is an extensive topic to try to comprehend with just one variable. However, accounting records can provide you a clear idea of how a business is being ran and transparency in their operations. With that in mind, try to find information regarding the exchanges financial records. This will show the viability of the business in terms of how the company is run.
How to recognize Wallet SCAMS?
Due to the resurgence of Bitcoin it catalyzed old scam practices to rise up again. One of them being crypto wallet scams. These consist of fake apps in the PlayStore that for an experience crypto trader it wouldn’t be hard to recognize and ignore, but for those unexperienced crypto novices, it can represent a risk. Here’s a few recommendations on how to avoid falling into those traps: -Go over the App reviews -Check App Creative Assets quality (app screenshots) -Review the App description -Research the developer of the app -Check for the app and recognized 3rd Party Review Platforms (Eg. www.g2crowd.com)
In conclusion, there are many things to watch out in the crypto world so follow simple steps:
- Do your own research-make sure you go to objective sites (no…not cryptotwitter)
- Ask around- friends and familiar faces won’t lie to you (Plus, you did your own research)
- Stay in the know- follow professional news sites and people of interest in the crypto space. Telegram groups are also important (make sure you ask around).
- Follow your tokens, wallets and exchanges social account. You can always tell quality over quantity.