The creation of cryptocurrency was for a good course but opportunists are always lurking in every corner to cash in on the technology. Crypto scams are on the rise and anyone can fall victim. There are various scams but only 3 types that have become rampant in the crypto sphere.
Crypto is an investment and scammers are preying on those trying to grow their online wealth. The fear of missing out in investing in digital assets is a soft spot for the crypto criminals. Most of these scams appear real on the surface but when looked at critically, it becomes easier to know a scam. Below are 3 types of scams that you should be wary of:
Initial Coin Offerings (ICOs)
ICOs are a noble way to raise funds to support crypto projects but the nobility has been eroded by scammers. Since investors pour millions of dollars in such projects many illegitimate fund raisers have seen the gap where they raise funds and disappear in to thin air without trace.
There are many genuine ICOs but the scam ones are easy to tell apart. They do not have a working product and all you see online is their shinny whitepaper. The team or individual behind the ICO has no market knowledge, no business plan of a technology behind their project.
The Chinese ban on ICOs was a good move and this has seen the number of crypto scams reduce drastically. This will eventually clean the crypto scam mess that was getting out of control.
Growing Number of Unregulated Exchanges and Brokerage Firms
There are so many unregulated exchanges and brokerage firms out there. These offer crypto products that many users never take their time to verify. These usually promise high returns on small investments and tend to attract the get rich quick traders and investors.
Their goals is to entice you to deposit your digital coins and charge you crazy commissions that eventually make it hard to withdraw your funds. This is outright stealing and many investors have fallen victims.
Crypto Trading Systems
The crypto trading system target Bitcoins but is fast spreading to the altcoins. These are automated systems that promise to cushion traders with the market volatility and arbitrating prices between the various exchanges.
These are usually hyped up and these systems are quite expensive especially when exchanging crypto with fiat. They tend to tie your funds down and once you want to exit the digital economy to the fiat one, they put many hurdles for you.
Before investing in crypto, a thorough background check is important. Do not jump to a system simply because of the hype behind it or the promise for big returns; do your homework first and invest wisely.