Cryptocurrencies are taking the world by storm. Popular cryptocurrencies such as Bitcoin, Ethereum, Ripple, etc. have made many people want to invest in the crypto market. However, it’s common knowledge that investing in any form of venture entails taking risks. There are plenty of new investors who end up losing their money either due to fraud or simply bad luck. Even seasoned investors can fall prey to scams. If you’re thinking about getting involved with crypto, then you should read this article from start to finish. We will be discussing some of the most common scams involved in cryptocurrency and what you can do so you can trade safely.
Fake Crypto Exchanges scams
A popular investment fraud targeting new investors is the fake exchange scam. Fraudsters try to trick new investors into trading their cryptocurrency for fake tokens on a non-existent exchange. These scams are often run by hackers who are trying to steal your cryptocurrency by promising to trade it for something else (i.e. investing in a fake ICO). You should only trade your cryptocurrency for goods or money that you can actually use. Never trade your cryptocurrency for anything else.
Cryptocurrency phishing scams
Phishing scams are also very popular when it comes to investing in cryptocurrency. They are very similar to phishing emails in which people are encouraged to visit a website and enter their personal details in order to obtain access to their account. These scams may appear to be from legitimate-looking websites that may even have the words “cryptocurrency” or “blockchain” in their domain names. Once you enter your details, hackers will have access to your crypto account and will be able to steal your coins. Make sure that you only enter your personal details into legitimate websites. If unsure, leave the website and type the domain name yourself (without clicking on the link you received via email).
No information is provided about the company or team
There are plenty of scams out there targeting new investors. When looking into investing in cryptocurrencies, it’s vital to look at the company’s background and make sure that they are legitimate. Also, you want to make sure that the investment is not run by a team of anonymous people. These two points should trigger red flags. Financial scams are almost always run by a team of people with an extensive background in the finance industry. If you are being offered a cryptocurrency investment scheme with no information about the company or its team, then tread carefully.
The investment is too good to be true
It should go without saying that you should not invest in any investment that seems too good to be true. This may seem obvious, but scammers know that people are eager to get into this exciting industry and as a result, they target new investors with projects that offer high returns. These fake business opportunities are extremely popular and are likely to continue to pop up as the cryptocurrency industry continues to grow. Remember, if a scam ICO claims that you can earn a 50% return on your investment in just two weeks, then it’s probably a fake investment opportunity.
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Tips for new investors
Here are some ways you can trade safely and avoid being scammed:
1) Only invest what you can afford to lose
It’s important to have a financial goal when getting into cryptocurrency. Whatever your financial goal is, make sure that you don’t invest more than you can afford to lose.
2) Research the company and project
When investing in cryptocurrency, it’s important that you only put your money into projects and companies that you know. This is a way of reducing the risk of investing in a scam.
3) Make sure that you understand the risks
Investing in any business carries a high level of risk. Too many people get into cryptocurrency without understanding the risks involved. You can reduce the level of risk by only investing into reputable companies, coins or tokens like KCS.
4) Stick with reputable exchanges and wallets
Only invest and trade through well-known crypto exchanges and wallets. You will be safer and won’t lose your coins to a scam.
Conclusion
Cryptocurrencies are remaking the world. From the biggest banks to small businesses, many people are going to want to get involved in the new economy of digital currencies. However, there are lots of scams out there targeting new investors. If you’re thinking about getting involved with cryptocurrency, then you’ll need to make sure that you’re not being tricked. Always do every research possible and choose your investments wisely. Showing restraint when investing in cryptocurrency is key. Only invest what you can afford to lose. And finally, if something sounds too good to be true, then it probably is.