If you have never used a cryptocurrency before, it’s a digital token that can be exchanged for services and some goods as well. Some treat crypto as an investment rather than a currency to exchange, they buy the coins and hope to exchange them for more in the future. Those who invest will likely make a profit from doing this and actively watch the currency as a hobby. It’s also a good idea to compare crypto before purchasing so you know exactly what you’re getting.
If you are new to crypto currency and you are trying to learn more about it, you should be careful to avoid scams. Other assets are more regulated than crypto currency, therefore users are more prone to financial problems, scams, and fraud. Here are the top 3 crypto scams to avoid…
Hacking and theft
Make sure you go for a reliable cryptocurrency that has a well-established website, partners, and a history. If you don’t research the currency enough you could run into a problem with hacking and theft, when you are investing money this isn’t a laughing matter. Even if investors are experienced, they can still be susceptible to account hacking and identity theft. Never disclose information and passwords for your crypto wallet, this might sound obvious but fraudsters will try out any kind of trick to make investors reveal this information. Don’t fall for fake emails or suspicious websites.
Pump-and-dump schemes
You must watch out for these schemes, whether you are new or experienced with crypto currencies. These schemes usually represent an individual or group’s effort to inflate the price on a single asset, they will then sell their own holdings for a profit. Pump is the part where people will be convinced to buy, this can be on social media or other online platforms, this will be closely followed by the dump. Once people have invested, the price will go up and the schemers will cash out and make a large amount of money. When the investors know it was fake they will take their money out and realise their mistake, consequently the coin’s price will plummet. You will need to be smart to avoid these schemes and only trust well-established platforms that have a history of posts or other obvious signs of credibility.
Market manipulation
Pump-and-dump schemes are not the only type of market manipulation you need to look out for, there are many more scams out there. You should be aware of front-running, this is performed by those who have knowledge of the future transactions and therefore they make trades based on this, selfishly leading to profitable trades and price swings. Read more into market manipulation tactics if you want to avoid this at all costs.
Now you are clued up on how to avoid scams when it comes to crypto currency, you can invest your money wisely. If you do happen to make a mistake, it will be a learning curve and this shouldn’t put you off using crypto currency in future. Good luck with crypto currency, whether you’re using it to invest or as a means of exchange. Avoid those scams!
