Cryptocurrency is an incredible market with a large amount of potential to change the world financial system as we know it, but with that potential comes the potential to breed scammers. One of the best pieces of advice from most investors in the space states that investors should always fully understand the market before getting involved.
Given that there currently is a lack of regulation or central body to govern the use of the currency, scammers can easily get into the market with little penalization and consequence. There are several well known scams that investors should avoid, and here’s just a few.
One of the biggest scams continues to be fake initial coin offerings or ICOs. These fraudulent offerings are often not as legitimate as they seem, and can be hiding scammers looking to take money and get out. One of the best ways to debunk this scam is to look for proof of endorsements by reputable figures in the industry to see if the team behind the project is legitimate or not. Even after following these steps, it is never 100% guaranteed to be safe.
Another popular scam online is the conning of online software wallets. This is one of the riskiest ways to store cryptocurrency and can be either taken by the company itself, or hacked into by a random person. The best advice here is to only use wallets that have a large reputation for being safe and secure. These could be MyEtherWallet for Ethereum or Electrum for Bitcoin. This to is not a guarantee, but doing research is one of the most important steps.
The industry is built and continues to build on the idea of reputable and safe companies, but with several companies doing the opposite, it can often be difficult to discern what is true and what isn’t.