Cryptocurrency has attracted a lot of attention in the financial market over the last decade. I believe we’ve all heard some stories of people who became millionaires by investing in Bitcoin and other digital currencies. It’s easy to buy cryptocurrencies online because multiple websites are offering various coins. Additionally, these sites allow users to purchase coins using different methods, which include credit cards, cash via payment processors, and debit cards.
Nonetheless, not all vendors on the internet offer safe transactions. It’s unfortunate that some companies and online marketplaces are up to no good. This article will provide you ways of avoiding cryptocurrency scams, as suggested by financial expert Mark Dukas.
Initial Coin Offerings (ICOs)
Most startup cryptocurrencies use ICOs as a way of raising revenue to help in the development and promotion of the coin. It’s somewhat equivalent to an IPO as the public is invited to buy a new digital currency using established cryptocurrencies such as Ethereum and Bitcoin. As an investor, you need to be wary of initial coin offerings, as some startups use them to con unsuspecting individuals.
There are some tips you could use to avoid becoming a victim of ICO scams. For example, check for media coverage of the company offering the coin. Look around to find out if the company is involved in any trading malpractices. Investors should avoid companies providing little to no information about their ICOs.
Follow Your Instincts
When looking to purchase cryptocurrencies, be sure to follow your gut feeling. Be wary of deals that sound too good to be true. For instance, if a company is promising high returns without revealing the cryptocurrency’s intrinsic value, it’s wise to consider investing elsewhere. It’s a rule of thumb in the financial industry to be cautious when presented with opportunities that offer low risks and high rewards.
Ponzi Games
Since the initial release of Bitcoin in 2009, there have been several Ponzi schemes in the world of cryptocurrency. Suspiciously low risks and huge returns characterize Ponzi schemes. It’s safe to say that “risk-free” investments are rare, and you should be wary of them. Victims of Ponzi schemes often have a problem with withdrawing their earnings. Mark Dukas suggests that a genuine cryptocurrency marketplace or company should process cash and digital coin withdrawals without any problem.
Coins That Don’t Exist
A man in London convinced people to buy nonexistent coins in August 2017. Reports suggest that he called his victims and asked them to invest in the bogus cryptocurrency business he was running. The fraudster managed to obtain more than £150,000 (approximately $203,000) from unsuspecting investors. To avoid falling into such a trap, stay away from cryptocurrency investors who make cold calls to potential buyers. If you suspect a company’s business information, you should contact the SEC to confirm the details of the establishment.
Computer Malware
Web users need to protect themselves from virus and malware downloads. The anonymity that comes with cryptocurrency somewhat encourages scammers to entice internet users with files containing malware. To avoid malware, you should take some precautions. For instance, you should only download software from trusted websites. Be wary of suspicious links sent to your email. Additionally, find and install a genuine anti-malware application to help you detect and remove malicious files from your PC or smartphone.
Popularity vs. Trustworthiness
Most Ponzi schemes and scams fall apart before reaching their peak. Nonetheless, this isn’t always the case as some fraudulent cryptocurrencies become popular, thereby attracting more victims. A lot of people fall prey to scams because they don’t carry out their due diligence before making their investments. They choose to follow the crowd. Instead of trusting a company due to its popularity, you should consider putting in some work in researching it.
Fake wallets
Cryptocurrencies are stored in digital wallets, which could be offline or online. However, there are imitation wallets that are made specifically to steal cryptocurrencies from their rightful owners. Below are suggestions from Mark Dukas Charlotte on how to avoid fake purses.
- Only use familiar technology that comes with plenty of info about it.
- Use the official wallets provided or recommended by the company behind a specific cryptocurrency.
- Before using a site to trade or store digital coins, always double check the URL to ensure that it’s not a phishing/imitation website.
Conclusion
Mark Dukas Charlotte believes that you can stay safe from fraud by taking an interest in the deal before you sign. Digital currencies present a great investment opportunity, but you must conduct enough due diligence to safeguard your investment.
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