As bitcoin investment opportunities continue to gain adoption at breakneck speed, more new users are coming onto the scene. Which presents a very enticing opportunity for scammers. As new investors are obviously coming on board to make some money (are there other reasons to invest?), many are too unfamiliar with how the market works, leaving them fully exposed to hacks and theft.
Obviously, if you use helpful exchanges (famous ones like Bitvavo that are secure and full proof are an option to avoid scams), or have been in the game for a long time, the probability of being duped is much lower. But it´s best to try to avoid it. Scams are possible, particularly in the bitcoin and crypto sphere. This is largely because digital currency is, well- digital. The lack of tangibility coupled with a trading floor that is entirely online can be a hackers paradise and an investor’s nightmare. Luckily, many scams are easy to spot and simple to avoid.
What They Look Like
Most crypto scams have a very recognizable structure- albeit a pretty professional one. Here are the three hallmarks that should raise some red flags when you’re considering new crypto buying options.
Get Rich Quick
Even an “overnight” bitcoin millionaire will tell you- they had to buy in early and wait years for their bitcoin to come to any sort of recognizable value. Probably the biggest indicator that a website or latest crypto is a scam is any indication that it may give about you becoming instantly in the money. Trading just doesn’t work like that. You’re either looking at a slow, arduous process of acquiring small, short-term gains, or you’re a part of the HODL community and have to sit on investments for ages. There’s just no way to get rich quick in this game. And as the Princess Bride put it best- “anyone who says otherwise is selling something.”
Copy of a Copy
While most scamming sites do look professional and fairly legit, pay attention to the smaller details, and you’ll soon see the cracks in the Matrix. Scammers love to troll non-financially based social media platforms like Instagram and Twitter- which detracts from the genuine financial advice you can get from these sites, provided you know where to look. Scammers will create fake tweets or profiles and pass them off as the product of a reliable source. So make sure that anytime you think Elon Musk is handing out Ethereum- check out his page first.
Check the URL, Again
Which brings us smoothly into discussing phishing sites. Cloned phishing scams are notoriously hard to detect, and the ones that are well done can even take long-term and well-versed investors by surprise. These scams work by hackers creating an identical page to an original site that requires private login details (like a clone of an exchange). The hackers then use these details to access your accounts and wreak havoc on your investments. The best way to avoid these types of sites is to always ensure that you’re using the right URL- which means double-checking it every single time.
How to Avoid Them
Arguably, once you know what to look for, scams become much more easy to avoid, but some are good enough to where they can still leave you with some doubts. When this happens there are a few tried and true ways to ensure you don’t get taken for a ride.
Ask an Expert
Reach out to anyone of the various communities and forums that are dedicated to talking crypto. Both Twitter and Reddit offer some classic safe havens for novice and interested investors. It’s also wise to reach out to the team behind any ICO or crypto company that you may be looking to invest in. If you can’t get a hold of them directly (as it’s unlikely you’ll be able to swap emails with mega-stars like Vitalik Buterin), at minimum do your due diligence. Spend some time researching individual team members and any partners before you invest.
Read the White Paper
A white paper is the document that works similarly to a mission statement or manifesto for any given cryptocurrency. It should clearly define the token’s background, goals, strategy, the timeline for implementation, development strategies, as well as a call to action. These papers should actually be pretty boring. A flashy website may serve to entice, but a well written white paper should be so clear it becomes nearly bland. Talking to depths about facts, figures, and future investment potential.
Make Sure It’s Real
Sure, it was funny, maybe even brilliant, but when TikTok’ers decided to plug the fake cryptocurrency “Dodgecoin”, the market actually boomed. Leaving many to fall prey to a classic pump and dump- which in the wildly unregulated and arguably, rarely understood market, is a bit unfair. The token is based on an old school internet meme of a rather incredulous looking Shiba Inu. While the coin itself was created in 2013, it was done as a gaff- providing no supply cap, making it next to impossible for the coin to lay claim to the value inflation caused by artificial scarcity. Rendering it near useless, giving us all a staunch lesson in why influencers shouldn’t be your only influential resource.