What are some warning signs of a scam?
1. Minimal use of cryptocurrency.
2. Lack of sophisticated technology.
3. Extremely high subscription costs.
4. Fake endorsements from well-known celebrities and politicians.
5. Nonsensical claims.
7. Someone you know/trust has invested in the company.
9. Reliance on “investors” for funding.
10. Big “get-rich-quick” schemes.
Section 2: Discovering Cryptocurrency
1. Understanding cryptocurrency.
This may seem more complicated than it is. Some of the simplest forms of cryptocurrency, like bitcoin, can be used to pay for a cup of coffee. However, not everyone who knows how to use the technology fully understands its implications, and, as a result, it can be confusing.
4 Scams to Keep an Eye Out For
No-questions-asked ICOs – Investors pay for some details about a cryptocurrency investment and are left in the dark about how their money will be invested. This is especially dangerous since many ICOs don’t explain the plan very clearly and have vague timelines.
BitShares is a notable example of this. In August 2017, they reported having raised over $150 million in ether tokens from over 42,000 investors – with few details about how it would be invested. Most recently, they’re planning to raise $37 million in bitquids, a type of cryptocurrency.
Initial Coin Offerings (ICOs) – Another common scam, these are when an organization sells cryptocurrency in exchange for fiat money. The early investors receive “miners” who solve the program’s cryptographic puzzles.
5 Tips for Avoiding Digital Currency Scams
If you’re contemplating a move into cryptocurrency, take these five tips from experts to protect you from scams.
1. Bitcoin-Specific Investing
“Bitcoin scams range from ‘get rich quick’ schemes to Ponzi schemes,” says Debbie Kilroy, CEO of the Social Learning Company, an education company. “If a company says they’re an expert in Bitcoin, beware. Look for an actual person behind the company and make sure you can confirm that, even if they have a website.”
2. Speculative Investing
Another warning sign, Kilroy says, is whether or not a company’s products or services fit a “coin-hype” stereotype. For instance, if a company thinks they have the next big cryptocurrency or Bitcoin is the “The One Thing Everyone Is Missing,” that’s a red flag.
Despite the high risk of being scammed, Bitcoin is the key to financial freedom and independence in the future. Taking advantage of the opportunity to invest in the best Bitcoin opportunities is an essential part of your personal success. For anyone interested in learning more about Bitcoin, there are a number of resources to help you on your way, including websites, videos, and other publications.
Alexa Mansour is the chief strategy officer and editor in chief of Monexpro. You can reach her at [email protected].
Bitcoin Scam Videos
If you would like more information about digital currencies or you need help with your finances, visit our Bitcoin section, or click here to see our how to buy Bitcoin page.