Cryptocurrency scams: 6 warning signals to consider

Elizabeth Smith

We are surrounded by cryptocurrency, NFTs, tokens and metaverse. But when do these golden goose eggs actually turn out to be well-framed scams? And how to recognise cryptocurrency scams?

Being able to figure this cryptocurrency scams out in advance is certainly a great advantage, especially when we are talking about digital assets, instruments that are not infrequently exaggeratedly fascinating.

We will focus on cryptocurrency scams, but we cannot deny that some of this advice may also be valid in relation to the various digital assets that populate the Web3 today.

It is not difficult to realise a scam if we take these 6 factors into account. But, the result is not guaranteed. A lot also depends on how well the fraud is woven. Anyway, you will at least have useful filters to protect you and your capital.

Cryptocurrency scams: inability to sell purchased cryptos

There are some very obvious cases of fraud created for less aware users, some of which are easier to notice than others.

There are cases where, having created the token, it is purchased by an ordinary user who nevertheless finds himself unable to resell it.

This is an obvious wake-up call. Not being able to immediately resell a purchased crypto, or not being able to easily exchange it for fiat currencies demonstrates possible flaws in the equation we are part of.

This is often accompanied by very high commissions that risk stealing a lot of money during the selling phase.

Cryptocurrency scams: unfair distribution of tokens

Many users are unaware that it is possible to control how many people hold a certain amount of cryptocurrency.

Another alarm bell, when buying tokens of dubious nature, is a not inconsiderable amount held by a single individual or group.

You know that via blockchain or transaction history it is possible to see the owners of tokens. But, we could also do this on sites like Arbiscan (Token Tracker) or Etherscan.

If the developer of a project owns most of the crypto made available, it would be a good idea to ask yourself a few questions. And evaluate some of the other tips in this article.

Cryptocurrency scams: identity of developers

Who created the cryptocurrencies or tokens in question?

In a world like ours, where innovators take pride in their projects, it is difficult for the creator of a business not to want to reveal himself to the public!

When we buy cryptocurrencies or even other types of digital assets that are part of a business that seems interesting and profitable, it is hard not to come across the name of the development team or the CEO representing it.

We research developers or simply possible names related to crypto. If they are not there, we have a problem, and perhaps they do too.

On the web, where identities are easily corruptible, it is very important to know the first and last name of the user we come into contact with to avoid nasty surprises.

Cryptocurrency scams: excessive advertising with few interactions

One of the biggest risks when dealing with cryptocurrency-related projects is in close contact with social media and advertising strategies.

Linked to the concept of identities listed above, we must always be able to check and possibly credit sources.

It often happens that cybercriminals exploit innovations such as Web3 and its products to lure users with misleading advertisements, radical and not infrequently excessive marketing on Instagram, Facebook or Twitter, trying to grab as many victims as possible with often unrealistic promises.

Stay away from ads that seem incredibly tempting to be true, or at least investigate properly by following these tips!

No one wants to see their money pay for someone else’s luxury. And, then, risk being left with a fistful like the customers of the notorious CryptoKing.

Immediate and significant price growth

The value of the asset we buy is another measure of possible fraud.

When we buy one of the cryptocurrencies we most believe to be profitable, we have to watch out for possible excessive price increases within hours or days of its creation.

It could be the creator himself who crashes the price, running away with the profits from the sale!

A crypto can certainly increase in value quickly, but it is not as common as some of us might think.

Poorly detailed or missing white papers

One last thing to take into account is the growth plan. Namely, the core of the project and the purpose on which a particular token is based.

Are you familiar with the ‘white paper’? This is the document detailing the development stages and intentions of a given blockchain-based project.

Short and not very detailed information, rather than catchy promises of very high returns should raise initial doubts. All the more so if the cryptocurrencies we are considering buying do not have it.

To incentivise investors, a detailed and consistent white paper is crucial. Without it we are dealing with a fraudulent token.

Read also: NFT bubble burst? Values down, one of the most expensive tokens now worth only $10

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