With the booming cryptocurrency, a lot of stories about frauds and scams have surfed up in crypto in the past year. Many people think that money in crypto is real, while others consider it a scam.
By the latest report of March 2022, there are more than 22,000 cryptocurrencies in the whole world. You might have heard of it in different forms i.e. Altcoins, Forex Trading CFDs, etc. An increasing number of investors (aka “whales”) and influencers getting involved in this new form of virtual capitalism.
Is Crypto a Scam?
As with any investment, there are risks involved with cryptocurrency investing. Many scams and frauds have occurred within this space – some more well-known than others. Investors need to do their research before investing money into this new digital currency. This blog will expose all the possible risks and scams in Cryptocurrency.
Crypto Scam Whales
The whales in crypto are the wallet owners which are responsible for the biggest scams and frauds. Crypto whale accounts come from the darknets or illicit accounts. A whale sets up huge shares of the crypto and places a massive order to sell large chunks of crypto tokens. They play with the prices which cause high volatility and shift the cost paradigm of the crypto. Common investors suffer huge losses.
Cryptocurrencies are launched by Venture Capitalists (VCs) who are also responsible for naming the currencies for example the most popular currencies that you have heard of Bitcoin (BTC), Ethereum, SHIBA, POLKADOT (dot), etc. The scammers involve the VCs to launch the altcoins which have no real-life use. The most common VCs are Duckdao, daomaker, etc.
Before the actual Launch of the coin, the VCs generate an initial coin offer (ICO), they use the help of social media influencers to create social media trends. The early investors follow the influencers and are tempted to invest in the coin. 99% of the people doing even get the chance to be in the ICO.
Ranking Sites and Exchanges
The exchanges (e.g. ) and the coin ranking sites e.g. coin desk, and coin market cap put the coins in the market. They earn a handsome percentage of their shares and benefits. Genesys uses these exchanges and coin ranking sites to put out the fake trends and news about the coins and the exchanges do the flashing to make it all look real.
Scammers are very commonly involved with social media. They use the social media platform to make a new coin popular. They run fake social media trends, use the help of social media influencers, and carry out fake coin giveaways to lure in investors.
How to Avoid Scams
1. Don’t hop on trends
The best way to avoid crypto scams and fraud is to get rid of your fear of missing out (aka FOMO). A lot of early investors are people who are inspired by friends and social media investors. They invest in new coins without any research and verifications.
2. Do some homework
If you want to invest in Crypto you should always do your homework and spend time in research. You can buy coins that are stable and have real-life uses such as Bitcoin, Ethereum, Polkadot, etc.
3. Invest strategically
You should use a strategic investment plan. Instead of buying cryptocurrency in one attempt, you should divide your investment into small chunks and buy over a period of time. In this way, you will not be affected by the price fluctuations. You can buy at an average rate.
The most common term in crypto is Do your own research (DYOR). Always do your own research, and learn about the development and source of the coin instead of listening to external voices. The decision about the aunthenticity of any coin or wallet depends on the user and investor. You must be able to know enough about the currency before investing your hard earned money.
To learn more about cryptocurrency and is it worth investing in 2022?, you can read the previous blogs.