The cryptocurrency market balloon has attracted huge interest rates for new investors. The increase is so promising that new coins are added almost every month. There are now more than 16,000 crypto currencies on sale, according to CoinMarketCap, a market research agency. But this rapid growth seems to be a cause for concern as there are many coins introduced for the sole purpose of riding an existing trend or happiness as well as cheating or deceiving investors with their money. In such a situation, how do we distinguish between legal and illegal coins?
For a novice investor, many coins seem to match their promise of return and the work they represent. An example of a coin-related scam in the industry was the Squid Game token. Launched following the popularity of the Netflix show of the same name, it gained momentum and lost momentum with lightning speed. The developers disappeared with tokens worth a million dollars, leaving investors high and dry.
However, there are red flags that all investors should always keep in mind when investing in new investments - or especially in the cryptocurrency industry. Here are some of them:
1. Confirm the project
As a sixth rule, keep an eye on the project website and its white paper. It is one of the most reliable ways to ensure that the crypto project is legal. Each project produces a white paper, which explains the purpose, vision and design of the basic blockchain and other technologies behind the project. White paper can be found on the project website. Read it and verify information in other sources.
2. The promise of a senseless return
If a project promises a high short-term return, grab it and learn more about it. Any investment takes time to mature. Given the volatile nature of the crypto industry, it is always wise to invest in the long term. Temporary price fluctuations are acceptable, but high volatility should be read as a warning. Also, fraudsters use criminal emails to steal sensitive information and social media handles to reach emerging investors. Be careful with them.
3.Follow the URL
Fraudsters usually use website URLs that look similar to the original. If you do not see the “lock icon” in your browser's address bar, near the website, it is not safe to visit the website. Make sure the URL uses “https” and not just “http”.
4. Follow the creators
Look at the people running the project, the governing body, the supporting foundation etc. Extensive research is always a useful tool in the fight against scams. If the creators of the project are unknown, the flag is red.
5. Fake compliments
Fraudsters often try to increase legitimacy by adding the names of influential people and celebrities to their project without permission. They understand that people rely on popular words and try to use this as a ploy to deceive fraudulent investors. While some tech entrepreneurs and entrepreneurs have supported crypto, they have authorized a limited number of coins. Confirm claims.
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