How to recognize cryptocurrency SCAM ?

2 min reading

Many people just entering the crypto market, very often fall victim to scams. How to distinguish a valuable project from a scam and what to suggest?


Good and weak project vs. SCAM

Vitalik Buterin (creator of Ethereum) once said that there are some good ideas in the crypto space, many very bad ideas and a lot of scams. These words became a kind of inspiration for writing this article. The most harmful thing that can happen to cryptocurrencies is to throw them all into one bag. I mean a situation in which a given user makes an investment blindly or under the influence of emotions or pressure from the environment. When the course drops and he loses his money, he claims to have been cheated, and the projects he has put money into are put together. This is unreasonable behaviour and the opinion given is wrong. Therefore, from the very beginning I will explain the difference between good and worse cryptocurrency and SCAM.

Projects which aim to scam money from users are not focused on technical aspects, but on marketing. In this case it doesn't matter what their cryptocurrency brings to the market and what problems it solves (if it solves any...). Everything revolves around the profits generated from acquiring more people who are willing to join the system. 

Companies of this kind have nothing to offer but the benefits and promotions that new members of the community are putting up for. One example was OneCoin, which turned out to be the largest financial pyramid in the history of the cryptographic space.

Next to it, there are these good and worse projects. However, comparing them to scams is ridiculous. What some people find captivating in a given cryptocurrency, others not necessarily. However, their creators want the project to develop further and bring some value to the market. This, in turn, will not be offered to you by scams.

Read also: How NOT to invest in Bitcoin (BTC)?

How to invest in cryptocurrencies?

If you have never had to deal with the crypto market or any other investments before, start with education. Remember, no one goes to the middle of the lake if they can't swim. You can drown very quickly in this situation. It is worth to learn from this for the future and use it in many other areas of your life, including investments.

First of all, do a decent analysis of the project. Answer the question what distinguishes this crypto from another. What technical aspects does it have? What is it used for? Who is behind it? What are plans for further development? Why does its value have potential for growth? Then focus on the security of its resources. Take care of a decent crypto wallet!

Read also: How to recognize shitcoin?

Avoid projects that offer you a high return on investment in a short time. With aggressive marketing and profits offered by newcomers, you should get a red light. A common mistake I've seen with beginners is that every low value cryptocurrency has a chance to become a second Bitcoin. This is not the correct way of thinking. What matters is what the project represents and delivers to the market.