The cryptocurrency sphere is a whole new world that involves a lot of money– and where there is money to be made, there is money to be stolen. Being a crypto industry veteran Vadym Kurylovych CEO of stex.com and advisor to an online identity platformcryptonomica shares:
‘The thrill of having certain coins or cryptocurrencies and the ability to make a profit from it through trading sounds easy. But one should be wary of exchanges that appear from thin air and start priding on what they are not. These exchanges may hold onto one’s cryptocurrencies and alt-coins or putting out unreasonable demands for withdrawals. They could shut down as quickly as it appeared with all one’s crypto assets. Therefore, it is advisable to conduct due diligence and check reviews before committing to one. Another pro-tip would, of course, be to not put all one’s cryptocurrencies onto the exchange platform. Cryptocurrencies should be stored in a wallet or if one is extremely serious about security – a hardware one.
Next, there are wallets.
There are many fake android wallets out there and while there are no outright signs of it, it is imperative that one reads up on the reviews. Scour the internet for as much information as one can about the wallet that before transferring the crypto investments into.
Then there are ICOs.
As an investor, it is imperative that one reads the whitepaper of the company that they will be investing in and do the necessary research. If one decides to put money based on marketing hype and what someone from the product team “said” or claims, then perhaps losing investment shouldn’t be too surprising.
A few telltale signs of a dodgy ICO are:
Inconsistent whitepaper or blueprint — a mismatch between what is written and verbally shared
An anonymous team (or most of them)
The team ignores or are unable to clarify difficult questions
There is a rush in execution or the technology needed to build the product is not even available yet
Finally, phishing scams by impersonators or ponzi/pyramid schemes.
They can come in many forms but most of the time they will be asking for user’s username, password and keys. Of course, the format it is presented in not that upfront. They come in the form of Punycodes or fake Airdrops. Some impersonators create fake social or Telegram accounts of the team members asking for details.
If the project is getting users to be its evangelist for a fee and a promise of higher investment returns for getting more people onboard, it is a Ponzi scheme. The focus should be on the promise of the product’s return and not solely on the return of the invested sum.
In conclusion, the most important thing about entering this space is to be diligent in research. It may seem cumbersome at the moment, but it will definitely save a lot of heartache in the future.