8 Warning Signs a Crypto Coin Is a Scam
Anyone who’s made good money through cryptocurrency can become an evangelist for others to hop on board the crypto train. While it is certainly possible to make money through legitimate cryptocurrencies, it’s just as easy to become the victim of a crypto scam.
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While you shouldn’t let fear put you off the chance to invest legitimately, you should educate yourself on the signs of a crypto scam so you don’t end up losing money. Many scam payments are irreversible.
The safest way to spot a scam is to expect them, according to Al Alof, CEO of the crypto and currency exchange ChicksX. “Many crypto coins are created intentionally to scam those who purchase them,” he said. Be on the lookout. Some new coins may be made with relatively good intentions but end up crashing, so stay vigilant when investing.
“With the emergence of smart contract tokens, it is easier now than ever to create crypto tokens, and little programming or cryptocurrency knowledge is needed,” Alof explained. Decentralized Exchanges (DEXs) also make it possible for anyone to list their coin for sale with no prior approval by a trusted third party.
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You’ve probably heard of Bitcoin, Ethereum or Solana because they’ve established themselves as legitimate types of crypto. You should be wary of newer ones until they find their legs, Alof said.
“Only invest in established cryptocurrencies that have many years of trading and market activity behind them. A high market cap is another strong indicator of a coin’s trustworthiness, but methods including ‘pumping and dumping’ can manipulate this, so they should be considered alongside the age of the coin.”
It helps to keep up to date on crypto news from sources such as CoinDesk and BeInCrypto, Alof said, “to stay in the loop about potential concerns or risks with these more popular coins.”
Another sign of a scam could be that when you search for information about it on Google and news, you can’t find anything.
“While many scam coins are only revealed to be an obvious scam after they have tanked in value, it’s essential to read a variety of opinions and analyses before making your investment decision,” Alof said.
Another indicator of a potential scam is if a coin has a large “pre-mine value,” Alof said. “This means the creator of the coin has the potential to tank the coin’s value by quickly selling it off.”
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