The crypto world is a great environment for scams, and that is well-known fact in the cryptocurrency world. Still, many people get scammed regardless of their awareness. Why is that? Well, it could be traced to psychological factors. Simply put, if there is a chance of a hefty profit with a low investments people may get carried away. This might cause them to not pay attention to details, which are crucial if one doesn’t want to get scammed.
First of all, one should be well informed before making any investments. If one gathers all the information about a possible investment, there is less of a chance of getting scammed.
If there are guarantees of high profits or high-interest rates, it’s almost certainly a scam. The price of every coin is very volatile, so it is hard to give any guarantees. Also, minimal information about team members or the company is usually a sign of a scam. Another sign is difficulty withdrawing funds.
Most cryptocurrencies are open sourced. Every cryptocurrency that has been branded as a scam does not reveal it’s codebase or simply doesn’t have one. A big reason why a scam cryptocurrency could be closed source might be due to the fact that there is no codebase at all. You can check the codebase for any cryptocurrency at Github. The Whitepaper is also a way to determine if the company has a clear strategy and idea, or if they are simply waffling on about nothing particular.
ICO (Initial Coin Offering) scams are very popular. An ICO is an unregulated and controversial means of crowdfunding via the use of a cryptocurrency, which can be a source of capital for startup companies. Fake ICOs are not that easy to spot, as some seem very legitimate. What one should be looking for is proof of endorsements and involvement from reputable figures, as well as a legitimate team. The best way not to get scammed with a new ICO is to see a working prototype of their product in action before making any investment.