Scams are not new to the present world. Many people stay up late at night trying to figure out how they can make quick money by deceiving others. ICOs are merely one of the newest opportunities that are often exploited to create fraudulent deals. ICO stands for Initial Coin Offering and involves the sale of tokens which are purchased using either fiat funding or cryptocurrency. ICOs require an initial investment like any other startup, with a promise of incentives later on. The problem starts when the ICO Company requires an original investment and holds a bigger portion of the token to be saved and used for profit once the new currency starts to hold value.
This is a cheap way of financing artificial developments without commitments. There is no insurance if they fail to deliver the promised deal. They do not keep documented proof on how the business roadmap is and also there is no evidence of the startup investment, so it can be dangerous. It is possible to invest in a research project and not the company itself, which they do not take responsibility of.
Why ICO Scams Succeed
A lot of money is made on speculation. The process of getting your money back is advertised as being quick and simple. They are popular because they do not have formal financial jurisdiction and exist in a crypto ecosystem with minimal checks and balances.
Your investment is very liquidatable in that you can cash in and out whenever you feel like. This platform is unique and exciting for that reason. A person requires assistance from somebody who understands this platform well as simple mistakes can cause major loses.
Tips Not To Fall Into ICO Scams
It is important to remember you are not investing, you are gambling on a company. Most of these companies do not always deliver on their promises. You should not invest in the ICO of a company unless you have found one that is working. It is important to invest in the companies that you are sure you can trust to produce valid results. Most companies in this field do not deliver their promises after they receive your investment, so if you are not careful you end up losing your money.
Due diligence is important when you are researching about an upcoming ICO and the product it is offering. You should not rely on other people’s research, comments, analysis, and feelings. There are a few people who pay at first and fail to pay the rest. When you listen to people who are among the first to join you may be misled. It is good to invest in something that you know of because you will have basic ideas about the product. This is very important so that you do not fall victim to scams.
If you don’t understand anything, it is important that you do research about the product, the technology they embrace, supply, market viability, incentives, roadmap, and demand. Many established companies start and perform very well but most die within a few years. Many businesses are normally purchased or acquire by other firms for additional funding. They should have good revenue streams, loyal customers, and documented evidence of the functions and transactions.
Cryptocurrencies sometimes reserve physical commodities like oil or gold, but most often they do not represent any physical item or use these items to determine their exchange rates. This is an independent digital currency that is well encrypted and is used to regulate currency generation by verifying funds transfers. Cryptocurrency is comprised of bitcoin, Ethereum, litecoins, and many other smaller or lesser known tokens. These currencies are decentralized, meaning that they do not belong to any one government or entity, and are not controlled by one.
This is a worldwide used cryptocurrency and a digital payment platform. Bitcoin is the first decentralized currency that is digital in nature and it works in absence of a central repository. The system works on a peer-to-peer basis and transactions happening directly without an intermediary. The transactions have to be verified by network nodes. The transactions are then recorded in a public distribution ledger known as the blockchain. They have gained popularity overtime and its popularity may continue to greatly increase with time.
How To Identify Bitcoin Scams
You should understand how transactions take place and how they are formed. It is important you learn how bitcoin works to ensure you do not get involved in transactions that you cannot understand the traffic of. If you do not understand the transactions, it is always important to consult with an expert.
Bitcoin Pyramid Schemes
These types of scams are hard to identify on the surface because they pretend to be genuine for a specific period of time before they pack up and are revealed to be schemes. They tend to benefit the first few people who get to them first who then invite their friends and later vanish with all the money. They are common as the scammers make a lot of money within a short period of time.
Many people use Bitcoin to fool victims to download software that doesn’t actually work. They may also sell substandard products and others may cause harm to your computer. This is called fake bitcoin wallet and hides in malware downloads. A person should verify any software before they purchase it online.
These types of scams are rampant on social media and use the bitcoin brand as a tactic to gain victims trust and imply their own credibility. They offer enticing services to users with an aim of gaining bitcoins from the victims. They do not offer the services they promise and do not return the victims share.
These scams pretend to offer bitcoin exchange services. After paying your initial fee, they promise to double your investment within a short time. Once you invest your money, your bitcoins are stolen immediately. These scammers succeed because they can be able to broadcast their activities to many unsuspecting people through social media. They widely advertise their services to many people and manage to get a good number of people who fall into their traps.
How To Identify Bitcoin/Cryptocurrency Scams Conclusion
Cyptocurrency transactions are irreversible after being confirmed by a number of blogs. It lacks consumer protection against fraud, unlike credit cards. Cryptocurrencies are managed by advanced encryption techniques that remove the need for a third party watching over every transaction, but this also means it is easier to take advantage of unprepared users.
Many governments are taking cautious measures towards them for these reasons. They are insisting on the importance of financial security to ensure citizens do not lose their money. In truth, it is the user’s responsibility to be proactive and invest wisely, only engaging in transactions with trusted entities. If you exercise caution, it is very possible to avoid being scammed.