We are seeing ICO’s and coin promotions all over the internet and social media the past 12 months. Unfortunately, most of these ads are promoting “shitcoins” or “pump and dump” schemes to just take. Some of these tips may seem like common sense, but common sense is not so common so I thought I would reiterate them anyway. Here are some protocols you need to take to avoid crypto scams.
Look At The Coin’s Volume
Low volume coins are a big red flag. Illiquid markets can be easily manipulated, and plummet a huge amount in a short period of time. Most pump and dump coins are low volume, because insiders are just looking for unsuspecting people to generate liquidity so they can dump their coins at a higher price. If you try to exit a big position in an illiquid coin you will take a much bigger loss due to slippage from the lack of buyers in the coin.
Be Suspicious Of Any Social Media Accounts DMing You About Donations
Legitimate projects do not direct message random people on Instagram asking for ETH donations. The best projects market their coin in a professional manner, and have a method of verifying investors in the project, and have a secure system of taking payments. People direct messaging you on social media will likely just take your crypto donations and run with it.
Research The Coin’s Team
Legitimate coins have a team full of people with extensive experience in the field their coin is in. Crypto scams will often have a small team full of unqualified people, who might even have criminal records. You should do a Google search on every member of the team of any coin you are looking to invest in. If nothing comes up on the team members on a Google search or you find they have a criminal record, do not invest in the coin.
No White Paper
A white paper tells the direction and purpose of the team’s project. If a coin that is being promoted to you has no white paper, that is a huge red flag. A project that has no white paper indicates that there is no direction. It is very concerning when a coin’s team cannot tell you exactly what they plan on doing with the funds you are giving them.
Plagiarized White Paper
Many crypto scams will actually plagiarize the white paper from legitimate cryptocurrencies’ projects. You should copy and paste phrases of the white paper of the coin you are looking to invest in. If any other white papers from other coins show up on Google search using that exact verbiage, take this as a major red flag. They are trying to masquerade as a legitimate project and are likely a scam.
Get Rich Quick Promises
The coin you are looking to invest in should have actual utility and focus on the coin. When the team is constantly talking about how it will make you guaranteed returns and make you a millionaire overnight, be very suspicious. These are statements that pray on uneducated investors who don’t understand that getting rich overnight from a small investment is not realistic.
Legitimate coins have teams that focus on the technology and the problem their coin willl resolve in the world. They don’t focus on making investors rich overnight. One that we really like is called UnikoinGold from the company Unikrn. They have a proven CEO in Rahul Sood and a great project with a real use case.
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