How to Start Investing in Crypto Without Getting Scammed

Have you seen the craze over cryptocurrencies? Everyone from your friends to your grandparents has been talking about Bitcoin, Ethereum, and any other number of coins that have been flooding the market. Or maybe you’ve heard of blockchain technology which has been behind most of the recent advancements in cryptocurrency.

Crypto coins are by far the most popular investment at the moment. Everyone seems to have an opinion on them, and you will often find people talking about their coins at work or in public. However, this has resulted in a crowded and chaotic market that is now being swamped with scammers and con artists.

Therefore, if you are new to investing in crypto, you might be confused as to whether it is safe or not.

In this article, we will introduce you to the different types of cryptocurrency scams and how you can protect yourself from them.

3 Common Crypto Scams

The cryptocurrency market is full of criminals who are trying to rip off the recent influx of new investors. Some of these scammers are a lot more sophisticated than others, and some of them will try to exploit any vulnerability that they see.

Following are some of the more common scams that have sprung up in this new and exciting market.

1. Rug Pulling Scams

You might have heard the phrase “pulling the rug from under you”, but you probably didn’t know that it could be applied to cryptocurrency scams as well.

This term is used to describe a scammer who puts on a show of helping you learn about cryptocurrency and how you can use it. However, once you believe that this person is genuine, they will hit you with some kind of catch.

More often than not, the rug pulling scam will require you to make an investment in some kind of new cryptocurrency. The scammer will tell you that it is an amazing opportunity and then encourage you to invest as much as possible.

However, once you invest, the scammer will disappear or take your money and run. Normally, once you invest, you can not trade back out of that cryptocurrency.

2. Bitcoin Investment Scams

A classic scam that we see a lot of, is the Bitcoin investment scam. This involves an investor who promises quick and large returns from their newly found cryptocurrency. The person will teach you how to mine or trade your Bitcoin, then explain to you the advantages of Bitcoin as an investment.

However, they will also tell you that if you invest a certain amount over a certain period of time, you can earn a very large profit. They will also recommend putting all of your eggs into that basket and then cashing out.

They will also most likely sell this as a way to get rich quick, which is the main reason that you need to be very wary of what you are being promised.

This type of scam may also occur when a seemingly reputable investor is trying to sell you a cryptocurrency product. They then ask you to trust them to trade your money for you. They end up disappearing with your money and you lose everything.

3. Ponzi Scams

Ponzi Scams are the most common scams in the world of cryptocurrency. They occur any time that an investor or investor group promises returns high enough to match or exceed investment growth.

A Ponzi scam is usually a form of investment fraud that looks very attractive to unsuspecting investors. It offers high returns on investments or gives them the chance to get in on the ground level of something very new and lucrative.

However, the returns are actually being made by investors who invest funds into the scam and then keep that money for themselves as profits. When there is no more money to invest, the whole thing collapses.

They also depend on investors who joined early on to encourage new people to invest. This means that these scams need a constant influx of new people in order to remain profitable.

How to start investing in crypto without getting scammed

Now that you understand what types of scams are out there, you might be thinking about investing in cryptocurrency. Maybe you have decided to buy some Bitcoin or Ethereum for the first time, but you do not want to get ripped off.

So, how do you start investing in cryptocurrency and not get scammed? Here are some basic but helpful tips.

1. Always do your research

One of the most important things that you can do to protect yourself from the many different cryptocurrency scams is to do your research. If someone is trying to sell you something that sounds too good to be true, it most likely is.

If you are having trouble getting your head around how cryptocurrency works, then do some research. Read up on the different articles and guides that are available and ask questions. Ask the people you know who have invested or traded on their experience.

This will not only help you understand how cryptocurrency works, but it will also help you spot potential scams and frauds.

2. Check out the Traders

Another good idea is to check out your potential trade partner. If they are offering you cryptocurrency, then you should go to a site like ICOBench and see what others have said about them.

These are independent opinions, but they can also help you to get a feel for whether the people who are offering you cryptocurrency are good or not. If several people have had bad experiences of some kind with that given trader, then you should look elsewhere.

3. Ignore get-rich-quick webpages

You might have heard of get-rich-quick scams, but you probably did not know that they also exist in the cryptocurrency market. Websites like these promise you a quick and easy way to amass a large sum of money.

However, to benefit from crypto-get-rich quick schemes, you have to invest a lot of money in something risky. A lot of these schemes will promise you great returns, but they actually end up taking your money and disappearing.

Always trust a company that is based in the real world. The chances are much smaller of them being a scam than one of the cryptocurrency ICO startups that might look like they have a great idea, but they probably do not have the means to make good on their promises.

Conclusion

Crypto investment scams are real and they can be very convincing. However, it is important that you learn the warning signs and do your own research. Compare what you are being told to what other people are saying and make sure that you are getting the whole story.