Just because you are interested in trading cryptocurrencies does not mean you have to jump into trading without proper thinking. The cryptocurrency market is quite fresh right now and many governments are thinking about regulating it. The idea of regulation has not come out of nowhere. In fact, when cryptocurrencies started, a lot people invested their hard-earned cash into buying them. Later on, they were scammed and as a result, they lost the money they had invested in crypto coins. Time and again, people have lost their precious coins in the hands of a scam.
Unfortunately, you still have a lot of scamming lurking around in this market. As new cryptocurrencies continue to emerge, you have to be more careful with where you spend your money. So, to make sure that your money is safe, In this article, Neuercapital brings you to identify the legitimacy of a cryptocurrency.
Tips to Identify That a Cryptocurrency Is a Scam
Understand the Whitepaper
If you notice, we have not used the word “read.” We have used the word understand for a reason there. When you look at the whitepapers of various cryptocurrencies, you will find out that many of them resort to jargon of the industry. They use complex words and fancy terminologies to make it appear as their concept is new and unique. Perhaps, they are also trying to prove that they know their stuff. However, a whitepaper that you cannot understand as an investor or trader is as good as nothing. The idea of the whitepaper is to explain to you how the technology works. Instead, these scammers use whitepapers that make absolutely no sense to you.
So, if you are reading a whitepaper but can’t understand what it is talking about, do not think that it is your fault. The creators of the cryptocurrency are complicating matters for you so you can’t make a well-informed decision.
Know the Concept
You have to know the concept in detail. You must make sure that the purpose of the cryptocurrency to exist means something. As they say, “You can’t fix what’s not broken.” Unfortunately, many cryptocurrencies that you see today are trying to fix what’s not broken. You can read the whitepapers of these cryptocurrencies and join online platforms to know what the cryptocurrency is all about. You then have to engage in the pursuit of finding out the truth. Is the cryptocurrencies really needed? Is it solving a problem? Is it there just for the sake of being there?
If you feel that a certain cryptocurrency is not adding any value to the existing system or bringing anything new in the world, you can just away from investing in it.
Know More about the Developers
This is probably the most important thing that you will have to do to know about a particular cryptocurrency’s reality. It has happened several times in the past that a cryptocurrency disappeared after its initial coin offering. The common factor among those cryptocurrencies was always the team of developers i.e. no one knew anything about the developers and the entire team behind the project. So, the first thing you should do when you discover a new cryptocurrency is to find out about its developers. You can usually find their pictures and names on their websites. In addition to that, you should look for their social networking profiles.
One of the clear indicators that the cryptocurrency you are looking at is a scam is when you notice the team of developers having new social networking profiles. You can’t believe that an entire team of developers would create social networking profiles at the same time. Almost everyone has a social networking profile today and if a team of developers has to create theirs after starting a cryptocurrency, that’s a clear sign that there is something wrong.
Search through Online Platforms
You have some online platforms where you can find just about any type of information you want about cryptocurrencies. Take the example Reddit, where you can find information about the cryptocurrency market, blockchain, and any new cryptocurrencies that are being launched. The best thing is that you find neutral people here who will tell you everything about cryptocurrencies in the most honest manner. These are people just like you who are looking for opportunities to invest in cryptocurrencies. They discuss various cryptocurrencies almost on a daily basis through online communities.
You will be glad to know that Reddit has Subreddits (more like communities) that are dedicated to specific cryptocurrencies. So, if you are interested in a particular cryptocurrency, you can see if there is a subreddit with its name.
In addition to Reddit, you have Quora as one of the best online platforms to know about the status of various cryptocurrencies. Here, people like you ask questions in an attempt to get expert answers. If you are skeptical about a particular team of developers or a cryptocurrency, you can definitely post your question on Quora. If there are any people who know anything about the cryptocurrency, they will answer your question and help you stay away from being scammed.
Wait for It
That’s not just a meme on the internet. In fact, when you wait for things, you have time to rethink your decisions. The number one mistake that many new investors and traders of cryptocurrencies make is that they jump into things very quickly. They want to grab an opportunity before everyone else gets their hands on it. However, in an attempt to do it, they completely ignore the many warning signs that are trying to stop them from being scammed. Do not invest in a cryptocurrency when it has just come out. You should take your time and wait for it to be known around the world a little.
Let experts give their opinions about the cryptocurrency. In addition to that, you should also wait for online exchanges to make that particular cryptocurrency available. Not to mention, you should ask questions on Reddit and Quora to know what answers you receive from the people in the industry.
As much as you want things to be ideal and fair, the world does not work that way. People have lost millions of dollars in cryptocurrencies in the hands of scams. People appeared on the scene, started an ICO, broke records, and then disappeared with people’s money. In many cases, people could have avoided getting robbed of their money by waiting only. You should be patient when it comes to investing your money in cryptocurrencies. Read about a cryptocurrency, investigate the matters, know its developers in detail, and then make a decision.