IDENTIFYING CRYPTO SCAM PROJECTS

Contemporary times have witnessed the launch of a number of projects following the growth, huge demand, and profitability of cryptocurrency projects. Associated with this trend is a seemingly proportional increase in the rise of crypto scam projects. With the mainstreaming of cryptocurrency, there is a sense of responsibility that comes with trading in a high-risk investment market. As such, both investors and non-investors are targets for scammers aiming to earn quick money by manipulating people who will do anything to get rich quickly.

One of the most famous scams was BitConnect. The project that turned out to be a financial pyramid collected billions of dollars from investors and left them with an unuseful coin. The referral program proposed by the BitConnect providers no longer exists, but the cryptocurrency space is still full of such schemes. In this article, we’ve highlighted some pointers to crypto scams so you can easily spot them and avoid falling victim.

First off, a simple approach to evaluate whether or not a token is a fraud is to look for investment schemes that promise unreasonable returns in a short period of time. Authentic crypto projects take time to build up products and solid investment policies via their tokenomics structure. A careful study of this aspect is an important precedent to identifying crypto scam projects.

Again, any crypto giveaway scheme which requests investors to send a few coins for address confirmation is almost certainly a scam. Remember that no legitimate crypto project will ever ask you to send money first.

Another popular scam is Pump and dump, a fraudulent scheme conducted by small, well-organized groups looking to generate interest in unknown coins. They purchase the coins themselves before launching a social media campaign to generate interest in the project and attract investors. In this regard, as more people desire to take advantage of an investment opportunity, prices increase dramatically, causing FOMO (fear of missing out). The project’s organizers dump their coins as soon as the fear hits its peak, causing the project to fail and a major outflow of investors who realize they are losing money.

The obvious way to avoid this scam is not going into mass hysteria and again, don’t forget to study the market carefully. Commonly perpetrated scams also involve unsolicited job offers sent to actively lure cryptocurrency investors, trade cryptocurrency, create a cryptocurrency, or convert cash to Bitcoin.

Another method is to use hacked or forged social media handles of well-known individuals to promise quick cryptocurrency doubling. You may most likely send a certain amount of coins to a specific address or provide personal information. Just keep in mind that it’s always a scam.

As an investor or an intending investor, it is very important to invest after doing due diligence on a project. Look up their white papers, the background of the team behind the project, their social media handles, and check out the project’s community. Similarly, confirm that the token is supported by a real, working blockchain that you and anyone else can monitor in real-time. One must also ascertain that its developers are regularly introducing new features, fixing bugs, and attempting to improve the performance of the network.

In all, learn everything you can about cryptocurrency and maintain your uncertainty, and you’ll have a much higher chance of catching scammers off guard.

The Afridex Model just launched her Community-based Exchange that adopts the future of Crypto projects in Africa as the centerpiece of objectives within the crypto space. The viability of our platform derives substance from our desire to build a virtual consortium of blockchain projects in Africa and beyond.

Dedicated to building trust in the crypto space, our business model is product-focused. The $AFDT tokens being the governance token within our eco-system have been developed to give holders access to a portion of the profits from the Afridex Exchange in the form of dividends distributed to token holders in proportion to their holdings.

Are you willing to invest directly into Afridex? Contact us here

You can also generate affiliate earnings on AFDT before it gets listed on the Afridex Exchange.

We are helping startups raise funds by building a decentralized structure for investment in their projects. If you are interested in this service, get started here.

If you need more information, read our white paper.

Join the Afridex community on social media

--

--

--

A Defi Blockchain Company, using decentralized solutions to revolutionize finance in Africa.

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Bitcoin’s SHA-256 Algorithm Gives You More Guarantees Than Any Bank in the World

New Exchange Listing — Bitvoicex

NKB Group's Blockchain Market Update

Untitled

Elon Musk Wants Dogecoin Purchases to be Cheaper

Review of ShapeShift Prism

Hey, you got your decentralization in my immutability!

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
AFRIDEX Techlabs Ltd

AFRIDEX Techlabs Ltd

A Defi Blockchain Company, using decentralized solutions to revolutionize finance in Africa.

More from Medium

Weekly Recap 02/28–03/06

Gear up for the MetaGrail NFT sale that is going live today!

The Airdrop of Bamloff NFT Whitelist!

Koi Metaverse — Bi-Weekly Update 2/14–2/25