How to Differentiate Between a Reliable Exchange Platform and a Scam

Share:

Just like stepping into anything new that concerns money and the potential to make more of it, cryptocurrency is full of risks that can affect even an experienced crypto trader or investor. There’s loads of information about common cryptocurrency scams on the internet to keep you protected. This article deals with some of them and explains the red flags to look out for when something might be fishy (or should we say “phishy”?). We’ll also detail how to know you’re on the right track with a trusted and reliable exchange platform.

Crypto Scams — the warning signs

There’s an endless variety of scams, and we’d need a lot more space to give you an exhaustive list — crypto scammers, like scammers in general, are probably some of the most creative people out there. Before we go into specific details about the main scams you should steer clear of, here are some questions to always ask yourself in case you’re unsure (even if you’re not — it’s always good to be safe when investing in the volatile world of cryptocurrency) about the legitimacy of a platform.

Ask yourself:

1. Am I guaranteed to make money? (Even if it’s a celebrity promising this)
2. Am I guaranteed big returns or payouts?
3. Am I guaranteed returns in a short time?
4. Am I promised free money/crypto?
5. Are there any reliable details, explanations and trustworthy credentials?

Once you’ve answered these questions, it’s helpful to grow your scam-savvy arsenal by knowing what some of the major scams are. Firstly, investment/business scams are common. Here, scammers make promises in the form of highly successful investment opportunities or even job offers to do things like mine Bitcoin. Once you agree and send through some of your personal information, this is used for hacking purposes. Or you send money to be invested; but when you try to access it, you can only do so once you’ve paid a fee. FYI, these job offers also involve paying a fee. The equation goes something like this: pay money to make money ad infinitum, but you’re the only one paying money and the scammer is the only one making it.

Another popular scam that catches many people comes in the form of social media promises, blackmail emails, bad apps and fake websites. These scams target the social yet private worlds we inhabit on Facebook, Twitter, etc. It includes things like romance scams — people who are in it for the long game. Scammers use psychological tactics to convince, build trust and rapport and create personas to play on people’s weaknesses and eventually siphon money from them. Don’t fall victim to group mentality or overlook even the tiniest details; does a logo look slightly different? Sometimes even a website’s URL might have a zero replaced with the letter “o” — the devil is quite literally in the details

Another large scam is phishing; this covers all manner of ways that scammers might try and get your personal information. For example, to your virtual wallet or any other secure keys that would leave your personal information (and therefore, hard-earned money/assets in whatever form they may be) at risk.

Finally, market manipulation is another huge risk — check out Business Insider’s thorough explanation of what these complicated scams look like if you are seriously considering making money from cryptocurrency investing.

Reliable Exchange Platforms

Since there are so many “DON’Ts” already listed, let’s end this article on a positive note. What are some practical steps you can take as a crypto trader/investor to protect yourself?

1. Do your research. Before investing, search for the name of the company and the cryptocurrency online, plus words like “scam”, “review,” and “complaint.” Don’t forget to check out the token/offer’s white paper, objectives and history.

2. Ask these questions: how long has the token been around? Does it have a purpose? Does it seem unrealistic?

3. Be wary of who is the one promoting it: are they a credible financial expert or a fashion expert talking about the hottest new crypto?

4. Bypass third parties and find an original website. Then determine if the website itself is legit (refer to the points regarding fake websites we mentioned above).

5. “Most exchanges show you all the open orders for an asset and the order history. Check the pattern on trading volume. If it has spiked recently and looks to be trending higher, be cautious” — this could be a sign of a pump and dump scam.

6. Most importantly, keep a cool head, don’t always follow the crowd and be cautious amongst the volatility of crypto. Doing these will ensure you rebuff any potential scammers and fraudsters.

Now that you know what dangers lurk in the waters, you can better protect yourself. As for a safe place to start, the IXFI platform has advanced security measures, such as an Anti-Phishing system and thorough verifications so you and your assets can be more secure. Your Friendly Crypto Exchange always has your back, so join IXFI today.