Depending on one's knowledge of crypto-currencies, one either thinks of it as a revolutionary technology or a fraudulent activity. Those in the latter group are afraid to invest in this industry because they are intimidated. Are you part of this group? Well, worry no more. We are going to show you how to avoid crypto fraud with a simple trick.
HOW TO AVOID CRYPTO CURRENCY FRAUD: WHAT IS IT ALL ABOUT?
Before we dive into the solutions, let's take a look at a popular method of crypto-currency fraud. Nesting scams are popping up all over the place, despite an increased crackdown by the government. A nesting scam uses a fake token that it claims is built on a highly reputable platform like Ethereum, EOS or Tron.
Usually very little information is given, but enough to fool a few eager investors. Once these investors join the project, the scammers create a large number of fake transactions on the network by simply exchanging their own crypto-currencies. All this fake traffic increases the volume of transactions and you start to see this fake token rise in the rankings of the protocol it is built on. When investors see this rise, they start buying out of fear of missing out. This is just one example, but all of this could have been avoided with a trick.
HOW TO AVOID CRYPTO FRAUD: DUE DILIGENCE
All of the above could have been avoided with simple due diligence. Crypto-currency fraud is on the decline as more and more people become familiar with the technology, but it's still not enough. With the majority of the world still in the dark about blockchain technology, we need to get the message out about due diligence. Take the extra five minutes to research each project you want to invest in. Research the team, talk to them on Telegram, and follow their white paper. If you do this, a scam is easy to spot a mile away.
HOW TO AVOID CRYPTO FRAUD: INVEST IN TRANSPARENCY.
Transparency is another key to avoiding a scam. The more transparent a startup is, the less likely it is to be fraudulent. You'll notice already this year that the projects that thrive the most are those that are open and honest with their operations. To see good examples of transparent startups, follow the crypto lending platform YouHodler, Ethereum or OmiseGo. They are all perfect examples of how a legitimate startup should behave. They give constant updates about their projects, are easy to reach via Telegram or email, and have clear roadmaps that users can follow. As long as you do your research and support honest projects, you will survive this industry.