How to spot red flags when choosing a cryptocurrency?

How to spot red flags when choosing a cryptocurrency?





Since the inception of Bitcoin, cryptocurrencies have become a household name. Since then, thousands of cryptocurrencies, or so-called “alternative coins,” have emerged.

Simply put, altcoins or altcoins are cryptocurrencies that are not Bitcoin. As of November 2021, there are currently over 14,000 cryptocurrencies on the market and this number is constantly growing. Of course, the biggest names in the industry, such as Bitcoin and Ethereum, account for 60% of the total number of cryptocurrencies on the market.

So far, Bitcoin has seen a remarkable increase in price over the past few years. Although it has seen some dips, its rapid rise in value is what has investors and traders diving into this volatile industry.

However, in order to get a better return or yield, you need to be aware of common red flags, especially when you are buying cryptocurrencies for the first time. Here are a few that every investor should watch out for.

A guaranteed return on investment that sounds too good to be true

Most investment scams flaunt attractive investment propositions that are too good to be true and unrealistic. Some promise high returns with little or no risk. But as Bitalpha AI warns, “the cryptocurrency market remains one of the most profitable sectors due to its volatility.” Remember, in a highly volatile industry, not mentioning risk at all is one of the signs or indicators that the company is nothing more than a scam. Any investment involves risk, especially in the cryptocurrency sector.

False testimony

Testimonials are often not a reliable source of information. You can’t believe them because they might just be written by actors who are paid to lie about becoming millionaires in a short period of time. Even social media influencers and celebrities are used to exaggerating or lying about their experiences to gain attention.

Experts recommend that before investing, you should carefully check the history of the company, i.e. whether registered or licensed.

Anonymous guide

Leadership is one of the most important factors that investors should check before buying any cryptocurrency. Check the history of the cryptocurrency itself to see if it is associated with any scams or fraudulent activities. Also check out her background and the projects she’s involved in.

Although Bitcoin has an anonymous creator, a group or community of developers has taken its direction, allowing it to grow continuously. Over the past decade, Bitcoin has proven its reputation and remains one of the most trusted coins on the market.

Poorly written websites

An investor should pay attention to one important element, the cryptocurrency website. Some mistakes are too obvious and easy to spot. Spelling errors are very common, but they can easily slip even through spam filters. Errors can convince users that a website is legitimate, making it more trustworthy. Ignoring mistakes can tempt you to fall into the trap of fraud. Make sure you have a keen eye that allows you to spot errors on certain websites.

Paid celebrities, over promotion

Celebrity endorsements are no longer uncommon. Even cryptocurrencies use celebrities to gain popularity. Of course, the role of marketing is vital for business growth. However, if a product focuses more on promotions than improving services, you should consider whether it deserves to be among your choices.

Cryptocurrencies are excluded from major exchanges

Major exchanges like Coinbase have high criteria for selecting coins from their top list. If a coin is not on the list of well-known exchanges, this is not a good sign and you should be more careful with it.

Conclusion

As the price of Bitcoin increases over time, more and more investors are prompted to try cryptocurrency investments. However, traders and investors can resort to other coins that have lower costs. Because of this, some may fall for cryptocurrency related scams.

Experts advise to always follow what your mind tells you. If that doesn’t feel right, think twice. More importantly, do your own research. Always check the achievements of the piece and the team that maintains it. Also, make sure that the coins have not been involved in scams or problems in the past.

Check any information including exchanges to see if a coin is listed. Do not trust coins that are over hyped. Most scams use exaggerated claims and testimonials. Celebrity endorsements are not necessarily a sign of legitimacy. There is no investment without risk. Finally, the golden rule of all investing: don’t invest what you can’t afford to lose.





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