The cryptocurrency industry is vast, and at the time of writing, it numbers over 22,267 different assets. This means that there are plenty of great coins to invest in, but also that there are just as many — and probably more — scammy, pump-and-dump projects that only care about getting your money.
So, if you are interested in investing into some new crypto coins, how can you tell which ones are safe and which ones are not?
Fortunately, it is not that hard to notice a scam if you stay open-minded and do your research. The key here is to try and tackle the greed that will undoubtedly try to push you towards investing into coins that seem to be promising massive returns in exchange for low amounts of money.
These projects are unsafe for several reasons. First, they could be unregistered securities, in which case, it is only a matter of time before the financial regulators crack down on them. Second, they might be fraudulent projects, with the scammer behind them just waiting to collect enough money from investors before they disappear with it.
Projects like these are fairly easy to spot because they have no ideas. If there was a genuine idea worth investing into, the project would be a legitimate thing, since it would be much more profitable to actually work on it than scam people for a few thousand dollars. They often lack the white paper, or they have stolen someone else’s white paper to maintain the ruse.
Another red flag is urgency. Legitimate projects are always trying to spread the word about their token sales in order to get as many people to come as possible. Fraudulent projects seek to trick as many people in a short amount of time, before someone figures out that they are a scam.
This is why they promise extreme profits in return, but they will encourage you to give them your money as soon as possible. Always remember, if a deal seems too good to be true, it most likely is.