It doesn’t matter if you do believe in cryptocurrency bubble or not, but one thing that most people would agree is that, investment frenzy are attracting untrustworthy people searching for their next trader greed. In this article, we will try to identify some scams while laying out steps that traders can take in order to be on the safe side whenever they’re trading cryptocurrency.
Scams in the Market
It is fairly easy to think that everyone becomes rich after investing in crypto such as Bitcoin. This is a poor mindset and many people have fallen into this misconception. As a result, there are tons of scammers that are taking advantage to lure traders with unscrupulous services and products which include the following:
Number 1. ICOs
This is known as Initial Coin Offering and is actually fundraising mechanisms that are often coupled to newly introduced cryptocurrencies. ICO investors receive tokens for their new venture. Believe it or not, investors have put ridiculous amount of money to over 1000 ICOs for the past several years.
While most ICOs are legitimate, many of it actually has no real technology to back them up or plans.
Number 2. Exchanges and Brokers are Unregulated
There are literally hundreds of brokerage firms and online exchanges that are unregulated and yet, they are offering cryptocurrency trading products and cryptocurrencies. Most of which are teaching to know the use of the best crypto bots for trading. For any suspecting investors, you should take a step back especially for promotions that seem too good to be true.
As soon as you have made a deposit, most of these firms are going to charge you with unbelievable commissions or perhaps, make it hard to withdraw your funds. In fact, worst offenders are just stealing your money.
Number 3. Bitcoin Trading Systems
Bitcoin’s volatility is such an extreme. It has even spawned wide industry of automated trading system. Promoters of the products are making claims that they have a way of beating the market by means of arbitraging prices between exchanges. As a smart trader, do not believe the HYPE!
Exchanges in Bitcoins oftentimes have expensive withdrawal procedures and high fees for trading it with fiat currencies like Euro or Dollar. Furthermore, the settlement trades may take hours. And all of these factors are going to eliminate profits from the Bitcoin arbitrage and could even result to your lost.
Safe Practices for Trading Coins
We’ve known that trading these coins come with a risk but there is a way to be the next victim for these scams. When trading cryptocurrencies, see to it that you invest money in what you could afford to lose, do thorough research before investing and the likes.