Just like with every technological advancement that happens every once in a while, scammers are starting to take advantage of the popularity of crypto.
The thing about crypto is due to the vast amount of information out there, it could be easy for newbies in the space to get scammed. This, however, isn’t always because of the lack of information and skill when it comes to finding crypto projects but also due to how crafty scammers are becoming.
Crypto scams are starting to pop up and the FTC is concerned
The problem regarding scammers in the cryptocurrency space has become so severe that even the FTC released an article warning the public about these scams. It’s important to do your own research before investing in any crypto project especially if it hasn’t proven itself.
It’s important, however, to give a definitive meaning for crypto scams since the word has been loosely used for a number of things in the cryptospace. The scams referred to in the article are projects promising massive growths in fiat money.
10x to 100x could be a huge red flag
Money in crypto comes from two ways, appreciation and interest. Projects that “promise” a secured 100x or even a 10x can be a red flag for any investor.
In crypto, however, it is hard to tell since there are certain projects that do multiply in value. One way to spot a crypto scam is if the website itself or the official papers guarantee extremely high interests or profits in a secured cryptocurrency.
Legitimate projects versus crypto scam projects
Asset appreciation, however, is a different story since there are projects like OlympusDAO that can offer up to 8000% APY. The thing is, you will be paid in OHM, their native token.
Should a crypto project promise to pay in USD, however, this could be a huge red flag since even the best fiat investments in the world do not really give out this amount of profits. A legitimate crypto project usually pays in their native token which still fluctuates giving room for risk of loss due to asset depreciation.
When looking for legitimate projects to invest in, look at the chart and see if the price is sturdy, is it bearish, or if the project has potential and either is or could be in a bullish direction later on. Finding a project with modest returns is a safer investment compared to a project with massive returns with a very versatile token.
When looking for a crypto project with good returns, the best way to do this is to look for stablecoin investments with a modest APY. Although these types of investments might not be as crazy as other investments, this minimizes the risks of losing all your money on a single investment.