Identifying Whether A Crypto Project Is Legitimate

Squid game token were a recent example of crypto-related scams. I tried to take advantage of the popularity of the Netflix show of the same name.

The growing cryptocurrency market has generated tremendous interest from new investors. Growth is very promising, with new coins added almost every month. According to market research firm CoinMarketCap, there are currently over 16,000 cryptocurrencies traded. However, this rapid expansion is problematic as there are many coins being launched with the purpose of deceiving or defrauding investors by taking advantage of existing trends or euphoria. How to distinguish between legitimate and illegal coins in this situation?

To novice investors, most coins look alike to their respective return promises and the features they represent. An example of coin-related fraud in the industry was the squid game token. The show, which began after the Netflix show of the same name became so popular, became more valuable and quickly lost. Developers disappeared with $1 million worth of tokens, leaving investors dry.

However, there are some warning signs that every investor should be aware of when investing in new coin, or primarily the cryptocurrency industry. Here are some of them:

1.Verify the project

As a thumb rule, always look for the project website and its white papers. This is one of the most reliable ways to verify that your crypto project is legal. Each project publishes a white paper that describes the goals, ideas, and designs of the underlying blockchain and other technologies behind the project. The white paper can be found on the project website. Read it to see more details from other sources.

2.Promise of unrealistic returns

If your project promises high returns in the short term, please refrain from looking into the details. All investments take time to mature. Given the volatility of the crypto industry, it is always advisable to invest in the long run. Short-term price fluctuations are acceptable, but extreme volatility should be read as a warning. In addition, scammers use phishing emails and social media addresses to contact inexperienced investors. Pay attention to them.

3.Follow URL

Scammers typically use the same website URL as the original URL. If you don’t see a “lock symbol” next to a website in your browser’s address bar, your access to the website is insecure. Make sure the URL uses “https” instead of “http”.

4.Track creators

Find the people behind the project, the governing body, the foundations that support it, and more. Thorough investigation is always a useful tool against fraud. This is a red flag if the project creators are anonymous.

5.Fake endorsements

Scammers often try to increase legitimacy by adding the names of influential people and celebrities to a project without approval. They understand that people trust familiar voices and try to use them as a trick to deceive vulnerable investors. Some tech entrepreneurs and businessmen approve cryptocurrencies, but only a limited number of coins. Verify the claims.