Types of Cryptocurrency Scams You Must Look Out For

Cryptocurrencies like Bitcoin and Ethereum have gained massive popularity over the years. Even if you don’t know how it works or what technology drives these digital coins, you must have heard stories about how people have made a fortune out of them.

In fact, since the launch of Bitcoin in 2009, more than 1500 other digital currencies and coins have been introduced in the market. Presently, they serve as hot investment products in the field of online trading.

For a smart investor, it is possible to generate significant returns from bitcoin investments. But, it is important for new traders to remember that the prospects of substantial wealth from bitcoin investments can blind them to the risks and entrap them into bitcoin scams.

Before we take a look into the types of cryptocurrency scams existent today, we will define cryptocurrencies and highlight some of its characteristics.

Cryptocurrencies Introduced

Cryptocurrencies are digital assets that works as a medium of exchange. they include examples like bitcoin, ethereum, litecoin among many others and one of their main characteristics is that they are not backed by any central bank or government authority.

When it comes to making payment online, it is possible to use digital currencies. They can be used to make purchases and pay for services over the internet. They can also be used to exchange fiat currencies like US Dollars.

But, digital currencies are limited in supply. Their value depends on their supply and demand. For investors, the changing value off digital currencies can either bring them substantial returns or make them lose their investment altogether. Digital currencies are highly speculative and less regulated than the traditional forms of financial products including mutual funds, bonds and stocks.

Due to the huge demand for certain digital currencies, it can be said that some of them are here to stay. But at the same time, we cannot ignore the fact that this increasing demand has also given rise to scammers who are looking for innocent traders to prey on.

It is not always possible that anyone who becomes a part of the digital currency industry will become successful. Having this kind of mindset can be extremely damaging for the investor because most of the scammers out there take advantage of the greed that people have by offering them fake trading products.

Moving further, we will take a look at some of the different kinds of cryptocurrency scams that you must be aware of.

Fake ICOs

Initial Coin Offerings, also known as ICOs is a way for companies to raise funds for their newly released digital currencies. When someone invests in the new coin, they receive tokens.

Over the past few years, billions of dollars worth of investments have been made on new digital coins and currencies. While some of them were genuine coins, most of them were illegitimate and did not have any driving technology or plan behind them. as a matter of fact, most of these fake coins were released by individuals who didn’t have any experience in the industry at all.

With the release of fake cryptocurrencies and altcoins, the scammers operating behind them try to lure people into making investments by giving them false promises and guarantees.

So if you hear of a new coin getting launched, think twice before investing in it. Don’t forget that ICOs are related to some of the biggest scams in internet’s history.

Fraudulent Trading Systems

The popularity of Bitcoin and similar digital coins has given rise to an industry to trading robots and systems.

But sadly, the majority of the trading robots that are released on the market are fraudulent. They are developed with one intention and that is to scam innocent traders and deprive them of their invested capital.

Usually, these systems are introduced with a lot of hype surrounding them. They will make promises of outrageous returns within a very short period of time. Their claims will look convincing and you may be tempted to sign up with them, but in reality they will have nothing to offer to you, except steal your funds and force you to give them more money.

If you don’t want to become a victim of a scam trading robot, you must remember that there are no tools or systems that can make you wealthy overnight. In fact, no software can guarantee hundred percent wins all the time. Even the best digital currency software like the Bitcoin Code cannot guarantee fixed returns.

Reliable trading robots work on algorithms and technology that enable them to analyse the digital currency markets with precision. They make predictions about the direction of price movements and generate alerts for traders. Using the signals provided and their own knowledge and experience, traders can execute winning trades and generate stable returns.

It is important to remember that software systems don’t work like magic potions. In fact, they work like companionships which assist with the trading tasks and helps you achieve positive results.

Unreliable Brokers

At present, there are hundreds of bogus brokers and firms that offer digital currency related trading services. Mostly, these brokers are based offshore and they don’t hold licenses from any financial regulatory authorities.

These brokers introduce promotions that you cannot ignore. They make promises that will make you feel that you will miss out on a lot if you don’t give them a try. But once you deposit funds with them, it will become very difficult for you to get your hands on your own money. Withdrawals will be impossible with unscrupulous brokers and no matter how well you trade or how much you accumulate, you will never get access to your funds.

Put simply, they will steal your funds and leave you with a great deal of disappointment. For this reason, it is crucial that you only deal with brokers who are licensed and regulated. You must check for their licenses and ensure that they are legally able to offer their services within your jurisdiction.

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