How to Identify Fake Cryptocurrency?
The cryptocurrency industry is a hive of activity, with new coins launching nearly every month. As of 26 February 2022, there were around 9,505 cryptocurrencies in the $1.71 trillion crypto market. However, enthusiasm is making it more difficult to verify the genuineness of crypto tokens, and investors are frequently duped.
One such example is the Squid Game token. The currency, which was established in response to the massive popularity of a Netflix program with the same name, turned out to be a rip-off. Squid Game token soared and plummeted in the first few days after its launch, with developers fleeing with millions of dollars in tokens.
The fear of missing out (FOMO) factor in crypto markets is a trap for unsuspecting investors who invest in these speculative currencies without doing their homework. They are left with useless coins and no recourse in the judicial system.
Red flags, on the other hand, can alert investors to potential scams. The most important part, like with any investment, is thorough study and reliance on only credible sources of information.
Here are some simple criteria that investors can use to distinguish between pony and legitimate tokens:-
Look for the project's website and whitepaper:
This is the most reliable method of determining whether the cryptocurrency you are investing in is authentic. Every token has a whitepaper that explains all of the underlying foundations and technologies that went into the creation of the blockchain that supports it. It can be accessible on the blockchain developer's official website.
Most real tokens reveal the token name, creator address, contract source code, and other vital characteristics for transparency. If any of these are missing, it is important to be cautious.
Follow the creators:
It is critical to learn as much as possible about the people behind the scenes. On social media, there should be enough of information about them. If the creators are unknown, there is grounds for concern.
Be wary of impostors: It is commonly known that investors value the advice of well-known figures. Swindlers frequently construct bogus videos featuring well-known people and use incorrect information to deceive investors. In such circumstances, digging further is frequently beneficial. Investors should follow information back to its source to ensure its accuracy.
Be wary of claims of high profits in a short period of time:
Every investor should keep in mind that any investment will appreciate in value over time. Furthermore, there are volatile cryptocurrencies with large price swings. Scammers take advantage of these characteristics and offer unbelievable returns in a short period of time. Fraudsters commonly employ phishing emails and social network handles to lure in unsuspecting first–time investors.
Keep an eye on the URLs:
The majority of fraud incidents involve untrustworthy websites. It is hazardous to visit a website if a 'lock icon' does not appear in the address bar next to it. Also, make sure the URL begins with 'https' rather than 'http,' as the latter is insecure. Because the difference between the letter 'O' and the number '0' is difficult to discern, phony site URLs may utilize the letter 'O' and the number '0' interchangeably. To avoid being cheated, you must be vigilant.
Websites like CoinMarketCap provide all of the publicly available information required to validate the legitimacy of a cryptocurrency. Make a point of seeing if it is trading on well-known exchanges like Binance, Kucoin, and Coinbase, as they do their own due diligence. Taking a cautious approach may take more time, but it can save your life.
