The cryptocurrency sector is gaining an increasing amount of investor attention, and new crypto projects sprout by the dozen virtually every month. This fascination also attracts people with nefarious motives who seek to profit from the current trend. The $2.61 trillion cryptocurrency market contained roughly 8,710 cryptocurrencies as of December 3, 2021.
As a result of this enthusiasm, it is becoming increasingly difficult to verify the authenticity of tokens and cryptocurrency projects, and investors are frequently duped. The Squid Game token is an example of this. The token, which was created in response to the enormous success of a Netflix show with the same name, turned revealed to be a ruse. The Squid Game token both soared and crashed within days of its launch as the developers got away with millions of dollars from naïve investors (this is known as a “ rug pull”).
Fear of missing out (FOMO) is a trap for naive investors who invest in speculative currencies with no fundamentals and minimal analysis. They wind up with useless coins and little recourse in the judicial system. However, there are always warning signs that might protect investors from scammers. The most important thing, like with any investment, is to be properly informed and to rely on only credible sources of information.
Here are some simple criteria that investors can use to distinguish between phony and authentic tokens.
How to avoid scam tokens?
Below we present the information to check to make sure that the project that you are interested in is legitimate and is not a scam. Take a moment to read, as it could save you some serious money!
Find the project’s website, white paper, and other important information.
This is the most reliable approach to make sure the bitcoin you’re investing in is legitimate. Each project issues a “white paper” that explains all of the underlying concepts and technologies that went into the creation of the blockchain that supports that coin. It can be found on either the blockchain developer’s or the project’s official websites.
Most legitimate tokens broadcast key facts such as the name of the token, the creator’s address, the contract’s source code, and so on for the sake of transparency. If this information is missing, proceed with caution. Make sure the information is consistent, because fraudsters know how to manipulate information to make it attractive.
But what now?
If you look closely, you’ll discover that the team just highlights suspect Instagram profiles with no explanation of their qualifications or expertise.
The SquidGames Token page’s Linkedin page is empty, and the roadmap appears to have been prepared in 5 minutes with no details. The white paper is also devoid of content, with no use case, technical details, and an air of disrespect. The auditor who presented “TechRate” simply checks the code, which does not imply that the project is valid. One strategy to lessen suspicion is to make sure that the project has been audited.
Follow the creators and the founding team
It’s critical to learn everything you can about the game’s creators, developers, and management team. On social media, there should be enough of information about them. There is cause for concern if the creators are unknown. You should be able to learn about their talents, previous experience, and social media connections (Linkedin, Twitter, etc.).
Aside from spelling errors, we can observe on the Squid Game project that the crew does not provide any information about their talents, expertise, or a link to their Linkedin profile, instead opting for suspicious Instagram and Twitter accounts.
Look at the contract’s address and the remarks.
Copying the contract’s address into Google or the “Blockchain Explorer” site is a fairly simple technique to evaluate if the project appears to be real. There is a plenty of useful information there:
Number of holders,
but most importantly, community feedback.
Comments can raise a red flag right away and rescue the day. Always remember to keep an eye out. You can paste the contract address at https://bscscan.com if it’s a Binance Smart Chain (BSC) project. If it’s an Ethereum-based project, you can paste the contract address into https://etherscan.io/.
Keep an eye out for imposters.
It is also commonly known that investors value the advice of well-known individuals. Scammers frequently produce bogus videos starring these well-known figures in order to deceive investors. In such circumstances, more investigation is frequently beneficial. Investors should follow information back to its source to ensure its accuracy.
Any investor should remember that any investment will appreciate in value over time. There are also volatile cryptocurrencies with dramatically fluctuating prices. Scammers take use of these traits and offer unbelievable profits in a short period of time. Phishing emails and social media usernames are commonly used by con artists to deceive unsuspecting potential investors.
Keep an eye on the web addresses.
The majority of fraud cases involve insecure websites. It is risky to access a website if the padlock icon does not appear in the address bar next to it. Check that the URL uses “https” rather than “http,” as the latter is not secure. Because the difference is difficult to discern, fake site URLs may utilize the letter “O” and the number “0” interchangeably.
To avoid getting conned, you must stay vigilant.
Websites like CoinMarketCap provide all of the publicly available information needed to confirm the legitimacy of a cryptocurrency. Check if the cryptocurrency is traded on well-known exchanges like Binance, Kucoin, and Coinbase, as these platforms perform their own due diligence.
Taking a cautious approach can take time, but can also save lives and most importantly protect your money.