Red flags show warnings of threats or problems with the financial statements, stock income, and reports of the company.
Based on the report stated by the market coin cap, the market contains over 10,000 cryptocurrencies and more coins are being produced every day.
However, the thirst for more coins and pressure from investors has resulted in the creation of fertile grounds for fraudsters.
The only way of reducing the chances of losing your money is by having enough research on coins before purchasing them. Here are 6 red flags to look out for.
7 Cryptocurrency Red Flags to Look out for
1. Unknown leadership
Even though bitcoin was created by an unknown person and that the logic of accepting a coin to develop with no leader is acceptable, you are still advised to check all projects the growing company has been involved in to ascertain they are not involved in any scams.
Good leadership shows more about a coin.
2. Lack of team
A well-qualified team plays a major role in the running of a good company. A new invented coin with successful plans should have a good team that can bring attention to the community full time.
The number of personnel should be a major red flag to watch out for.
3. Grammatical mistakes
Silly errors in promotion materials say a lot about a company. Either cryptocurrency or an opportunity to invest, avoidable corrections, and poorly written grammar are a sign of red flags.
The reason is that silly errors make texts seem more convincing and as people keep ignoring them they continue to fall for all these scams.
4. Cryptocurrency Whitepaper
The whitepaper shows plans about the project, people involved and the intentions it has. When a client reads out the paper, an understanding of the language of the company and grounds they stand is created and understood.
Unlike the statistics listed by other companies which are mostly planned to please your eyes. A company doesn’t really need a whitepaper but if it lacks in an organization simply shows how they don’t have a plan.
Marketing a product is important but you must be keen on companies that tend to spend more on promotions and less focus on developing the product.
Be suspicious enough before spending on a coin without researching it, what they do and how secure is their network.
This could be the difference between you who gains money because of the right research and those who are losing money as a result of ignorance.
6. Cryptocurrency Exchanges
Top crypto exchanges tend to have strict standards about the coins they are listing. If a coin is left out in that list or complains of difficulty in buying the coin is noticed gives you more reason to go ahead with your precautions.
7. Captured on Scam Sites
A couple of sites like token sniffer which helps in detecting scams continues to list coins that sound fishy every day.
Visit these sites and read out the details carefully to avoid regretting them in the coming days.
All investments in the cryptocurrency field require taking risks meaning that chances of high rewards are the same as the chances of a big loss.
These, however, do not encourage you to take unnecessary risks, why rush and gamble on a coin with many red flags while you can seek qualified and more serious crypto ledger projects that are likely to earn you rewards later on.