Cryptocurrecy investment sounded like a get rich quick scheme to me until I started to explore the crypto space. I believe I am not alone on this; maybe you have also thought the same before. Day in and day out, we see and hear stories of people making a fortunes off their investments. Well, if some of them tell you about the underground grinding they do to get there, you will be shocked. You will also be shocked if I reveal to you that some of them are not real; they are either showing off to promote their project or to attract your attention.
This should not let you believe there are not opportunities in the crypto space. In fact, cryptocurrencies are full of opportunities and can easily turn your dreams into reality. The opportunities are countless, but they only require two things from you: patience and carefulness. If you are patient and careful with your decisions, you open yourself up to countless opportunities. Investing in cryptocurrencies is just like our normal investments. What makes crypto different and interesting is the fact that you have freedom over what you are investing in. There is no interference from a third party or manipulation. Just you and your decisions
If what your cryptocurrency investment turns out to be manipulative, then it's likely that you are investing in the wrong project. Because everyone is free to create his own cryptocurrency project and community, the ecosystem is saturated with fake projects, which are only created to lure investors funds and run away. There are other projects too that are created by inexperienced teams unable to manage affairs well, leading their investors to lose money. So, you are likely to stumble into one of them. In this blog, I shared 10 red flags you should watch out for in every cryptocurrency project you are investing in. They are common signs of non-serious or non-credible cryptocurrency projects that you should always watch out for. Stay with me, as I explore 10 of those signs in the next section of this blog.
Lack of transparency: Although I do not intend to arrange the red flags in any order, I still believe transparency should be the first red flag to look out for. A serious cryptocurrency project should at least be transparent about important area such as the team behind the project, the goals that they set for the project and more importantly it's technology. As I indicated earlier on, the crypto space is an open space, everything has to be transparent. If you are trying to invest in a project, look out for those areas I have just indicated, if any of them are hidden, that's a bad sign you should be extra careful, because there is a high chance that, users' funds will be lured. This is a common feature of almost all scam projects. They hide some of their details.
Pump and dump schemes: Many people invest in a project that because they have seen or heard that the coin is pumping, creators use this as an opportunity to artificially inflate their cryptocurrency through marketing and hype, only to crash once they have made their money. They will promise the community with huge returns but there will not be plans on how they'll achieve them. You should lookout for such projects. They are many in the system and they keep on emerging everyday. Most of them are in partnership with the influencers, this is the reason I mentioned earlier that, not all the flaunting you see are real, some of them are marketing pump and dump schemes.
No community support: Although every project begins with small community, it is still difficult to figure out if the project is real in the beginning, if your analytical skills is not strong, you should stay away from projects with small or no community support. A project without a strong community behind it is unlikely to succeed. Look for projects that have an engaged and passionate following.
Lack of security: Security is indeed a big concern in cryptocurrency. You might not have the expertise to determine if a project is having security concern. So you must pay attention to the concerns and issues being raised by the community members, if most of the issues are security related, you should run away from the project. Cryptocurrency is notoriously vulnerable to hacking and theft. Every serious project has a robust security measure in place to protect your investment. So look out for such projects with serious security measures.
No real-world use case: As a crypto project it should be addressing a particular issue. A project that doesn't have a practical application is unlikely to succeed. I realistic project should have some partnerships with real-world businesses or that are solving real-world problems. Rather than those without clearly defined use cases which is a big sign of scam projects. They don't have use real world use-cases.
Overvalued tokens: You shouldn't rush to a project just because it's price is high. Don't let the high price tag of the token deceive you to believe it's a good investment. You should be in look for the project's market capitalization and evaluate whether it's justified by the project's potential. You can easily know a token is overvalued by comparing its market cap with the price. So, look out for such overvalued projects and be careful with them.
Lack of liquidity: Liquidity of a cryptocurrency simply means it's availability and it plays a critical role in determining if the token is an authentic one. Indeed, A realistic token should not be difficult to buy or sell. You should be in lookout for projects that have a healthy trading volume and are listed on reputable exchanges like Binance, Huobi, Gate.io and the likes. These are currently some of the popular exchanges.
No clear roadmap: Just like any other form of business in real life, A good cryptocurrency project should have a clear plan for development and growth. Look for projects that have a detailed roadmap that outlines their goals and milestones. A lot of these scam projects do not have roadmaps. You might be investing in a scam project if what you are investing in doesn't have a roadmap
Unrealistic promises: There is a popular phrase that says "if something seems too good to be true, it probably is". This perfectly explains my point here. You should be wary of projects that promise huge returns or make unrealistic claims about their technology. Look for projects that are transparent about their limitations and challenges.
Shady team members: You should place more emphases in the team behind the project. They are those that manages its affairs and fraudulent team members will only end up duping you. Always be wary of projects with team members who have a history of fraud or unethical behavior. Look for projects with teams that have a track record of success and integrity in their works.
Indeed, cryptocurrencies investment is here to stay and there are opportunities every day for you and me, but it's important that you are always mindful of those red flags I just shared. By looking for projects with transparency, community support, security, real-world use cases, and clear roadmaps, you can increase your chances of making a successful investment.
Thank you for your time in my blog. Stay safe!
Image used in this post w made with canva
I hope you found this useful. I am Abdul-Salam Issahaku, from Ghana. I am a student web developer and a blockchain enthusiast. I blog about technology, life and investments. You can follow me to be part of my Hive family. Thank you for your time.
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