As the number of coins within the cryptocurrency market keeps rising, it becomes difficult to differentiate a genuine coin from a fraudulent counterfeit.
With tens of thousands of cryptocurrencies seeking people’s attention, one should be very picky.
When investing or trading in a cryptocurrency, whether for the first time or as a regular investor, it is critical to learn how to differentiate between real and counterfeit cryptocurrencies.
To help you, below are 5 things to check when approaching a new cryptocurrency.
1. Clear White Paper and Vision
A legitimate cryptocurrency should have supporting documentation, preferably in the form of a white paper outlining its operations in great detail.
The following points lead to understanding what the project is, the technology used, the application of the project, and the plans for the future. It should also elaborate on a description of the problem the cryptocurrency seeks to address and how it will go about it.
However, it is crucial to avoid complex whitepapers full of technical details without adequate description and interpretation because it may be a ploy to mislead.
2. Experienced and Transparent Team
The credibility of a cryptocurrency often depends on the team behind it. So, try to find out the founders, developers, and advisors of the project under investigation. In the case of genuine ICOs, most team members should have some track record in blockchain, finance, or any other relevant field.
Transparency is also key. Players and other members of the team should not hide anything about themselves or their backgrounds. On the other hand, a lack of identification or merely general information about the candidate should raise suspicion.
3. Reputable Exchanges and Brokers
One of the significant constraints that exists in cryptocurrency trading is that established and reputable brokers and exchanges are always very selective in the cryptocurrency they list.
So if a new coin is already featured on major exchanges, such as Binance, and you have the help of a trusted brokerage service, such as Traze.com, then the project has a good chance of growing, and you have extra protection when investing. This is an extra layer of protection, so the project has a good chance of growing.
4. Strong Community and Social Proof
A thriving and active community is yet another sign of a genuine cryptocurrency. Examine forums, social media sites, and other online communities to determine the degree of participation and interest.
Reputable projects frequently feature a vibrant crypto community, frequent updates from the developers, and ongoing discussions.
Projects using excessively aggressive marketing strategies or phoney followers should be avoided, as these may be indicators of manufactured hype.
5. Partnerships and Real-world Applications
Search for instances where the technology is implemented or integrated with corporations or organizations.
A genuine cryptocurrency shouldn’t only be a means of speculating; it should also have useful uses. Forming alliances with respectable institutions helps validate the project and lend it more legitimacy.
For instance, it’s a sign of credibility if a cryptocurrency collaborates with governments, tech firms, or financial institutions.
Conclusion
Investing is the key to success in crypto coins , but first, it is necessary to determine the project’s details to understand the possibility of fraud.
With a well-defined white paper, a skilled and passive team, communities, problem-solution fit, and the presence of credible exchanges and brokers such as Traze, making investment decisions becomes easier.
As usual, you have to do your homework and read as much as possible about the available options when choosing cryptocurrency investments.