Scam coins in the cryptocurrency world are coins that do not add value or have any use other than making the creators wealthy.
Bitcoin is the most well known coin, but there are plenty of Alt-coins, Bitcoin clones or new coins with purpose, mining pools, a whitepaper, and a form of exchange. Not all Altcoins are good investments, or will hold up over time. Investing in Altcoins is like investing in Penny Stocks in the stock market – Potential reward, Great risk, and many “pump and dump” schemes to increase the value so the early investors (scammers?) can cash out. Please read on to learn some techniques for detecting cryptocurrency scams and altcoins.
There is a lot of information on this on the web:
If a coin looks too good to be true, it most likely is. If you are unsure of a coin, you can reduce your initial investment (don’t buy a lot), or set a time frame and watch it’s performance. Should you be really wary, step back and invest in the better known cryptocurrencies; Bitcoin, Litecoin, and Ethereum.
ICO’s are unregulated, and anyone can create and mine their own coin – this does not mean it will reach high levels of popularity or financial success. Coins need to have a purpose other than to make the founders wealthy. The more you know and understand about how cryptocurrencies are manipulated is the best way to make good decisions on purchasing,- or not purchasing, any altcoins.
Cryptocurrency: How to Make a Lot of Money Investing and Trading in Cryptocurrency: Unlocking the Lucrative World of Cryptocurrency (Cryptocurrency Investing and Trading Book 1) Kindle Edition
I have other posts here in Bitcoin Money Man and on The Chenkin Report (Please forgive my shameless self promotion)
BE wary and cautious when investing in ICO’s!
May your investments go to the MOON!
A fake story about a man selling Chuck E. Cheese tokens
and claiming they were bitcoins went viral over the weekend. Unfortunately, it was fake.
Buying ICO’s and altcoins are like investing in IPO’s and Penny stocks.
Lots of potential reward, but real risk that you may lose up to all your investment. Many ICO’s are for coins that have no practical use (you can’t buy anything with them) – only an investment value that may plummet at any time. For Example, Bitcoin can be used to purchase goods and services from many established companies. Altcoins need to be on exchanges, where they can have a value equal to Bitcoin (BTC) and other coins, so the altcoins can be traded.
If the ICO price is low, You may want to accumulate some over time – adding to your position (or abandoning it) as your comfort level permits. Going “ALL IN” my be fun, but figuring where to start taking profit is a mystery, and many investors have watched their value climb, and then plummet, with little warning. Remember, any profit is good profit.
Two sites you should look at are:
Live Coin Watch – Live coin Watch
How to Differentiate between legitimate and scam coins – IB Times
I strongly recommend that you don’t mortgage your house or max out your credit cards to invest in such unstable securities. Keep your head, study the market, invest with Money you can Afford To Lose. Some people use their Bitcoin profit to invest in Altcoins. Some altcoins have a social component, or are mined to benefit causes, like veterans (see Globalboost). If you are actively mining, see this Mining Profitability Calculator.
Here are some books on Altcoin investing:
Learn all you can, invest smartly, learn from any mistakes you make.
Best of Luck with your alt-coins and cryptocurrency investments!