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.
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.
I have other posts here in Bitcoin Money Man and on The Chenkin Report (Please forgive my shameless self promotion)
