5 simple tips on avoiding cryptocurrency scams

In October of last year, PayPal announced that they will be allowing their users to buy and sell Bitcoin and other cryptocurrencies in their platform. This may have opened a new market of retail investors with PayPal’s over 300 million users worldwide. 

More recently, Tesla, the world’s leading electric-car manufacturer, invested 1.5 billion USD in Bitcoin. This was preceded by cryptic tweets from their founder, Elon Musk, promoting Bitcoin and other cryptocurrencies. 

These kinds of news have pushed Bitcoin’s price to all-time-highs, reaching increases of more than 300% in its price in just over the last year.

Having been in the cryptocurrency space since 2013, I’ve witnessed how these “bull runs” or huge spikes in the price of Bitcoin give birth to scammers and illegal investment schemes. 

Recently, I heard stories about how people are being scammed online by unscrupulous agents by pretending to introduce them to the world of cryptocurrency and help them make their investments grow. Before they know it, they have lost hundreds and thousands of pesos. They have become victims instead of trading winners. 

The conscienceless practice of preying on the innocent is upsetting especially in these times when we ought to be helping each other survive the pandemic. 

As a long-time cryptocurrency trader, I’d like to share my thoughts on how you can easily spot these scams and avoid them:

1. Avoid get-rich-quick promises
   
   Bitcoin and cryptocurrencies are speculative and highly volatile assets. Investing in them involves a high risk of losing all your money. Anyone who promises you guaranteed returns in exchange for an initial investment is outright lying to you. This is actually true not just for cryptocurrency but for any form of investment. As they say, if it sounds too good to be true, it probably is. 
   
   
2. Buy only from Bangko Sentral ng Pilipinas (BSP)-licensed cryptocurrency exchanges
   
   Our central bank actually has pretty clear regulations on cryptocurrencies. In fact, there are cryptocurrency exchanges that are licensed and regulated by the BSP. So if you really want to invest in these digital assets, check out the e-wallet app Coins.ph or trading platform PDAX.ph that are both licensed by the BSP.
   
   
3. No recruitment or networking required
   
   Cryptocurrencies are digital assets and in order to invest in it, you must buy and store them in a digital wallet or exchange with the intent of eventually selling it at a higher price in the future.
   
   There’s no requirement to invite friends or recruit others who will also invest so you can build a network of investors “under” you. If anyone offers you this kind of pyramid-like scheme in the guise of “cryptocurrency investment,” I suggest you report them to the SEC so we can also protect others who might be persuaded by their tactics.
   
   
4. Google is your friend
   
   Just a few days ago, a friend of mine was asking if a particular company was a legit cryptocurrency investment company. I’ve never heard of them but a quick Google search showed warnings directly from the SEC that they are not legitimate.
   
   I expect more illegitimate entities to emerge especially now that Bitcoin is all over the news. So if someone is inviting you to invest in their “company,” extensively research about them first.
   
   
5. Learn about the technology
   
   I don’t think anyone should invest in anything they don’t understand. Bitcoin and other cryptocurrencies are, first and foremost, technologies. The ability to invest in it is just one aspect of this very promising technology.
   
   It could potentially change the way we do banking, global commerce and money transfer, supply chains, arbitration, and even the way governments work, among many others. So before investing in it, I encourage you to learn more about this technology you plan to invest in.

– Rappler.com

Harry Santos has been a cryptocurrency enthusiast since 2013. His background is in digital marketing, and is currently the marketing lead for the fintech startup, PayMongo.