Crypto market research agency CoinMarketCap recently revealed that right now, over 16,000 crypto tokens are being traded. In recent years, multiple new crypto coins have been floated each month, and while that is a reflection of the ever-growing popularity of cryptocurrencies, it is concerning as well. A lot of crypto tokens are illegitimate, and investing in these tokens is sure to result in losses for investors sooner or later. However, how can an investor tell whether a crypto project is legit or not? Read on to know the answer.
1. Pay due diligence to project verification
A legitimate crypto token will have a whitepaper that explains the idea and objectives of the project. Typically, projects release whitepapers on their official websites. So, if a new crypto token interests you, search for its official website and, of course, the whitepaper.
2. Do a thorough check for tokens that promise unrealistic returns
Investments require time to mature, and if a crypto project promises unrealistically high returns within a short time frame, you’d best be on your guard. Remember, the crypto market is incredibly volatile, so a project promising high short-term gains is quite suspicious.
3. Find out information about the creators
If you can’t find any info about the creators of a particular crypto project, in all likelihood, it’s a scam. You should also look for information on the foundation backing the project and the project’s governing body.
4. Make sure that the project’s URL is safe to visit
The official website of a crypto project should have a URL with ‘https’ and not ‘http’. If you see the latter, don’t visit the website, as it might compromise your device’s security and leak your financial information.