By Vikram Subburaj
As with any new industry involving money, the scale and impact of frauds in global crypto market is growing. Scammers, scammers and subversive minds have spared neither experienced investors nor newbies to the ecosystem. Some unfortunate people have lost their lifeInvestors' savings fell amid promises of unusual and disproportionate returns, through online and offline means. These fraudulent schemes also serve to undermine overall trust in the virtual digital asset (VDA) space.
As VDA adoption grows and more countries incorporate them, there is a greater need for greater vigilance and due diligence when considering investments in this highly volatile market. This should start with you, the investor. While authorities and companies can help in certain cases with publicizing an event, it is easier to avoid getting involved with better education and a well-defined risk-reward ratio.
Today we look at some ways investors can safely navigate the crypto space.
Be careful and spread your storage risks
Exercising caution and due diligence is paramount throughout your cryptocurrency investment journey. It requires a commitment to extensive research and a deep understanding of market dynamics and its inherent risks. By staying informed, you empower yourself to make wise decisions.
In terms of storage, in addition to storing VDAs on trusted platforms/exchanges, distribute your assets to include consideration of personal hardware or software-based wallets. If you are a Web3 user and store VDAs in software wallets, be careful about the permissions you give to the protocols you interact with. Some users give full permissions to random protocols that can wipe out your balance in no time.
Choose Reputable Indian Crypto Exchanges
One of the critical steps to mitigate the risk of fraud is to select established and reputable Indian crypto exchanges. Before investing, evaluate the reputation of the exchange and the credibility of its promoters. Trusted platforms prioritize security and transparency. Trust local exchange platforms as they answer to the Indian authorities while complying with the country's tax and compliance requirements. Additionally, we recommend users not to use Peer-to-Peer.
Asset exchanges (P2P): These are in a murky area and are often linked to suspicious money flows that authorities are cracking down hard on.
Stay informed, stay tuned
In India, VDA/cryptocurrency exchanges are actively engaged in investor protection through educational campaigns, enhanced security measures, and robust reporting mechanisms. Stay informed about these initiatives and actively participate with them to improve your security in the crypto space.
Vigilance means recognizing red flags associated with fraudulent schemes. Beware of investments that promise unrealistically high returns, unverified traders, new products with extravagant performance offers, Ponzi schemes, commission-based and multi-level promotions. marketing (MLM) tactics. Remember, if it seems too good to be true, it's not good for you.
Plus, secure your OTPs and 2-factor authentications. Do not share your login/OTP passwords on the platforms with anyone, including the support staff of the crypto exchanges.
Understand your risk tolerance and invest in bluechips
Perhaps the most critical aspect of investing in cryptocurrency is understanding your risk tolerance. Never invest more than you can afford to lose. Diversify your investment portfolio to spread risk across different assets. This way, you will be able to better weather market volatility.
In the world of cryptocurrencies, not all assets are created equal. Focus on VDAs with a solid foundation and real-world utility: bitcoin and Ethereum as a start. Avoid investing in projects that lack substance or have little or no technological or practical use. A solid foundation is the basis of a reliable investment.
Seek expert advice
Never underestimate the value of expert advice. On your investment journey, interact with professionals well-versed in the crypto space. Their guidance can help you make informed decisions and significantly reduce the risk of falling victim to scams.
The cryptocurrency market presents both interesting opportunities and significant risks. As the space continues to evolve, it is critical to remain vigilant and proactive in protecting your assets. By conducting thorough research, verifying the legitimacy of platforms and projects, and safeguarding your investments, you can significantly reduce the risk of falling victim to financial fraud in the crypto space.
The author is CEO of Giottus Crypto Platform.
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