5 Tips To Help You Avoid A Scam Blockchain Project

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The promise of crypto projects and the blockchain offers amazing opportunities for people to get involved with great projects early on. Anyone can become an investor and see the huge gains of some tokens, NFTs and metaverse projects. Unfortunately, when there is lots of money involved, there are often scams and thieves preying on the excitement of the community. Today, let’s take a look at some ways you can avoid getting scammed.

Crypto Twitter can be a valuable tool in terms of gathering information, but it can also be a minefield of misleading statements, and investor opinion. Thousands of crypto projects call twitter their home, but only a small percentage are actually successful long-term.

There are a number of great projects out there that have solid fundamentals, great teams and strong support from investors, but for every one of those projects there are 10 others that are just looking to make themselves some quick money and leave supporters holding the bag.

The team at Ruby Play Network have been doing a number of AMA’s with great communities like the Future Lounge, and Crypto Hunters. One of the points we often talk about is the work we’ve done with the New Zealand government and financial regulators to make sure our RUBY token is in compliance with all the current laws and regulations. It can be quite exhausting to stay in compliance with new and changing laws, but well worth it for any project that wants to be legitimate.

To that end, through extensive research compiled as traders, and blockchain developers, the Ruby Play Network has gathered reasonable insights as to what to avoid. Here’s the RPN take on how to prevent scams, with 5 easy-to-remember tips.

Tip 1: DYOR (Do Your Own Research)

When first getting into the crypto space, it’s good to collate some information from reputable sources, including the press or even legitimate influencers, such as CoinDesk, Cointelegraph, or Lark Davis respectively.

A source of information, or a tip for a crypto project is only as credible as the person or entity behind it. Just because you heard from a friend about a “great project” doesn’t mean it’s actually any good. Look into the team and the project, check out the community, do your research and then make an educated investment based on the project's utility.

Tip 2: Review the Team

Good teams make good projects, this isn’t rocket science, nor is it synonymous to the cryptocurrency sector. However the identity of the team behind a crypto project can provide insights into its credibility, or even the likelihood of it being a “rug pull.” A team of identified individuals you can assume is a safer bet than an anonymous alias with a picture of Daffy Duck as his/her profile photo.

Not saying that just being anonymous is a bad thing, but as a potential investor you’ll want to look into the members of the team, anonymous or not, and see if they have an online presence or something to show they are hiding their identity for bad reasons. Are they active in their communities? Is their alias at least reputable within the scene? Whether it’s because of their day job, not wanting people to come after them or because they like it, people have their reasons, even stretching to staying under the radar of regulators and unregistered securities claims. There are a multitude of reasons that teams are anonymous.

It can be said with reasonable assurance that a “doxxed” team will have your interests more at heart than those who are unidentified. That being said, there have been a plethora of successful projects that have anonymous devs. Have you ever heard of Bitcoin?

Tip 3: Review the Tokenomics

Now we’re starting to get into the weeds, but this is where you can find dangers hiding that can come back to bite you. A good project will have put a lot of time and effort into its token plan. what is the distribution? Are there sinks and uses for the token? What are the core use cases and loops for the token? If the team hasn’t put some work into this and published the data, it’s a red flag for the project.

Another important thing to look into is what the token lockup is for the founders and team. A good project will have a limited percentage of tokens available for sale by the team at listing or IDO. This prevents them from doing a pump and dump on the initial offering bump. You’ll want to see a limited pool at launch, no big unlock cliffs and a consistent vesting schedule. This helps to ensure the team is committed to the project for the long haul.

Tip 4: Technical Scams

So the first thing should go without saying: Never give someone your password or seed phrase.

This isn’t news either, however it’s baffling to see the amount of users in the crypto community who are naive to people’s supposed “good nature” when offering to help out with a transaction or trade. This is a popular one, where scammers will lurk within community groups and wait for users to have technical issues. Then, with a fake profile, they will direct message the user and offer “support” — when in reality, they are just looking to steal funds under the cloak of a good deed.

A popular scam to watch out for is an airdrop phishing scam. Scammers will find a list of valid wallets and send them “free coins,” when the victim tries to exchange the coins they get an error message that sends them to an info site. At that site, the scammers try to connect to the users wallet and drain it. Coinbase has a more extensive article about it. 

There are many other scams out there. The majority revolve around getting you to give the scammer access to your computer or accounts. Don’t trust links sent from people you don’t know and don’t send a few coins in exchange for a big airdrop. It’s best to assume people you don’t know can’t be trusted, the internet can be a dangerous place.

This is just a small example of the ways bad actors are trying to take your money. Conventional wisdom tells us that if something looks too good to be true, it likely is. Always do your research before trusting a project you don’t know.  

Tip 5: Trust Your Gut 

If you’ve been trading cryptocurrencies for a few months, then most likely you’ll have been “dusted.” Dusting is the action of sending a token to a users wallet, without their knowledge or acknowledgment of the transaction. The user then starts working out the value of their dream Jet-Ski purchase that could be bought with the “free airdrop,” and in turn goes to cash-out the token. This is where the fatal error occurs, as within the smart contract of the “dusted” token will be a function that allows the scammer the ability to access your wallet via a hook. With that, any other token that is within the wallet, whether MetaMask, Trust, or any other — the scammer now has access to and will drain these funds immediately.

If you’ve invested in a project, bought an NFT or signed up on a site for an airdrop then getting something from that project could be expected. Many great projects give back to their communities to reward their support, but if some unknown project wants to give you something free, be skeptical. If you haven’t consented to tokens that are in your wallet, then they’re most likely looking to launch a dusting attack.

Now You Know

We’ve just scratched the surface of the types of scams that have been created or migrated to the crypto space. With the amount of money at stake, new and more elaborate scams are sure to come. There are a few things you can do to help reduce the risk. Don’t keep all your crypto assets in one wallet. Use a hot wallet with less in it for interactions online and try to regularly read up on the latest scams. Trust your instincts — if something seems off, it likely is. And, of course, do your own research. This won’t stop everything, but it can help protect you from becoming the next scam story.          

If you’re looking for a utility-driven project, then check out the Ruby Play Network & our play to earn crypto games, and win free $RUBY on a daily basis!

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.