How to Avoid Altcoin Exchange Scams

If you think that everyone is getting rich purchasing cryptocurrencies, you would not be alone. Unfortunately, fraudsters have identified the cryptocurrency market as an opportunity to take advantage of greedy traders by offering fake ICOs, fraudulent coin exchanges and offers that seem too good to be true. In fact, there are hundreds of unregulated cryptocurrency exchanges that have scammed users out of billions of dollars.

Consider the Bitcoin exchange in South Korea, BitKRX, that was supposedly the largest exchange in the country. To many traders’ dismay, this exchange had actually scammed them out of their life savings. Other exchanges have taken a different approach charging outrageous commissions once a user deposits funds or making it next to impossible to withdraw funds later.

So, what does this mean for traders? Should one avoid cryptocurrency investments altogether?

Not necessarily.

Like any other investment, fraud does exist. However, avoiding fraud is all about selecting the right investment and finding a reputable place to execute the exchange. Gold-backed cryptocurrencies that can prove the assets backing have traditionally proved to be among the safest options, especially when purchased directly from the token creator. In cases where the use of an exchange is necessary, some key considerations must be considered.

Purchasing a Gold-Backed Cryptocurrency

If you decide to go down the exchange route, the best place to find out what exchanges you can purchase coins on is through the company’s official website or medium blog. In most cases, gold-backed cryptocurrencies are still gaining traction and not all coins are available on all exchanges.

In the case of CACHE Gold, the coin has recently been made available on Uniswap, Bithumb Global and Bittrex Global, with more exchanges likely to follow. As a new investor or someone that doesn’t already use any of these exchanges, you might be skeptical when it comes time to making a purchase. While the CACHE Gold creators have been careful to only use reputable sites, you might decide to do your own research to be sure of your choices.

Evaluating Gold-Backed Cryptocurrencies

If you are unfamiliar with the exchanges that are listed, some additional background research might be necessary. Traders should look at criteria such as user-friendliness, exchange security, customer support, fees, expert reviews, the team backing the exchange and payment options.

User Friendliness

Regardless of your experience, an easy to use exchange and intuitive interface ensure trading is easy and a steep learning curve doesn’t exist when onboarding. When looking at the company’s website, it should be clear what coins you can buy and sell and how the platform works on a general level. That said, an exemplary user interface is subjective and will depend on the preferences of the trader. However, if many traders like an exchange, it is often reflected in the exchange’s growth in transaction volume.

As a new trader, it is completely acceptable to sign up for a few exchanges and use them all. Doing so will allow you to compare your options firsthand.

Security

One of the largest causes for concern when selecting an exchange is security. Fraud and hacks can occur, leaving your investments worthless. To determine if an exchange can be trusted, a few recommendations exist;

1. Look for HTTPS in the browser bar before your website. This tag can be a good indicator of whether the website is real or fake.
2. Two-factor authorization requires both a password and six-digit code sent to a trusted device or email.
3. An emphasis on security features on the exchange’s official website. This might include more information about managing personal details and how the account is run.
4. Know your customer (KYC) procedures (although lengthy) also help verify the identity of those using the exchange and prevent hackers or scammers from sneaking onto the platform and compromising the exchange for other users. It is not uncommon for exchanges to require ID verification before withdrawals or deposits are made.
5. The availability of SMS and email alerts for updates and information relating to potential breaches.

Customer Support

An active customer support team is essential for any online business. Many exchanges have been known to take days or weeks to reply to customer concerns. In comparison, an exchange, even if it’s newer, should be available by phone and/or email during business hours. They should not just point you to a FAQ page. As a new trader, this feature will also help you gain your bearings on not only a new platform but also a unique investment opportunity.

Fees

Each exchange will charge you a fee when making a trade. That said, cost structures may differ and may include a flat rate, a specified base rate or a percentage of the trading value. Some exchanges even allow purchases to be made for free and only charge a fee on sales. While there are benefits and drawbacks to each, a good site will tell you exactly what to expect for fees and will not hide additional costs in the fine print. It always worth reviewing the fine print on your initial exchange.

Expert Reviews

Many of the more well-known cryptocurrency exchanges will have several reviews available for prospective customers. These third-party review websites can often make a direct comparison across exchanges to help steer you in the right direction. If the exchange is newer, expert reviews may be hard to find, and customer reviews can be a good alternative.

Trustworthy Team

An equally well-known team will likely back a good exchange. Legitimate organizations will make this information available, along with the company’s headquarters, business mission and the number of employees that work there. If this information is not readily available, traders should be careful to consider the impact of transparency on the overall legitimacy. If the information is available, a quick look on LinkedIn or even the company’s team site should provide you with an idea of who is running the show. Chances are, if this team is made up of qualified individuals who have a good reputation, you know your cryptocurrency is in good hands.

Payment Options

Purchasing your first gold-backed cryptocurrencies should be simple. Exchanges often offer methods to buy digital currencies through debit or credit card, bank transfer or a third-party payment platform (depending on the country of operation). For new traders, the availability of these payment options is essential to begin purchasing tokens.

Selecting an Exchange

When it comes down to choosing an exchange from available offerings, it is essential to know all your available options and weigh the features accordingly. External research such as reading Reddit forums, third-party trust sites and engaging on the LinkedIn profiles of exchange founders can help provide traders a more holistic view of the platform. Fortunately, CACHE Gold is only available on reputable exchanges, so users do not have to worry about the security of their assets.