How to avoid cryptocurrency scams and safely handle crypto currencies

 Global cryptocurrency market cap hits $1 trillion. More and more people are getting attracted to the crypto world.

Along with the wide adoption of cryptocurrencies among people, there are new scams and Ponzi schemes rising every day.

Here I'm describing some of the common scams in the crypto world and the precautions that can be taken to avoid them.

Common Cryptocurrency Scams

Initial Coin Offerings (ICOs) 

ICOs are the fundraising mechanism for new cryptocurrencies. This is like the Initial public offering IPOs that is done when the companies are going public.

About 99% of the cryptocurrencies launched by ICOs are either scams or short-lived.

If you are a beginner in the crypto world, ICOs are not the right point to start your journey.

Following are some of the important things to be checked on participating in ICOs.

1.  Read the business plan, Check whether there is a sustainable business model 
2.  Do some research on the team behind it
3.  Follow news and articles about the project
4.  Check white paper 
5.  Check the GitHub codebase if publicly available a code base with wide participation means a good project.

Choosing the wrong exchanges for trading

1. Chose the crypto exchanges that are widely used by other people.
2. Do some research about the Genuity of the exchanges before transferring money to them
3. Check for news articles related to the fraudulent, hacking activities that happened in the exchanges
4. Check the liquidity of the exchanges before transferring your coins. If you transfer the coins and there is no one to buy/sell then you will be in trouble.
5. Check the trade rates and withdrawal fees.
1. The industrial average is around 0.2% for both buy and sell. This means like if you buy or sell 100$ worth of coin 0.2$ will be taken by exchanges as fees.
   Don't choose the exchanges with high fees as this can considerably reduce your profit.
2. There are some cryptocurrency exchanges that levy fees on withdrawal. Check the withdrawal fees before investing. Otherwise, all the profit that you've made through trading will be collected by an exchange while withdrawing money. 
6.  If you are a beginner trade only the widely used currencies. (Like bitcoin or Ethereum)

Binance(https://www.binance.com), Kucoin (http://kucoin.com), Coinbase (https://www.coinbase.com/), etc are some of the cryptocurrency exchanges in the world.

Cloud Mining 

Cloud mining is a mechanism to mine a cryptocurrency, such as bitcoin, using a rented cloud computing power.

There are companies providing mining as a service, and you have to pay rent on the hash rate and the hardware maintenance.

Before investing in cloud mining 

1.  Invest only in trusted companies Genesis mining is the one that I would recommend
2. Even with genesis mining the crypto mined will not be profitable as the mining charges that you pay to the cloud mining company can sometimes be higher than the value of crypto mined.  There will be a profit calculator on the mining companies website, you can calculate the estimated profit there.
3.  Mine the currencies that are likely to have capital appreciation in future