To those who are active in the crypto sector, saying that the segment is full of scams is akin to calling the sky blue or the Earth round. Everyone knows the fact to be true – and saying it out aloud only signals that you are about to point out something deeper than those statements. In this case, it is going to be the related topic of scams that stem out of crypto trading bots.
If you have been associated with the cryptocurrency sector for a while, then you would have seen automated trading rise up in popularity in the past few years. But with helpful solutions coming to the forefront every so often, it has also become commonplace for scam bots to hide in plain sight.
Simply put, these scam bots pose as helpful solutions to new and old traders alike, promising to deliver state of the art features and vowing to provide immense profits overtime. But in reality, they neither have the features or the ability to improve your investment. Instead, they have all the makings of a scheme that would strip you of your funds and leave you stranded with nowhere to turn for help.
With that being said, it can be difficult to differentiate between a scam bot and a credible service, especially when you are about to make an impulsive decision with the notion to enjoy riches beyond your dreams. That is why it is important to understand a few points that would help you steer clear of scam crypto trading bots.
How to Detect the Scam Platform?
The short answer to this question: do your research.
To elaborate on this further, you have to be vigilant and careful about a lot of factors before you end up selecting a bot for trading Bitcoin and cryptocurrency. If you are not giving proper time to understanding the service you are about to trust with your funds, then it could go very wrong very quickly.
Almost every platform can make tall claims of providing the best of the best in features and guarantee the utmost ability to turn your investment into a larger amount. In fact, most platforms are based on those promises. But the notion of “all that glitters is not gold” is highly relevant in this scenario.
Keeping this in mind, it is highly essential to check a few factors for any crypto bot before you select it as your primary trading mechanism.
Check the Project Offer
When it comes to automated trading, everyone likes a service that offers substantial profits. But seeing that cryptocurrency is a highly fluctuating mechanism where profits depend upon dips and bumps in the market, it is not possible for any bot to offer a fixed profit. That is why, even if the service is highly efficient, it would never be able to set a fixed amount of profit for its clients.
Keeping this in mind, any trading bot that provides you with a fixed profit is most likely a Ponzi scheme that is after your money as a new client to pay its previous clients. This is specifically called a high-yield investment program (HYIP), with the term going right in line with what the program offers at the surface.
What it does for you is to simply take your money to fund its unethical scheme. It might even pay you for a while by the money it gathers from other clients. But eventually, the dominoes are going to fall and you are going to lose most of your invested funds.
To make sure that you don’t go down this route, stay away from any bots that promise fixed profit rates. Any credible platform worth its salt would either not specify the percentage of profits at all, or give you a range of profit percentage to look forward to (while never committing to the specific value).
While this might seem like trusting the algorithm blindly with no promise, it is actually the only logical approach to the mechanism and one that ironically indicates that your investment is safe.
Check the “About Us” Section
Another thing to check is the “About” section of the bot service provider. In some cases, it is also complemented by another page having a title along the lines of “Our Team”.
Make sure that you go through these pages to understand what the platform team holds in terms of total experience. In some cases, you can also check to see if the team affiliated with the project is confident in showing their faces to the public.
Here, you can check the social media profiles of top management and ensure that they are real people who are connected to the project. Similarly, check the provided history of the bot by checking the date of creation for its social media pages. Sometimes, the team’s profiles are not available against a trading bot. This is still understandable as long as the company provides a credible account of its development and explains its functionalities and overall objective.
Looking for these factors would help you stay away from services that are created by malicious parties to dupe people and rack up some profits.
Any trustworthy bots would have a detailed About page that tells you about the development of the project and the company behind it, while also corroborating the dates of creation for relevant social media pages.
Is It ICO, Startup, or Reputable Developer?
While checking the About section of a crypto bot, you will also come face to face with the information on exactly who is behind the development of the platform. It could be an initial coin offering (ICO) that kickstarted the project, a startup that financed it, or just a single developer who pushed their program into the mainstream.
While all of these options could work behind a credible cryptocurrency bot, there are some nuances to it.
Some ICOs could point to the unreliability of the project. Since the team behind the bot platform is already working with a massive amount of funding, it has high chances of making it complacent to the point of being unproductive. If the project has just started or hasn’t fully developed, then there are high chances for it to stop midway.
The possibility of abrupt stops also applies to startups. You would need to make sure that the startup has substantial backing by popular entities (this information is usually shown on the bot’s homepage or About page). Most startups stop their operations in the middle due to a lack of funding. Once again, the risk increases if the project is not fully developed or has just released with not enough history to support its operations. But if the project has been running for a while, then you might be in good hands.
Whereas, when it comes to single developers, it tends to be the safest option more often than not. Developers who create crypto bots often hold a credible reputation in the community prior to creating the service. In some cases, they might have already completed other projects before attaching their names to an automated trading solution. This is by far the most reliable option to go with, even if it’s not that common to find these projects.
Read the Reviews
A very popular way to determine the credibility of a bot is to check for its reviews on the web. Platforms such as Bitcointalk and Reddit are massively popular, third-party and neutral grounds to discuss cryptocurrency-related projects. If the bot you are reading up on is popular, then there are high chances that it has been mentioned on such forums.
Of course, your goal is not just to find positive reviews but also to source out any negative ones. This way, you would be aware of exactly what can go wrong with the bot platform and how you should prepare yourself to deal with its consequences.
If most reviews seem positive, then it would be safe to take a chance on the trading bot. But even if a handful of negative reviews point to the same flaw, whatever it may be, then you should also pay attention to it. Giving some time to this exercise could save you a world of pain in the long run. Since it is easier than ever to buy fake reviews, you would need to make sure that the platforms and profiles they are coming from are credible.
Ask the Community
Nowadays, almost all crypto projects provide a place for its own community to thrive in its own little space. More often than not, the place happens to be a group chat on Telegram or Discord.
Join the chat to see how active the team is or how large the community is. Observe to your heart’s content, but also don’t hesitate from participating and asking questions, but without divulging your identity or anything about your cryptocurrency funds in order to be safe.
This would give you an idea of what kind of social and customer support is the bot working with, which would indicate what can you expect in the future. It would also give you firsthand accounts of real users who are utilizing the bot. Just make sure that the user accounts are reliable and not just pawns bought by the company to act on its behalf. If there is not a massive social backing or no community behind the project, then it is a red flag.
Overall, telling the good, the bad, and the ugly of cryptocurrency bots could be an extensive process that requires substantial time from your end. But as mentioned above, this investment of time could save you from losing your funds in the long run.
Keeping this in mind, make sure to do your due diligence before going with any automated trading solutions, and you would be able to steer clear from scam bots who are looking for any opportunity to have a run at your money.