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  Nigerians are among the most enthusiastic cryptocurrency traders in the world; global crypto trading platforms have confirmed this much. A big factor driving this is the lure of high-profit margins, which exceed what most traditional investments can guarantee.
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But crypto trading comes with big risks. Scams abound, especially in Peer-to-Peer (P2P) transactions, which involve direct buyer-seller interaction. Persons posing as sellers may take payments without releasing cryptos to buyers. And supposed buyers could trick sellers into transferring cryptos without paying for them. There’s also the risk of using obscure platforms and falling victim to pump and dump schemes. If you’re involved in the crypto trade, here are six ways to avoid being scammed by ill-intentioned posers.

Don’t Trade On Obscure Platforms

There are numerous sites and apps on which you can purchase and sell cryptocurrencies. Some of these platforms are legitimate, but scam websites exist as well. If you don’t do your due diligence before settling for a platform, you could be defrauded. To avoid this, you’ll want to stick with widely-known and trusted exchanges. If you’re not sure how to tell which ones are safe, here’s our list of crypto trading spots you can use.

Only Use Platforms With Escrow Service

The better crypto trading platforms provide an escrow service, which holds a seller’s cryptos and doesn’t release them to the buyer until the seller confirms that they have been paid.
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The escrow is a third-party service, which means that neither the buyer nor the seller holds the crypto until they have confirmed payment for the cryptos. This goes a long way to prevent seller fraud (in which the seller takes payment without releasing cryptos to the buyer). If you’re going to use a P2P service, only go for one that has a functional escrow service like the one we’ve just described.

Verify The Number Of Successful Trades Executed

Another thing you’ll want to look out for is the number of successful trades a merchant has completed. This is an indicator of their trustworthiness. If they have completed many trades, they’re very likely to stay honest in their dealings with you. This isn’t foolproof. But it’s probably the closest you’ll get to vetting a trader before engaging them. Only settle with platforms that give you this data.

Ask For Proof Of Payment    

If you’re on the selling end of a transaction, you should ask the buyer for proof of payment before handing them your cryptos. This could be a screenshot from them confirming that they have transferred the money to you. Save this for reference purposes, just in case a dispute arises about the transaction later on. Also, check the payment at your end, and ascertain that the amount sent is what you’ve agreed on with the buyer.

Keep Conversations Within The Platform

A big red flag you may encounter when trading cryptocurrencies is when the other party asks to take your conversation with them off the P2P platform you’re both using. They may give a range of excuses for this; sometimes the excuse may even sound credible. Do not oblige this request. It’s often done to remove the protections that an official platform gives you. Insist that you both remain on the exchange. If the other party is unyielding, you could end the transaction.

Avoid Altcoins With Unknown Credibility

We’ve seen the meteoric rise in the value of Bitcoin and other major cryptocurrencies in the past few years. Understandably, some people would want to hop on newer cryptos, in the hope that they’d be the next big thing. But there are a lot of risks attached to little-known altcoins. They may not reach the heights that Bitcoin or Ethereum have achieved. It’s even possible that they’re just pump-and-dump scams—something that’s becoming all-too-common these days. Either way, you could lose your money to these schemes.

Final Words

Crypto trading offers great opportunities to earn handsome profits. But there’s always the danger that one of the parties involved isn’t being honest. Take the steps we’ve mentioned here, and you’ll reduce your chances of being scammed when you’re buying or selling cryptocurrencies. Featured Image Source: CMS Prime
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This article was first published on 26th August 2021

ikenna-nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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