The Good Tech Companies - 5 Steps to Recognize a Legitimate Centralized Crypto Service

Episode Date: July 11, 2024

This story was originally published on HackerNoon at: https://hackernoon.com/5-steps-to-recognize-a-legitimate-centralized-crypto-service. It’s almost always possible to distinguish between a legitimate platform from one that it’s not. A lot of obvious red flags are there if we know where to look. Check more stories related to web3 at: https://hackernoon.com/c/web3. You can also check exclusive content about #obyte, #crypto-scams, #cryptocurrency-investment, #cryptocurrency-trading, #cryptocurrency-exchange, #how-to-identify-crypto-scams, #hackernoon-top-story, #good-company, and more. This story was written by: @obyte. Learn more about this writer by checking @obyte's about page, and for more stories, please visit hackernoon.com. It’s easier to be scammed in the online world, and cryptocurrencies haven’t been saved from it. Their internal platforms are mostly safe and useful, but centralized middlemen around them are another case entirely. There are legitimate crypto exchanges and projects, but there are also malicious copycats and brands designed just to snatch the coins of their followers.

This audio is presented by Hacker Noon, where anyone can learn anything about any technology. 5 Steps to Recognize a Legitimate Centralized Crypto Service, by Obite Sadly, it's easier to be scammed in the online world, and cryptocurrencies haven't been saved from it. Their internal platforms are mostly safe and useful, but centralized middlemen around them are another case entirely. There are illegitimate crypto exchanges and projects, but there are also malicious copycats and brands designed just to snatch the coins of their followers. Centralized means that something, often the power, is concentrated in a central point, individual, or group. In this case and for final users of cryptocurrencies, this means that custody of your funds, and or the ultimate rules of the game, are in the hands of a company or organization. That's how most crypto exchanges with fiat exit

work, for instance. In this article, we'll delve into the potential red flags these projects may have, while in a future piece, we'll talk about different alert signs for decentralized projects. Luckily, it's almost always possible to distinguish between a legitimate platform from one that it's not. There are a lot of obvious red flags we can find in plain sight if we just look in the right direction. Let's learn more about it ahead. Basic signs. Likely, the first thing you'll visit when interested in a certain coin, exchange, or any other related brand, is its website or social media account. In the first case, there are several things, links, you should find in a legitimate project, an about us, or team,

section, terms and conditions, contact data or support system, related documents, white paper, roadmap, blog, privacy notices, etc. And, of course, a readily available product or service. If most of those items are missing, that's a giant red flag, enough for you to just drop it. If they're more or less there, but the product or service they're describing is only a promise or incoming, and they're already asking for money anyway, that's also a very bad sign. It could be, for instance, the offer of new tokens in a pre-sale without a white paper and with an anonymous team.

That's a huge no for investors. Additional details also have their weight. You must be able to know for how long the project has been around the longer, the better. A URL address without ANSSL certificate, the common green lock, or a URL that isn't written exactly ask the name of the brand you're looking for, i.e. Obite.com, Obite.org, are morethin' suspicious signs. In the last case, you'll end up, for sure, in a copycat site. Broken links that look like they're there but you can't click them or route to the wrong sections, as well as bad spelling and grammar in their original language are considered common warnings. In a social media platform like X, Twitter,

it's useful to check the unique handle, at, of every user, their verification badges, if any, and the number of followers or size of their community. In any case, it's best to always check other sources about the project, starting from its official website. Read their documents, we've all done it, just accept terms and conditions without reading them. Don't do that if you're dealing with assets and investments, because you could easily lose them all. You'll have to sit and actually read them, including sections like, legal, privacy, warnings, and other specific rules, if any. In the case of crypto projects like initial coin offerings, ICOs, or new coin or platform releases, in general, besides the above, you'll also have to read their whitepaper and roadmap. They should be available in legitimate

projects. A whitepaper outlines the project's goals, technology, use cases, tokenomics, and, sometimes, it also includes the roadmap, future plans. A legitimate project will have a well-written, detailed whitepaper that explains its vision clearly and transparently. Now, the first thing to check in this document is if it's original. There are several free plagiarism checkers online that'll allow you to analyze large sections, for instance. A lot of scammers wouldn't bother to create something from scratch. Next, look for a clear problem statement and purpose, as legitimate projects aim to solve real-world problems with feasible solutions. Be wary of unrealistic promises of high returns or

use overly aggressive marketing language without providing evidence to support their claims. Additionally, pay attention to the technical details provided in the white paper. If the technology or solution is unclear overly complex or lacks sufficient detail it may indicate a lack of understanding or transparency from the project team the tokenomics section is also important but it shouldn't be the main thing in the document this one should describe a fair token distribution clear token utility and sustainability on the other hand a decent road map should outline realistic development milestones and timelines. Research the team. Yes, we know that Satoshi Nakamoto himself was always anonymous.

However, in case you don't know, most of the current main team of Bitcoin Core and their sponsors are quite public. Private with their personal data, as much as any other cypherpunk, but public anyway. Truth be told, most people and investors wouldn't trust anonymous faces without any guarantee. A reasonable thing to do before investing is to put a name, face, and professional trajectory to the creators of the involved firm. Legitimate projects typically have a team with relevant experience in distributed ledger technology, DLT, software development, finance, or related fields. Check their LinkedIn or GitHub, GitLab profiles and track records to verify the ERR credentials.

A useful tip to start is to look for their names on a search engine like Google or Bing and make a reverse image search of their photographs using tools like TinEye. You may easily discover this way if they really are who they say they are. If you're still not sure, contact them via LinkedIn, Twitter, or any other medium that doesn't directly involve the project. Check security. Always assess the security measures in place to protect users' funds and data. Legitimate exchanges, for example, employ robust security practices such as encryption, two-factor authentication, 2FA, and cold storage for funds. Other projects should also have secure smart contracts,

tested protocols, and regular security audits conducted by reputable third-party cybersecurity firms. These audits assess the platform's security architecture, codebase, infrastructure, and adherence to best practices. Public disclosure of audit reports demonstrates a commitment to transparency and security. If you can read code, don't forget to visit GitHub, GitLab, or wherever the source code is stored, so you can analyze it yourself. You could even be rewarded for it, since a lot of legitimate platforms, like Obite, have their own bug bounty programs. And beyond the code, especially if the platform or service you're about to use includes fiat money, you'll also need to check for legal compliance. Ensure that the exchange or brand complies with relevant regulatory requirements and security standards in its jurisdiction. This often includes know your customer, KYC,

and combating the financing of terrorism, CFT, policies, in which some of your personal data, like your official ID or passport, may be asked before trading. Reputation and transparency. Even if the brand is new, it may already have an initial reputation among online crypto enthusiasts and some trustable reviews around known platforms like ScamAdvisor or Trustpilot. Legitimate projects often have active communities on social media platforms, forums, and discussion groups like Reddit or Bitcoin Talk. If a project is introduced on the ladder, it's a good sign, since it's open to criticism from the actual experts populating this crypto-focused forum. Transparency is also key in the crypto space.

Legitimate projects provide clear and detailed answers about their goals, technology, tokenomics, and roadmap. They maintain open communication channels with the community through regular updates, blogs, announcements, social media accounts, and AMA, ask me anything, sessions. Outside of this, you can always look for their history of security incidents, such as hacks, breaches, or data leaks. While no platform is immune to security risks, a pattern of past incidents or a lack of transparency regarding security breaches should raise concerns about the platform's security practices and risk management. Now, we should recommend that before engaging with any centralized service related to Obite, a crypto exchange, for instance. First look for

any of the sassigns. Trade safely. Featured vector image by Freepik.n Thank you for listening to this Hackernoon story, read by Artificial Intelligence. Visit hackernoon.com to read, write, learn and publish.