The Good Tech Companies - Everything You Need to Know to Spot Scam or Fake Tokens

Episode Date: March 3, 2025

This story was originally published on HackerNoon at: https://hackernoon.com/everything-you-need-to-know-to-spot-scam-or-fake-tokens. Malicious actors create useless tokens in a network (or pretend they’ve done it) to try and snatch people’s money. Do you know how to spot them? Check more stories related to web3 at: https://hackernoon.com/c/web3. You can also check exclusive content about #crypto-scams, #token-scams, #fake-tokens, #honeypot-crypto-scam, #learn-cryptocurrency, #cybersecurity-tips, #obyte, #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. Scammers often create counterfeit tokens that mimic legitimate assets to deceive investors. Honeypot tokens are built to trap investors by preventing them from selling their holdings once purchased. Some scam tokens don’t offer locked liquidity at their release, implying creators can withdraw the entire liquidity pool at any time.

This audio is presented by Hacker Noon, where anyone can learn anything about any technology. Everything you need to know to spot scam or fake tokens, by Obite. A scam of any kind involves deceiving someone into giving up their money, and S-cam or fake tokens in the crypto world aren't different. We must say that the term, fake, is often not that accurate, since, in most cases, these assets actually exist as any other token in a certain network. Their utility or value is another story, though. Anyone, even with the most basic knowledge, can create customized assets in numerous chains, sometimes almost for free. That's the origin of fake or scam tokens. Malicious actors create useless tokens in a network,

or pretend they've done it, to try and snatch people's money by offering empty promises about it. Only sometime after investors buy, they may discover that everything was a lie, their token isn't tradable, and or the team behind it and their related channels, website and social media, have vanished with the funds. Scammers have different methodologies to achieve this. N. Several, Several fake tokens. Scammers often create counterfeit tokens that closely mimic legitimate assets to deceive investors. These imitation tokens replicate the branding and name of well-known coins, making them appear genuine. To enhance their credibility, fraudsters may set up fake social media profiles and websites, and even forge endorsements from influential figures in

the crypto space. Some scammers go further by listing these tokens on decentralized exchanges DEXs, providing a false sense of legitimacy. They might also fabricate trading volumes and user reviews to lure unsuspecting victims into investing. Rug pulls are another widespread scam tactic, where attackers launch fake token sales, promising early access to exciting new projects. Investors are enticed with the prospect of high returns and exclusive opportunities. Once funds are collected, the scammers disappear, leaving investors with worthless tokens. Malicious airdrops are also commonly used to trick users by offering free tokens in

exchange for small payments or personal information. Victims may be persuaded to connect their wallets to fraudulent platforms, exposing themselves to further financial loss or identity theft. More on the internal designing side, honeypot tokens are built to trap investors by preventing them from selling their holdings once purchased. These tokens often promise high returns, but the smart contract is programmed to restrict selling their holdings once purchased. These tokens often promise high returns, but the smart contract is programmed to restrict selling, locking funds indefinitely. In addition, some scam tokens don't offer locked liquidity at their release, implying that creators can withdraw the entire liquidity pool at any time.

Another deceptive tactic includes imposing a 100% sell tax, which means that any attempt to sell results in the entire amount being deducted as a fee, effectively making the token impossible to cash out. There are several ways to know what's happening before investing, though. How to spot scam tokens. To avoid falling for scam tokens, if they're not just a vague crowdsale promise, it's crucial to verify the contract address, if applicable, before investing. Numerous crypto projects that offer real tokens on Ethereum like Network's ProVid official contract addresses, which can be found on their website, verified social media pages, or well-known listing platforms like CoinMarketCap and CoinGecko. If the token isn't based on an Ethereum-like chain

but in a different system, like Obite, chances are it won't be a contract, but it'll have another type of legitimate registry or address to check. Try on the native explorer of that network. Always cross-check this address or registry across multiple sources to ensure accuracy and avoid relying on links shared in unofficial forums or private messages. Additionally, be cautious of projects that use similar logos, names, or branding to established cryptocurrencies, as scammers often imitate popular tokens to mislead investors. If the project has a decent whitepaper, that's a very good sign. You can extract some good data from crypto whitepapers. Various tools can help assess

the risk of a token before investing. Platforms like TokenSniffer, DEX Tools, and Honeypot. is allow users to analyze a token smart contract and detect potential threats such as honeypot traps. These tools also identify warning signs like excessively high taxes on transactions, unlocked liquidity that allows creators to withdraw funds at any time, and unusual transaction patterns that suggest market manipulation. Using these services can provide valuable insights into whether a token is safe or poses a risk. Staying informed about the latest scams and security news is another key defense

against fraudulent tokens. Asterisk following crypto security blogs and official exchange announcements can help you spot red flags early. The crypto community is also there, loud on social media, so pay attention to what they're saying about a certain brand. By combining research with available verification tools, you can significantly reduce the risk of falling for scams and protect your investments. Now, this is important to mention. Anyone, including yourself, can create customized tokens in multiple networks, as we've mentioned above. In Obite, for instance, this option is available through the ACID registry without coding and for only 0.005 GBYTEs, less than $1. These customized

tokens can be totally legitimate, and the mere fact of creating them is legitimate as well. The uses they're given thereafter are another story, and that's why you must pay attention be totally legitimate and the mere fact of creating them is legitimate as well the uses they're given thereafter are another story and that's why you must pay attention and research new projects featured vector image by freepik thank you for listening to this hackernoon story read by artificial intelligence visit hackernoon.com to read write learn and publish