What do online shopping and Crypto have in common? More than you think!

(First published February 2023)

Nowadays, buying crypto can be done at the click of a few buttons once your account and wallet is set up. But while making a purchase is a simple matter of selecting your token and paying for it; it’s very easy to get caught up in convenience and overlook some vital steps that should come before trusting an exchange or broker with your hard-earned dollars.

Have you ever been to a website to check out a product and then, later that day, the product ‘follows’ you to Facebook via an online advert? If you’re anything like other purchasers, you’ll scroll through the comments on the advert to get a sense of what others think about it; and whether you can trust the seller’s claims. If it’s a significant enough purchase, you might even conduct some due diligence of your own — by visiting independent review sites, for example. This approach to online shopping is a great one as it protects us from wasting or (even worse) losing our money.

I believe our approach to websites that allow you to buy, sell or invest cryptocurrencies should be the same. Here are three key questions we ask about our online purchases that could help you introduce a healthy dose of scepticism to your crypto journey…

“What are other people saying?”

When we shop online, especially when our purchase is a more expensive one, we take the time to make sure we are dealing with a genuine, reputable service. The safest way to do this is to make sure we’re dealing with a site that other people trust and recommend.

“What are other people saying?” is a good question to ask. Specifically, visiting sites like Trust Pilot, Google Reviews and Facebook Reviews can be very helpful because reviews on a company’s own site are easy to fabricate. In addition, a search for ‘[company name] Scam’ might reveal important, suspicious information.

The International Investor Protection Blacklist is also a great way to uncover any international warnings about a site.

It’s also essential to read reviews from people who have had experiences investing in the particular coins or tokens that you’re considering if these are less common. With so many crypto projects out there, it can be tough to distinguish the good from the bad. By checking peer reviews, you’ll get a better idea of whether a particular project is worth investing in or not.

“Where is this made?”

It would be really difficult to hold a company in say Kazakhstan liable for a faulty product when you’re based in New Zealand as the same consumer protection laws don’t apply. This is why buyers will often consider ‘where’ a company is based when they make a purchase.

Crypto is no different. If the site you are considering is located outside of the US/UK/Australia, proceed with caution — just imagine how difficult it might be for you to pursue a legal case against a company in Bulgaria.

In New Zealand, it’s important to check if a business is listed in the NZ business registry and then to check if the link listed for that company aligns with the one you’re looking at (and isn’t pretending to be that business).

For international companies, you should check where they are registered by checking their T&Cs or website footer. An additional cross-check would be to use WhoIs.net to check the location of the people who own the domain. If you search for www.easycrypto.com, for example, you’d see that the easycrypto’s domain was registered in New Zealand in 2017, just a few weeks before we launched. If you’re dealing with a company that claims to have tens of thousands of customers, or to have been in business for 5 years, but the domain name was only registered 3 months ago, this is a very big red flag!

“Is this good quality?”

When making an online purchase, we’d also usually check whether the product complies with specific standards or certifications related to that product. In the same way, it’s useful to check whether the crypto project we’re considering complies with any standards or regulations.

To do this, find the financial service provider register for the country that the company is based in and do a search to see if they appear. In New Zealand, local exchanges and brokers are required to be a registered financial services provider and to meet regulatory obligations. For the UK, this would be the Financial Services Register here. For Bulgaria, the Financial Supervision Commission has a list you can search here. Every country has one of these registers online — make sure you find the official government site and do a search before engaging with any offshore company.

It’s also key to be aware of ‘fake’ endorsement of quality. If the particular token you’re looking at has been endorsed by Elon Musk or has made the front cover of Time magazine for investor returns, there is a high chance that this is a scam and that the endorsements are fabricated. Also be on the lookout for overly glib endorsements of quality such as ‘badges’ or ‘awards’ for ‘The worldwide authority in crypto’ (there isn’t one!).

“What are other people saying?”; “Where is this made?” and “Is this good quality?” aren’t the usual questions we ask when buying crypto…but they should be because not all ‘products’ (or in this case, tokens) were created equal. Be a savvy investor and don’t become a victim of scams.

Disclaimer: Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.