The purpose of this article is to offer advice on how to avoid a cryptocurrency scam. But what is cryptocurrency and how can people be scammed by it?

Bitcoin is a form of digital currency, created and held electronically. Bitcoin is the first example of a growing category of money known as cryptocurrency. There are many others on the market today – more than 1,300, and their popularity is driving their value.

As of this writing, Bitcoin is valued at $18,775 (US) per coin, with Bitcoin Cash, Dash, Byteball Bytes and Ethereum rounding out the top five. With Bitcoin’s meteoric rise, many people are looking to invest in cryptocurrency startups, hoping to capitalize on the cryotocurrency craze.

An Intital Coin Offering is an event in which a cryptocurrency or blockchain startup sells tokens that represent ownership of its core blockchain, in an effort to raise money to develop the product or scale an existing product.

Hundreds of crypto startups are preparing to launch their ICO over the next several months. You can find information about these on ICO listing pages like Coin Schedule, ICO Watchlist, Token Market and many others.

Because ICOs are almost completely unregulated, the potential for fraud is far greater than investing in a public company or even a non-crypto startup.

When it comes to investing in public companies, the U.S government enables investors to get a clear view of a company’s history and progress, and a glimpse of its future, through a set of required filings. These filings are registration statements, formal and periodic reports and other forms that are provided to the U.S. Securities and Exchange Commission (SEC).

When it comes to investing in a private non-crypto startup, there are various documents and forms that investors will want to see like organizational documents, intellectual property, bank statements, financial projections and legal information to name just a few – but many startup investors are also now requiring background checks on the founders.

Startup investors like Microventures, Angel Kings and Republic require background checks before investing in startups because it just makes sense to find out if the founders and team members are being truthful about their capabilities and achievements; that they do not come to the table with financial baggage; and that they don’t have a criminal history.

A background check should be the very first due-diligence step before investing in a cryptocurrency startup. It should include an identity verification search, an education verification search, an employment verification search, a bankruptcy and civil records search and a criminal record search.

Only a background check company can provide access to this information and SafestHires is doing this with the BitCheck Dossier. The dossier is purchased by the cryptocurrency startup and shared with potential investors on its website.

If the startup will not subject its founders and team members to a background check for you, then you should not give them your consideration. If they are not willing to be transparent about their backgrounds, then they are likely trying to pull the wool over your eyes about their technology and the entire company is probably a scam.

Click here to view a sample BitCheck Dossier.

Before you buy any Altcoins/Tokens, ask the startup to purchase a BitCheck Dossier on their founders and team and share it with you. They can contact us here.