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Differentiating Scam Crypto Projects And Legit Projects



Since Bitcoin became mainstream, we have seen countless scam schemes that claim to be crypto projects but are just scam projects that seek to cart away with investors money. a whole lot of them have succeed and are still succeeding in doing this. the reason why they keep getting away with this schemes, is that a lot of crypto enthusiasts and investors don't have a proper knowledge of how the cryptocurrency space works.

This is the reason why we have decided to put some contents together both on our YouTube channel and podcast to give investors and especially newbies the heads up to figure out when scam projects come knocking. The crypto space is in its early stage with peculiar opportunities as well as challenges.

There are scammers in probably every walk of life, seeking and exploring new ways and opportunities to extort their victims. below we will discuss give key points to figure out a scam or ponzi project.


Five ways to know scam or crypto projects


Important to note is an open secret about the idea that drives bitcoin/cryptocurrencies. cryptocurrencies don't just exists as mere coins, they are all supposed to provide different real time solutions to their users, either as a store of value, transfer/exchange of value etc.

Cryptocurrency is not a get rich quick scheme, and will ever be.

1: PONZI/PYRAMID SCHEMES


  • Ponzi schemes are investment frauds that promising the payment of high RIO to investors from funds contributed by new investors. 

Most people fall for their lies, they invest their money, and boom! these perpetrators are gone. These scammers take most of the money for and give a some percentage to their accomplices.
Such platforms are easy to spot, even though they come up with new ways targeting naive investors, offering them a quick and high return on their investments, and when they become victims, they face reality and then feels or categorize every crypto project as scam. so next time you see a project promising you high and or instant RIO you just have to take break and do your due diligence by researching more and asking experts of their opinion about the project.

  • Check the legal status of the platform. Are they properly registered with the relevant authorities to manage their financial platform? Can you sue them if something goes wrong?

  • Do they have any refund policy, in case they file bankruptcy 
  • Check all user feedback on forums and blogs. What do previous investors in this platform say?
  • look for platform's property information before making investments. like whats the professional history of the CEO's trustworthiness in that said field?  who and what qualifications and experiences does his board members have? has any of them been involved in any previous fraudulent activities or platform? 
Most Ponzi schemes do not disclose information about their owners. They keep the information out of reach from investors. People often come in and invest blindly, and when things fall apart, no one is held accountable.
It is necessary to know the background information about the platform. Ask questions like – Who runs the platform? Where is it based (its operational headquarters), and when was it launched?


2: MINING POOLS 

This type of scam usually happens on social media like instagram and facebook, the scammers follows your page and starts sending you messages asking questions of your knowledge and interest in cloud mining offering you big mining opportunities with payouts or payments in bitcoin daily.and when you eventually sign up, they offer you a wallet that has been compromised by the the wallet developers, so when you start receiving funds, they eventually wipe out your account and disappear without trace.

3: SHITCOINS/PUMP AND DUMP

These unsuspecting individuals or Groups introduce you to a less known coin with false promises but with plans to pump and dump or manipulate the price and volume of the coin once they notice they have a lot of unsuspecting investors. they pump the price by manipulating the purchase of large volumes, and then sell it by dumping on the coin on new investors, these could see a coin with huge volume dropping to a point of no or less value, abandoning the project on investors.


4: OTC AND ESCROW SCAMS

otc is known as over the counter and escrow is a trusted third party site/group where bitcoin/crypto buyers and sellers meet to transact. some scammers advertise to buy or sell coins to unsuspecting individuals and once they achieve their aim, they disappear and or change their contact details.
so in such sites or groups make sure you have verifiable details or make deals with individuals you know personally.

5: MULTI-LEVEL MARKETING

Every crypto project is either a payment solution, a store/exchange of value or an open source platform for other decentralized projects and so any crypto project that makes network marketing its major project or product is already a red flag. apparently any crypto project that tells you to go bring in more individuals to make money at this point you have to back off, cause no legitimate crypto project makes mlm its major product or service.

There are also projects that presents you with membership and autoship packages these also should raise a red flag for you, no legitimate project offers autoship programs. scam projects do that to take your money.

Comments

  1. Thank you for adding to my knowledge and fueling my curiosity. This was enlightening,to say the list.

    ReplyDelete
    Replies
    1. Thank you so much for your sincere comment. are there other topics you want us to cover?

      Delete

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