When I talk with no-coiners about the crypto space, one of the common fears I head is that 'crypto is full of scams' or even that Bitcoin ($BTC) itself is a Ponzi scheme and of no value, since it isn't backed anything. This is the point in the conversation where I point out the US dollar is not backed by anything real since 1971 when the gold standard was abolished. However, it's easier to understand and forgive why those who have not yet embraced Crypto believe such things. Unless you're particularly interested in something, it's unlikely you will look for news! Ever noticed how quiet the media are about nearly silent on Bitcoin and crypto in general, but all seem to take a huge interest when BTC consolidates. You see shocking headlines like 'Bitcoin Crashes 50% from All-Time Highs' but never the inverse.
Whenever there is large blackmail or ransom where has affected a nation, they always worm in that the ransom was demanded in Bitcoin or Monero ($MNR). This has given cryptocurrency a 'shady' reputation. People forget that people also use the US dollar for nefarious purposes and likely in multitudes of BTC by this point. At least BTC is transparent and traceable to some degree, particularly since 'Know Your Customer (KYC) requirements have gone mainstream in most countries including the US, UK and EU.
The same goes for Scams pulled off in Fiat Currencies. Crypto is not unique but the freedom it affords and security cannot protect from human error.
We can perhaps resolve the former issue and not the latter so easily. I hope that with awareness and caution about how 'Scammers' are stealing from cryptocurrency holders, just the same as with the rise of internet banking we saw scammers seize on the new opportunity for ill-gotten gains, we have seen awareness and vigilance towards unsolicited phone calls and have begun to think twice before sending money over the internet.
Have you ever heard of these sayings?
- There's no such thing as a free lunch.
- If it's too good to be true, it probably isn't.
One of the most prominent scams that I can remember was back in July of 2020. Multitudes of celebrities had their Twitter accounts hacked including Bill Gates, Barack Obama, Joe Biden, Kim Kardashian, Warren Buffett, and even Apple and Uber, they then all posted the following or similar:
Caption: Joe Biden wants your Bitcoin?
This tweet, to most people, appeared to be an obvious scam. Just imagine if the time pressure and your trust in that public figure that you followed on Twitter overcome or blinded you to scepticism. You would have quickly found yourself out $1000 of crypto.
Evolution of Scams
Jump forward a year and a half to July 2021, and scroll down in those YouTube comments of a crypto video. You could not move for the bot accounts posting WhatsApp numbers appealing for you to get in touch. Again on YouTube, you are not paying attention and look up to see an interview with someone influential in the Crypto space, maybe Vitalik Buterin, Elon Musk, Charles Hoskinson and off to the side is exciting news of a giveaway. Think again, it's just a scam. YouTube still seems to be struggling to remove bots and these scam-ads from their platform. If someone is offering you money over the internet for FREE? It's likely to be a scam.
The Ponzi Scheme is alive and well
Named after Charles Ponzi who launched a fraudulent investment scheme back in the 1920s, we still see this old classic ploy to rip investors off alive and well today in a new form of 'The Rug Pull'. Most recently, 40,000 people jumped in on the SQUID Token and were burnt when the developers cashed in their token and ran off with Millions. Some investors were duped by the hype and publicity of the project, which was even driven by the poor journalistic principles of mainstream media who didn't research what they were writing about to see if they were promoting a Scam. BBC News even covered the 'project' which gave it credibility amongst investors and ironically suffered little backlash for taking part in a scam other than damaging their credibility further.
The other types
- Giveaway Scam
- Phishing Scam
- ICO Exit Scam
- Wallet Phishing Scam
If you've been around the internet for a few years you will undoubtedly be aware of the above, but it's worth a reminder. Keep your information safe, use a VPN, use a secure browser such as BRAVE, don't click on unsolicited links in emails, check the authenticity of links in emails, comments, websites. Browse safe and don't overshare online and remember, there is no such thing as a free lunch and......
None of the above is financial advice
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