GUIDE TO IDENTIFY SCAMS
The technology that handles the cryptocurrency is extremely complex for many new traders. The technical nature and complex jargon scenarios can confuse any individual technical trader too. The lack of cryptocurrency knowledge and absence of regulations makes the problem even worse which the scammers are taking advantage and spoilt customers trust in the cryptocurrency market.
Also crypto market has evolved as a speculative hotbed for many traders to invest their money in the great hopes of getting greater profits. With a huge number of cryptocurrencies and tokens to choose from, it is difficult to differentiate the good ones from the rotten ones. The Following is the list of common characteristics about the faux schemes so that any new trader understand how to avoid them.
Crypto world promises to claim weekly or monthly returns, which is close to impossible in any trading market. Offering fixed income requires constant source, which must yield high profits to substantiate high revenues, the only way is through Ponzi scheme similar to Infinity App software, there are 3 common schemes in the crypto community that promotes unrealistic claims such as:
- Cloud Mining Services: Mining is a process which solves the complex mathematical equations to secure the transactions within the decentralized cryptocurrency network. Fraudster services which allow any user to operate mining and earn coins just by investing in initial funds, it is called a Ponzi This technique works as long as there is a pool of new users, once the count is reduced, the investor will lose all his funds.
- Bitcoin Investment packages: These packages also claims that user gets high returns. Initially, the user must buy a subscription package which promises to pay a small weekly payout, but it will shut down once the new users left. BIP often uses complex buzzwords for the customers who want to understand how it works.
- Multilevel marketing: This scheme involves referrals who need to invest capitals on this scheme and they require to promote the products to get commissions.
Nonexistence of code base:
Majority of cryptocurrencies are open based, but these scammers and their projects are close based since they do not hold code base, they do not reveal it.
The absence of key Information:
- No white paper: White paper includes all information from its mechanics to code dynamics, the absence of same is a huge red flag.
- Ghost Team members: Absence of information of founder and team members. If they do not disclose any information, they are possibly frauds.
Verdict: There are certain attributes of Cryptocurrency which includes open source code, decentralization, public ledger, transparent and genuine information which scams do not possess.