Cryptocurrency trading, as a source of income, is experiencing a boom in popularity. Having appeared on the Internet, this digital currency entailed a real “chain reaction”: who among us has not heard about its capabilities? Almost the entire world community, most governments are concerned about the uncontrolled growth in the popularity of cryptocurrency. You already know what cryptocurrency is and how to make money on it.
But still, what is the whole truth about cryptocurrency? Is making money on cryptocurrency a scam for people? Is Bitcoin a means of earning money or a scam and deception? Having studied a large amount of material on the Internet, we are ready to answer these questions in today’s material.
How does cryptocurrency work?
In order to answer the main question of the article “is cryptocurrency a scam and a deception?”, it is necessary to understand the peculiarities of the operating principle of this market.
The functioning of the digital currency system is based on blockchain technology - this is a method of storing information without placing it in one specific place, when the data is distributed among all participants in the system, automatically updated and available at any time to any user; it is a continuous, sequential chain of blocks of information that are typically stored and processed independently on multiple computers (Wikipedia).
Such a complex network is distributed among all participants, and all computers that mine coins become participants in the system. There is no main center to which everything is subordinate. Digital currencies are redistributed through the network between market participants. This allows you to bypass banks, exclude influence from the state, avoid fees for transfers and other expenses and difficulties. Users have complete freedom of action with cryptocurrency, they have no obligations to the network, and their money cannot be frozen, so they can do whatever they want with it whenever it is convenient.
The anonymity of the currency allows you to create a large number of Bitcoin addresses without being tied to any information. If the user deliberately does not indicate his data, then no one will ever know that a specific Bitcoin address belongs to him, and for anonymity, one Bitcoin address is usually used for one transaction. Thanks to the transparency of operations, the system stores the history of all transactions; these transactions cannot be canceled and the money cannot be returned; only the recipient can do this.
The emission of coins depends on the work of millions of computers using a program for calculating mathematical algorithms; it takes place only in digital form and anyone can mine currency. Having appeared not so long ago, cryptocurrency today is a real free coin, devoid of the complexities and restrictions inherent in standard money, it has become an antagonist of a centralized system, where everything is dictated by the state, the economy, but not always the interests of citizens.
2022 Representatives
Each emerging crypt is different from its competitor, since it is endowed with its own “chips”. It is difficult to guess which, among little-known projects, will become popular. More and more new currencies appear on the market every year - the creators want to take risks, and for good reason.
Prices for newly formed types of cryptocurrencies vary, but the most successful ones, for example, CoinMarketCap, cost about $750 per piece.
Cryptocurrency mining
The above coin is valued at $53 billion.
Many portals analyze promising initiatives, one of them is Wallet Investor. For some of the list of candidates being considered, the forecast predicts reaching $880 per share.
Cryptocurrency Polygon Network (MATIC)
Polygon used to be called differently - Matic Network. This is a structured and fairly simple platform for running Ethereum and developing infrastructure. The main component is the Polygon SDK, a flexible framework on which you can create: multiple applications, optimistic rollup or ZK collapsing chains, as well as standalone types or infrastructure to help developers.
Cryptocurrency Polygon Network
Polygon turns Ethereum into a multi-chain system similar to Polkadot, Cosmos, Avalanche. But it differs from them in advantages:
- safety;
- better ecosystem;
- openness.
The creators of the token aim to stimulate large-scale adoption of cryptocurrencies on many blockchains. Polygon uses Plasma Framework and proof-of-stake architecture. Conducts over 65 thousand transactions per second in one sidechain, and the block confirmation time is less than two seconds.
The token can be used for payment on Polygon, as well as as a payment currency for users working in this ecosystem. Transaction fees are also paid in MATIC.
Cryptocurrency Mina Protocol (MINA)
This is the first protocol compressed into a few tweets - only 22 kb. Blockchain architecture allows you to maintain a high level of confidentiality through the use of zero knowledge. This is an innovative technology for working with the Mina protocol, representing mini cryptographic certificates. Such elements check the state of the network, but do not provide information about the contents of the chain.
Cryptocurrency MINA
Mina allows full nodes to erase verified blocks by replacing them with zk-SNARKs, i.e. a snapshot.
The problem remains: the chain is still growing, and experts are trying to make this fragment permanent.
Cryptocurrency Clover Finance (CLV)
The token works in cross-chain pairing due to the company's two-way bridging technology - connecting Clover's EVM-based address and Polkadot. This way the chains are linked and can be used together. Crypt contributes to the creation of a fast environment of great opportunities. The project is based on the Korean exchange Bithumb. This was reported on October 13, 2022. They also pointed out the presence of their own blockchain.
Cryptocurrency Clover Finance
In terms of functionality, the token can be used both as a service and as a manager. Suitable for staking and reaching consensus, conducting transactions in the markets and profiting from working on the platform and participating in management. Holders have the right to propose adjustments to the project's activities and approve the modernization proposals they like. The token is equal to one vote of the owner.
Persistence (XPRT)
The project was officially launched in Singapore (2019). This is a network of independent chains that make it easier to compare different companies that already have significant capital (lenders) with organizations that need to find finance for development (borrowers).
The coin chain is encrypted by validators to protect data. The $XPRT persistence token is also used for these purposes. The platform was created primarily for businessmen, simplifying the conduct of business. Therefore, the main objective of using the application chains under consideration is the absence of a valuable monetary token with the ability to trade on open markets using cryptocurrencies. In reality, these application chains have been taken over by various third-party validators, and therefore they need to be rewarded or cut depending on the degree of performance.
$XPRT is used for stimulation. To perform an operation on a specified token, the main persistence chain finds and tags the block headers (using cross-chain connection) of each application chain. The goal is to find pre-prepared performance indicators. To publicize and implement plans, the company announced plans in the following DPoS/NPO networks: Cosmos Network, Terra, Kava Labs, IRISnet, Polkadot, Matic Network and Tezos.
Persistence cryptocurrency (chart)
The creation of the cryptocurrency was undertaken by a multicultural team, where each employee is an expert in their field. In 2022, its own protocol was developed, and now the issuance of coins has been established.
The work process consists of four stages. First, real asset invoices are tokenized to represent the assets on the blockchain. Next is trading against stablecoins, after which they are borrowed. The fourth and final step is to pool the loans to create fixed income investment products.
The main goal of Persistence is to provide the user with the opportunity to seamlessly exchange values from anywhere in the world, as well as to increase the speed and progressiveness of trading and financing.
To achieve the goal, the company uses the main functions of the ecosystem:
- capital movement - as quickly as possible and around the clock, without any restrictions;
- asset tokenization - we are talking about invoices;
- credit, bills of lading (representing goods on the ship) using non-financial tokens;
- NFT;
- a decentralized exchange to greatly facilitate the process of trading and exchange in the world beyond the monitor.
As a bonus, the company’s crypto assets can be used to secure a loan or loan.
Cryptocurrency Flow (FLOW)
Needed to support NFT collectibles and blockchain gaming. Crypto is associated with digital content.
Cryptocurrency Flow
(SFP)
Utility token used to generate profits and discounts from SafePal products. Holders can vote for new features or propose their own development options.
SAFEPAL Wallet
It is not yet possible to obtain SFP cryptocurrency on exchanges, but users can claim the token in the developer's application after completing the task. Name: Claim SFP Dapp.
Cryptocurrency Chia (XCH)
A token with a new “Proof of Space and Time” mechanism. For mining, instead of wasting computing power, you need to use hard drive space.
Chia cryptocurrency
Bram Cohen decided to create a cryptocurrency back in August 2017, but implemented the project only in May 2022. The development is supported by many funds - Andreessen Horowitz and Galaxy Digital, and the author aims to create a “customizable international commercial bank that works faster than Bitcoin.”
Common myths - is Bitcoin true or a scam?
You can hear a lot of myths about bitcoins that mislead citizens. For example, that cryptocurrency is a financial pyramid. But in fact, it has a completely different operating principle, because invested funds are never frozen, and the investor has access to them at any time. When transferring money or inviting new interested people to the system, the user does not have any bonuses. In the case of a financial pyramid, “old” investors make a profit by attracting newcomers.
The second myth is that digital currency is necessary for shadow markets. Of course, certain coins gained popularity only after participating in illegal trade, but today Bitcoin is an integral part of offline life; with its help you can purchase real estate, transport, or pay in a cafe.
Another common misconception is that cryptocurrency is a bubble. When using this expression, people usually have little understanding of what exactly it means. As a rule, it is used to denote valuable assets whose price increases are determined by the news background. This applies only partially to bitcoins; changes in their value are affected solely by demand. Accordingly, the higher it is, the higher the price.
It’s a stretch to call cryptocurrency a bubble. Although, at the beginning of 2022, when Bitcoin approached the $20,000 mark per coin, everything that happened in the market then had all the signs of a soap bubble. And when it burst, the cue ball fell to 3500 in November 2022.
There is an opinion that bitcoins are not backed by anything, but since 1971, when the gold standard was abolished, all world currencies are backed by the dollar, and the dollar itself, in fact, is not backed by anything. Digital coins are no different from standard coins in this regard.
Features of work
Don’t assume that cryptocurrency is just about buying low and selling high. There are some trading features that every trader must take into account:
- The market is highly volatile, so after rapid growth it can quickly collapse. Often such jumps lead to panic among market participants.
- Large trading participants have the opportunity to provoke a rise or fall in prices artificially (Pump and Dump).
- One should take into account the political factor that can affect the cost of digital coins. Traders remember the case when Bitcoin rose sharply during early parliamentary elections in England. Also not forgotten is the situation when its price jumped due to political scandals in the United States.
- Cryptocurrencies are not only an opportunity to make good money, but also huge risks, so a trader should always remain on guard.
- Only those investors who can competently analyze the popularity of digital coins, their prospects and factors affecting the dynamics of the exchange rate will be able to receive high incomes. The main methods of analyzing and forecasting the price of cryptocurrencies are technical analysis and fundamental analysis.
The media have repeatedly called on Internet users to forget about cryptocurrency, which supposedly will collapse very soon. But the coins managed to withstand all the tests. Thus, the debate over whether cryptocurrency is a deception of people or not continues to this day. People are speculating about whether digital coins should be officially sanctioned.
Advantages and disadvantages
Cryptocurrency has both advantages and disadvantages. Thanks to its advantages, many Internet users have become involved in this system. The main advantages of such earnings:
- Possibility of receiving unlimited income. Coins are dynamic, their course is constantly moving, exciting the consciousness of users.
- Ease of earning money. By analyzing market trends, you can easily increase your capital by buying on declines and selling when prices rise.
- Absolute anonymity.
- Lack of any control. The exchange rate of bitcoins and other coins does not depend on the state economy.
- Reliability and security. Cryptocurrency cannot be counterfeited.
- A variety of cryptocurrency exchanges where you can buy and sell cryptocurrency and make money on the price difference.
Bitcoin also has its disadvantages. It was thanks to them that the opinion arose that cryptocurrency is a scam. The following disadvantages of digital coins should be highlighted:
- Greater volatility.
- If the crypto exchange is hacked, the money cannot be returned.
- There is no absolute guarantee of the safety of electronic wallets on which cryptocurrency is stored.
- It is not yet known what status bitcoins will have in the future. It is possible that a ban on the use of such money will be introduced.
- There are no centralized regulatory bodies.
- If you lose access to your wallet, there is no chance of getting your money back.
- If an erroneous transaction is made, it is impossible to cancel. If the user changes his mind about sending electronic money, he cannot change anything.
Possibility for smaller currencies
You've all heard of Bitcoin, Litecoin and Ethereum, but there are more than three. As stated earlier, there are thousands of active cryptocurrencies, and even Facebook's Libra, which was announced in 2019 and is designed for international transactions without additional costs or fees, making the most of the popular social platform at present. But it's still developing, and you'll probably have the opportunity to see how it works and how Facebook is becoming a huge part of the global banking system.
Fake sites and pyramids
Trading is impossible without scammers, who are attracted by the very dynamic and fast-growing cryptocurrency market. Such companies are created in order to deceive investors and get their money at any cost, so it is very important to be responsible when choosing a company to which you can entrust your capital.
Users often fall for scammers when working on a seemingly familiar resource with familiar texts, design, and navigation. However, it later turns out that the investor’s funds have disappeared. Fraudsters create a copy of a well-known crypto exchange and take away not only money, but also passwords.
The fact that scammers obtain the passwords of their victims can then result in the hacking of other victim accounts on other exchanges or services, since the majority of users use the same password for all their accounts in different services. To be safe, you should always pay attention to the address bar of your browser, where the name of the resource is displayed. This will prevent you from falling under a phishing attack. It is better to follow links only from verified users.
Fraudsters associated with pyramid schemes are excellent psychologists, they are ready to promise the highest incomes. When you come across offers to store bitcoins, you should also be wary. There are a lot of such pyramids now; you should never get involved with them.
Transaction systems will improve
Whether you like cryptocurrencies or not, they have a huge impact on the traditional financial system. Most money transfer methods are protected by multiple layers of security, but when Bitcoin is transferred, it can be said to be “secured” until the transaction is completed. Blockchain is stable and secure, but at the same time vulnerable, both investors and developers always recommend saving money on a virtual wallet. Of course, there is always a chance for improvement, and we can expect that in a few years there will be a great transaction system for both traditional and digital money.
Cryptocurrency funds
The scheme is based on people’s serious perception of obscure but respectable words like “deposit”, “investment portfolio”, “fund”, “asset”, “capital”, etc.
They are used with terminology from the now popular field of blockchain technology.
So, an advertised cryptocurrency fund with a huge authorized capital may in reality be scammers, of course, without the necessary registrations, licenses and permits. But this “fund” is advertised, has a website, a bunch of reviews, extremely profitable statistics or bright graphs. In general, it has the entire set of deceptive attributes that inspire confidence among users.
Users are beginning to be offered in all sorts of ways to deposit fiat currency or crypto coins so that “competent and very experienced” managers manage investments. The cost of services is ridiculous, the profit is inevitable, the cooperation is mutually beneficial. Guaranteed income is usually offered over 110% monthly. There are always simpletons who fall for the promise of easy, quick money.
It is also not difficult to predict the outcome of such investments - this is a well-deserved punishment for illiteracy, rosy naivety and stupid greed in the form of an absolute loss of the transferred funds.
The era of inclusive investing
Srinivasan notes that the old methods of obtaining investment in your project are rapidly becoming a thing of the past. New methods allow investors to receive the money they are owed if the project is successful, and the developers of the idea will no longer be forced to allow investors to manage the business.
In the near future, you will no longer have to go to Silicon Valley or Wall Street to get the necessary money to implement your idea. The search procedure used to be very tedious, and sometimes even the most promising projects were not missed due to the conservatism of financiers.
Today, it is enough to get Kickstarter approval, after which you can develop the project idea, prepare documents and submit the idea to trackers. The most interesting projects receive even more money from ICOs than they can expect, while potentially failed ideas or those containing significant flaws can be corrected through direct communication with financial analysts on the appropriate forums.
Clones of cryptocurrency wallets and digital coin exchanges
The idea of a fraudulent scheme is not new, but thanks to the recent excitement in the market, the idea has not lost its effectiveness. Here, criminals create an extremely identical copy of the pages of a web resource, with an address slightly different from the original site. It is precisely this little detail that victims of scammers often do not discover.
The stages of this scheme are:
- We send out mass emails of attractive messages about unprecedented promotions, super discounts, winnings in an automatic lottery, etc.
- The user is moved to the main page of the crypto wallet or exchange platform. Seeing a familiar page on a web resource, he writes a password and login to log into his account. Nothing, of course, works out, and the page is reset;
- As a result, the scammers obtained his authorization data. Now, if there is no two-factor authentication, there is an easy opportunity to steal crypto coins.
Here's how to prevent this deception:
- Carefully check the addresses of Internet resources to which dubious links lead. It is better to avoid such transitions from unexpected emails;
- Work with digital coins exclusively in cryptocurrency wallets and exchanges that provide double authentication.
How to identify scammers?
Attackers work according to well-established schemes that allow them to gain the trust of users. Signs that can help you spot scammers.
- Rush. In most cases, scammers push their “clients” on and try not to give them time to realize what is happening. They often use manipulation and threats for this purpose. Do not follow the lead of those who are trying to confuse you and rush you, do not forget to familiarize yourself with all the available information and do not follow the lead of those who want to confuse you.
- Exclusive information. To attract attention, scammers use the trick of “secret bugs.” On social networks, scammers often “share information” about an allegedly erroneous exchange rate, or about successful exchange chains. Both are a loss of money.
- Cryptocurrency. If you have to make a transaction involving sending tokens, or a transfer in payment systems with a low degree of data verification, such as QIWI, then you should pay very close attention to this. Fraudsters very often use the features of these systems to their advantage. For cryptocurrencies, these are non-refundable transactions.
Dangerous factors that indicate an attempt to mislead include promises of inflated returns: 50% or even 100% per month.
What to expect soon
New projects are released regularly, but not all of them deserve attention. Among those announcing an imminent release, experts highlight 3 options.
Mining farm
Cryptocurrency Asva Finance (ASVA)
The liquidity aggregator gives access to connecting and working with several blockchains:
- Binance Smart Chain;
- Polkadot;
- Avalanche;
- Ethereum.
Thanks to such extensive access, the user receives the maximum increase in profits from pharming. Asva Finance compares crypto loans across lending protocols and selects the best.
The ASVA token is used within the Polkadot ecosystem. The development of a liquidity aggregator is needed for mining and voting for stages.
Cryptocurrency Polkarare (PRARE)
This platform creates NFT tokens and helps in exchange and trading. The network connects simultaneously to several blockchains:
- Polkadot;
- Binance Smart Chain;
- Polygon Network;
- Ethereum.
Owners have access to: rewards for use, participation in farming, staking.
Using Polkarare, you can take out a loan by collateralizing NFT tokens.
Smartlink cryptocurrency (SMAK)
The project was launched on the Tezos blockchain. The goal is to reduce prices for transactions and high reliability in comparison with conventional payment systems:
- Stripe;
- Escrow.com;
- PayPal.
SMAK is an FA 1.2 utility token. Owners are given a deposit reward of 20 to 36% per year. At the same time, holders do not pay commissions for transactions. They can also vote on important decisions regarding the operation of the platform.
