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Today, a lot of information is available about cryptocurrency, and the global community is excited about the uncontrolled growth of its popularity. People continue to make easy money online by investing in bitcoins and other coins. The more popular this topic becomes, the more complaints there are about scammers hacking wallets or offering large profits in a short time, and then disappearing with the investors’ money. Many are sure that cryptocurrency is a scam, but we still need to figure out whether this is so.
Common Myths
You can hear a lot of myths about bitcoins that mislead citizens. For example, many people believe 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 becoming an integral part of offline life; with its help you can purchase real estate, transport, or pay in a cafe. The conclusion is obvious.
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.
Advantages and disadvantages
Cryptocurrency has both advantages and disadvantages. Thanks to its advantages, many Internet users have become involved in this system. Among the main advantages of such earnings are:
- 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.
Phishing with Bitcoins
One scheme involves sending emails with the intent to steal personal information. The victim is sent a letter saying that he has won bitcoins. To pick up coins, you need to log into your wallet (the form is located immediately in the body of the letter). The user simply leaks his data to scammers and loses access to his wallet, since the data has already been stolen.
Phishing scams are very common and have recently started to gain popularity in the cryptocurrency community. Always be wary of clicking on any links in emails that appear to be inauthentic, especially when you are checking email on your phone.
The same scheme is used when creating a copy of sites.
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 not only money, but also passwords. The fact that scammers receive the passwords of their victims can then result in hacking of other victim accounts on other exchanges or services, since the majority of Internet users use the same password for all your accounts in various 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.
Pyramid scammers are excellent psychologists and are willing to promise the highest returns. 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.
The offer to store cryptocurrency and receive income for it may seem tempting at first glance, but you need to understand that if you leave your funds on one of these sites, you can lose them. Quite often, users of such resources have to deal with the freezing of funds for a certain period, after which nothing can be done with them.
Unique Pump or Dump channels
Those who are aware of the pump&dump scheme on cryptocurrency exchanges understand that there is a wonderful chance to earn extra money. It is only necessary to open orders in a timely manner, the direction of which corresponds to the intentions of pumpers or dumpers.
The most important problem lies in the secrecy of such plans. Only a closed group of like-minded people knows the activation time of the system, the specific crypto exchange, and the target altcoin. They also know the duration of the financial transaction and other nuances. It is the gullible and supposedly most cunning users who always fall for this bait.
Approximate stages and nuances of the scheme:
- A thematic channel, group or community is created and rapidly promoted on social networks, instant messengers, thematic platforms and forums. The topic, of course, is entirely devoted to crypto trading, special strategies, easy money, etc.;
- Between active discussions and communication between attracted users, the administration gives only these people secret information about the planned implementation of dump or pump. The information, of course, is absolutely reliable from a reliable insider;
- With second-to-second accuracy and complete predictability, let’s assume that on the EXMO crypto exchange the price of the RVN (ravencoin) or XVG (verge) coin begins to rise continuously. Cunning individuals, who once became members of a special channel or group, first open short or long positions, as required by the disclosed strategy;
Peculiarity. Dumpers and pumpers do not carry out planned actions on the crypto market with expensive, very well-known coins from the TOP-20 - ethereum, bitcoin cash, litecoin, bitcoin, etc. They simply do not have enough capital for the planned effect. But from 100-200 places in the crypto rating, it is not difficult to select altcoins that can be bought en masse, quickly influencing their quotes.
- Having altcoins, users wait for the specified quote and close active transactions. They seem to be the most cunning traders who have outsmarted the bulk of speculators and made a profit. Everything is super good.
Indeed, the proposed scheme is extremely attractive, optimal, incredibly simple, and 100% profitable. Where's the catch? Fraudsters who started this deception earn money in the first 3 stages:
- At the first stage, they sell expensive “membership” in a closed community, group, etc.;
- The second stage is the sale of signals or more refined data;
- The most profitable third phase is working according to a different scenario. The channel organizers immediately sell the target crypto coin at a distance different from that announced to other subscribers. Cybercriminals make big profits by abandoning gullible and “cunning” users with actively depreciating assets.
In principle, there is no theft here either. That is, critical gullibility, illiteracy, greed and the desire for quick income rightly result in losses that users made through conscious actions.
Obvious scam
Modern scammers know how to win over the victim and gain their trust; now more and more messages are appearing on the Internet from network users who want to submit digital coins or accept payment for any goods in cryptocurrency. Most often, when transferring money, the user is left with nothing. Having received the funds, the scammer immediately disappears. Often such people hide behind popular personalities in the Bitcoin community; they can send fake documents.
To avoid falling for scammers, you need to periodically look through current lists of scams, be aware of suspicious sites, and inquire about the identity of the seller. The abundance of lucrative offers and promises of triple benefits should be alarming. It often turns out that advertised scam resources contain links to fake or phishing sites. They can promise a 300% refund and numerous pleasant bonuses.
The authors of such advertisements are supposedly recommended sellers, but in reality they are selling non-existent coins. The user may fall for low prices and good reviews. There are also advertisements online for the sale of mining equipment that simply does not exist.
Nowadays, scams are also found in plugins and applications. You can't trust high ratings and positive reviews. If you want to install a program, it is better to contact the developer and make sure that he really is the author of this application. It wouldn't hurt to read the information on the forums. Perhaps someone has already worked in this program.
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, the advertised cryptocurrency fund with a huge authorized capital in reality is a couple of 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.
Recommendations for choosing a cryptocurrency exchange
The most important stage in the development of cryptocurrencies is the emergence of cryptocurrency exchanges that allow you to earn income from trading digital coins. If you want to choose a reliable exchange, you need to take your time and not rush into overly tempting offers from dubious companies. To avoid falling for scammers, you need to:
- Carefully read the exchange license; you can study it on the official website if the company is serious.
- Inquire about the reputation of the company, find out about the activity of the position, length of service. Similar data can be found on the website of the broker or exchange you are interested in; sometimes it is worth looking for information on the forums.
- Read investor reviews about trading through different companies.
- Do not rush to trade on a real account. It is better to try your hand at the demo version first - this is a very important trading tool, and not a stupid online toy. Such an account will allow you to understand whether the chosen company’s intentions are serious, whether the terminal is working properly, how things are going with the support service, and most importantly, it will help you understand how capable you are of earning money in this way, as well as test your trading strategy.
- Find out about the bonuses offered, including those provided in the demo version. This is also an important tool that allows you to determine the level of honesty of the broker with the investor. First, you should analyze the conditions for working with the bonus, find out whether it is possible to withdraw money, and also study the conditions for working out.
- Test your strength in real trading by transferring the minimum possible amount to a real account.
As a rule, there are no demo accounts on cryptocurrency exchanges. You can try your hand at trading cryptocurrency on a demo account with Forex brokers who offer trading not only in regular currencies, but also in cryptocurrencies.
Having done this kind of work, the trader will be able to make sure that the broker has serious intentions. It often happens that a naive user chooses the most advantageous offer, without thinking that a fraudulent company may be hiding behind beautiful words and unrealistically high incomes. You need to be as conscious as possible when choosing a broker, as this will help you avoid troubles and save money. By collaborating with a reliable company, an investor will never think that cryptocurrency is a scam.
What is fraud?
Fraud is:
- a crime consisting of taking possession of someone else’s property or the right to it, as well as obtaining other benefits through deception or abuse of trust,
- deliberate misrepresentation of the truth in order to obtain, through falsehood or deception or breach of trust, the valuable property of an individual or organization.
There are scammers in every line of business. In any business, there can be people and organizations that enjoy trust and act in the interests of their own benefit, without giving anything in return. Such a serious section of business as investing also could not protect itself from the participation of scammers.
Investment scammers harm organizations and individuals not only by fraudulently extorting various fees, but also by undermining trust in those who can actually help raise capital.
However, it should be noted that not all organizations and individuals making fraudulent offers are scammers. Often, without suspecting anything, organizations and individuals providing capital raising services compose their proposals with the inclusion of elements of certain fraudulent schemes, and as a result create unrealistic financial proposals and clearly exaggerate their capabilities.
Also, you can often see intermediary organizations that, by misunderstanding or intentionally, become participants in criminal schemes or even perpetrators, without realizing it. But one way or another, those in need of investment often agree to such proposals, spend time and money trying to fulfill their conditions and, naturally, come to a dead end.
The concept of an intermediary has been interpreted as a kind of “information bureau that demands an exorbitant fee just for information about an investor or a financing method.” In this article, we tried to help initiators of investment projects distinguish between real intermediaries and scammers.
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.
The future is cryptocurrency
The question of what will happen next with cryptocurrency and whether there are prerequisites to consider it the future of all money is becoming increasingly relevant. Opinions differ here: some are sure that this “soap bubble” is about to burst, while others call digital coins the future.
Some are convinced that cryptocurrencies are a promising investment that deserves great attention, while others find it easier to think that such money will become a reality only when technology development reaches its critical point. Probably, the truth is somewhere in the middle: some cryptocurrencies will inevitably disappear, while others will gain a foothold in the world system and, if they do not completely replace world currencies, then at least equal them in importance.
Digital money is an important part of the virtual world; it makes working with payments and transfers more convenient, so perhaps cryptocurrency should be the same for everyone. In some states, the use of bitcoins is prohibited.
Now many are trying to figure out what cryptocurrency is: the future or a hoax. Those who have suffered from the manipulations of scammers may believe that Bitcoin is just another scam, but you can still make money on this market. Today there is every reason to believe that cryptocurrency has prospects. There are multiple trends that indicate the further development of digital money. While the blockchain needs improvements, it is impossible to say an unequivocal “no” to Bitcoin.
Relevance of the issue
Why do 72-75% of the audience, captivated by the ideas of making money on cryptocurrency and blockchain projects, fail without achieving the desired result? This question is interesting and reasonable. The root cause here is natural - everyone wants to gain wealth. This is normal, but in light of the cryptocurrency topic, it is proposed to satisfy a person’s interest with an assortment of methods that are poorly understood even by many specialized specialists.
How many users who have decided to mine hundreds or thousands of dollars will immediately understand the essence of the concepts of “blockchain technology”, “cryptocurrency”, “launching an ICO”, “stablecoin”, “token”, etc.? Of course, only a few clearly understand the true essence, perspective and features of these terms.
Understanding the extremely poor awareness, lack of financial literacy, as well as the incredible greed and desire for easy (quick) money among modern people, criminals easily profit from them. They implement fraudulent schemes that leave naive users with an empty crypto wallet balance and a “0” on their fiat balance. It is not difficult to deceive an audience that believes in advertising tricks.
ATTENTION
Every day, many people, blinded by the ubiquitous advertising of cryptocurrencies and “unique” methods of making big money, lose money. Fraudsters steal crypto coins or regular money from them using only simple tricks and techniques. Knowing the schemes of such deception, it is not difficult to prevent the irreversible loss of personal finances.
Cybercriminals have developed hundreds of schemes for obtaining other people’s crypto-capital, and below we will analyze the main ones.
