Top 3 Leading Factors of Cryptocurrency Scams All Bitcoin Investors Should be Mindful of in 2019
The cryptocurrency ecosystem is plagued by scams and Ponzi schemes that take away some of the achievements the industry is facing. Since the start of the massive bullish momentum in late 2017, the industry has witnessed a spike in the number of cases of scams and hacks on projects in the crypto market. In this article, we focus on the top influences of hacks and scams in the cryptocurrency industry in 2019.
Blockchains are gaining superficially as compared to the traditional market hence the increased number of scams in the industry. Furthermore, the industry is filled with novices without the experience to research on an investment. These investors are likely to be caught in the trap of shills/paid groups that advice investors wrongly on the viability and risk profiles of the projects they are marketing.
All these are issues that investors should be wary about before investing any of their hard earned cash on a cryptocurrency project. Below are some of the most common reasons as to why the cryptocurrency field is still struggling with scams in 2019.
A. Crypto As A Get Rich Quick Scheme
Most altcoins have been identified as “moon coins” by their respective communities, tricking buyers into thinking the coin will soar to unprecedented highs. Such investors mostly end up losing their investment while trying to make a quick buck on the dollar.
Get rich quick schemes such as Ponzi’s and multi-level marketing (MLM) schemes, are also a popular way investors are scammed. The greed to make the quick money in cryptocurrency (albeit being legal) makes the market more risky to make investments.
Furthermore, some cryptocurrency scammers often promise high returns or even free token airdrops, which will ultimately lead to a loss of funds for the user. These are well choreographed acts that promise the user high returns over a period of time for a small fee. However, once the fee is sent, only a couple of payments are sent before the service is cut off.
B. Shills and Altcoin Hype is Killing Investment
One of the most unique scams in the industry today is the shill &scam method whereby individuals are paid to shill a token to his/her followers. These shills overpraise the token hence leading to buyers believing the coin’s future in great hands while in reality, it’s a failed and empty project.
Notwithstanding, a scam is easily identifiable with phrases such as “altcoin X is going to moon”, “invest X amount to receive 20% bonus”, “only available for a short period of time” etc. While not all projects that use these phrases are scams, you need to be vigilant before in investing in such projects.
C. Dearth of Research Among The Investors
“Do your own research (DYOR)”
The statement above is key for any investor in the cryptocurrency industry to avoid the easy scams in the industry. During the hype ICO process period in 2017, a number of investors were throwing money in hope of not “missing the next Bitcoin or Ripple”. The careless investing in that period saw these investors lose most of their investment to bogus token projects that are currently either out of funds, exit scammed, or still do not have a working infrastructure.
The trend seems to be taking the same turn as the field welcomes initial exchange offering (IEO) an improved system of capital raising amongst blockchain projects. The hype surrounding the IEOs and the fact that these projects are first offered on an exchange causes investors to assume the credibility of the projects.
Make sure you conduct your own research on a token project before investing your hard earned money in any project.