Fake cryptocurrencies, also known as scam coins or fraudulent digital currencies, are those sneaky little schemes that aim to trick people and steal their hard-earned money. They often promise huge profits or fancy features, but in reality, they have no real value or technology backing them up. It’s like a mirage in the desert!
Today we will cover this topic in a very deep and simple way and I assure you that after reading this you will not be such a victim.
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Let’s try to understand this with a very simple example:
Imagine you have a shiny box of chocolates, and you want to trade them with your friends. Cryptocurrency is kind of like that, but instead of chocolates, it’s digital money!
Now, to make sure no one cheats or fakes the chocolates, we use something called blockchain technology. It’s like a super secure ledger that keeps track of every chocolate transaction.
But here’s the catch: just like in real life, there are some sneaky people out there who try to trick others. They might create their own fake chocolates, pretend they are the real deal, and try to sell them to unsuspecting folks.
That’s where we need to be super careful! It’s important to do your research and make sure you’re dealing with reputable and trustworthy cryptocurrencies.
By the way, I have already written an in-depth article on how hackers steal our cryptocurrency from our wallets, You can read it if you are interested by JUST CLICK HERE
When it comes to checking the authenticity of a cryptocurrency, it’s important to dig a little deeper. Here’s how you can do it:
Research the project:
Take some time to explore the background of cryptocurrency. Look for information about the team behind it, their experience, and their previous projects. You can check their website, whitepaper, and social media accounts for more details.
Dive into the technical aspects of cryptocurrency. Look for a working product or a prototype that demonstrates the technology’s capabilities. You can explore their GitHub repository or technical documentation to assess the project’s development progress.
A strong and engaged community is often a positive sign. Look for active discussions, forums, and social media platforms where users share their experiences and opinions about cryptocurrency. This can give you insights into the project’s reputation and credibility.
Check if the cryptocurrency is listed on reputable exchanges. Established exchanges have a screening process that helps ensure the legitimacy of the listed cryptocurrencies. You can refer to popular exchanges like Binance, Coinbase, or Kraken to see if the cryptocurrency is available for trading.
As for resources, you can start your research by visiting the cryptocurrency’s official website, exploring their social media channels, and reading their whitepaper. Additionally, you can find valuable insights from cryptocurrency news websites, forums like Bitcointalk, and online communities like Reddit’s cryptocurrency subreddit.
Here is a more in-depth explanation of how to catch cryptocurrency scams:
Research the Team Thoroughly
Take time to dig into the background of the founders and developers behind a cryptocurrency project. Scammers often use fake names or stolen identities. Search for information on the team members’ backgrounds, their previous projects, LinkedIn profiles, or publications under their names. Legitimate teams will have an online footprint you can verify. If you find little or no information that can corroborate the team’s claims, it could be a scam.
Inspect the Website Design and Content
Scam cryptocurrency sites often have amateurish designs and may even just use copied stock content or dummy text. Legitimate projects will have higher-quality web design and custom-written detailed information on their technology, roadmap, use cases, and team members. Watch for typos, grammatical errors, or anything that looks hastily put together.
Verify Celebrity Endorsements
Scammers may falsely claim that celebrities, influential business people, or respected industry experts have endorsed the project. Verify endorsements by checking the celebrity’s social media, public statements, or official spokespeople before believing the claims. Scammers are counting on you to trust without verifying.
Look Out for Manipulated Metrics
Check the coin’s market data on sites like CoinMarketCap. Scammers often artificially inflate the price, market cap, circulating supply, and 24-hour trading volume to appear legitimate. Look for odd patterns or amounts that seem unrealistic relative to other major coins.
Research Exchanges Listing the Coin
Reputable exchanges like Coinbase, Binance, and Kraken will vet assets before listing them. Being on a well-known exchange is a good sign, though not a perfect guarantee. Check if exchanges the coin is listed on are obscure or have no reputation. Also, research if any links are provided to buy the coin directly—these direct “exchanges” are often fake.
Look for Technical Red Flags
If the project claims groundbreaking technology that seems too good to be true, it probably is. Scammers often make exaggerated technical claims while using buzzwords or fancy jargon. Legitimate projects will have technical details that can stand up to scrutiny from real blockchain experts.
Trust Your Instincts
If something feels off about the project, the easiest solution is to avoid investing. Even experts get fooled sometimes, so listen to your gut feeling if alarm bells are going off. It’s better to miss a possible opportunity than invest money in a scam.
One of the largest cryptocurrency scams to date is the PlusToken scam. Here are some key details:
PlusToken was a cryptocurrency wallet and exchange platform that launched in 2018. It claimed to provide high-return investment programs if users deposited different cryptocurrencies. It marketed heavily to unsuspecting investors through public appearances, promotions, and referral bonuses. At its peak, it attracted over 1 million members.
However, PlusToken was a Ponzi scheme. The deposits were used to pay existing member withdrawals to keep the scam going. No real trading or mining was being done. By mid-2019, PlusToken had accumulated at least $2.9 billion worth of deposits in Bitcoin, Ethereum, XRP, and other coins.
In June 2019, PlusToken stopped withdrawals and shut down its exchange platform after founder Chen Yunsheng vanished with the wallet’s private keys. Investigators later found that the PlusToken team had slowly drained the wallet reserves between 2018 and 2019 by transferring funds to exchanges to cash out.
Around $2 billion worth of cryptocurrency believed to be from PlusToken remains unaccounted for. The 6 PlusToken masterminds are still at large. The scam affected hundreds of thousands of victims mostly located in China and South Korea. The massive asset dump from PlusToken is also blamed for crashing crypto markets in 2019.
Due to the large scale of the fraud involving billions in stolen funds, disappearing ringleaders, and international victims, many consider PlusToken the largest crypto scam revealed so far.
The PlusToken scam is a valuable lesson that reminds us to stay alert and do our homework before diving into any crypto investment. It’s all about being proactive and conducting thorough research on the project, checking the credibility of the team, and listening to the experiences shared by the crypto community. Trust your instincts and remember, if something sounds too good to be true, it’s best to approach with caution. Stay informed and make wise investment decisions!
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