Cryptocurrencies- A Scam or good investment?
Cryptocurrency has been the talk of the town since its inception in 2009, Earlier the questions were what is bitcoin?, how does it work? What is the use case of cryptocurrency? Is it safe platform? But Now cryptocurrency is looked from the perspective of an Investor, Is the ICO good? Is it Worth investing?
According to Wikipedia,Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.In layman’s language, a cryptocurrency such as bitcoin is a currency which is virtual in nature with a technique that helps you in safeguarding your money with zero theft.
Now the question arises, Is it good to invest in cryptocurrency? What are the repercussions? What about the scams that are associated with bitcoins? How as an investor I can know the ICO is worth investing or just a ponzi scheme?
Before getting into is it worth investing? Let’s look on the few of the biggest scams that has shaken the belief in cryptocurrency.
SCAMS
- Confido scam ($375,000)-
What was Confido ICO?
The concept behind Confido was to allow a smart contract to monitor the delivery of a package. Once delivered, the smart contract would release funds held in escrow to the seller and if the package was never delivered, the funds were returned to the buyer.
Why people Invested in this scheme?
With the idea of this project, confido also came up with the strategy of keeping low hard cap and that came as a relief to the investors and people got attracted towards funding this project.With this, they always tried to engage people by showing off the work they are doing and also statement like they are going to be working with kleros made people believe in this project.
How much Confido scammed?
Confido wanted to raise just $400,000 and this gave every small investors a hope to invest in this project and people were so involved in this project that they forgot to see the red flag lingering with this project, i.e the token that once sold at $1.20, happened to come at just $0.7. With the help of eager investor, the organisation generated almost $375,000 and thus they scammed all the investors with this wholesome amount.
Aftermath
Confido attorney stated to give all the money i.e. $375,000 back to the investors by buying all the confido tokens from kucoin exchange at the nominal fee mentioned in their statement of december 2017.
Learnings to takeaway
Do not rush into investing in a project that offers something like low hard cap, this can be a trap.
Always check the team and their previous project to know how trustworthy they can be.
- Benebit ICO scam ($4 Million)
What was Benebit ICO?
Benebit was a project that claimed to change the way businesses and customers interact. By using blockchain and smart contract technologies, the Benebit platform will eliminate middle-actors and barriers from loyalty relationships.
Why people invested in this scheme?
The marketing strategy of the organisation was the main reason that people were intrigued with the hype of this project, estimated expenditure of the organisation on marketing their project was $500,000. Investors were quite interested in this project because various review website top rated this ICO and thus people thought it to be genuine.
How much Benebit Scammed?
Benebit team from the start had this ponzi scheme, this was actually a preplanned scam that surfaced in feb 2018. Benebit managed to extract about $4 million from the investors.The fraud only came to light after someone noticed that the team photos had been stolen from a school website.
Aftermath
The investors hired white hat hackers to track the benebit wallet and they manipulated the data and wired all the transaction in their wallet thus, providing all the investors with their said money.
Learnings to takeaway
Never rely on paid review sites when planning to invest in a project.
Always thoroughly check the website and team members.
- Bitgrail vs Nano scam ($150 million)
What was the Bitgrail exchange scam?
Bitgrail is the cryptocurrency exchange platform that deals in nano coins.The vulnerability here was the use of Hot wallets where they kept the amount and the security was breach because of this very reason.
Bitgrail vs Nano case?
Bitgrail accused nano coin blockchain technology for the hacking of 150 million USD, which was recently proved to be a false claim as it is not possible to change the blockchain ledger. The main reason was the vulnerable security measures that bitgrail applied to their platform.
How much bitgrail got scammed?
This has not been clear yet but Bitgrail announced that the hacker took $150 million but the figure claims that the attacker hacked the system and took somewhere between 150–195 million USD.
Learnings to takeaway
This is not the first time cryptocurrency exchange platform has been hacked and Coincheck is one of the biggest example of it having to lost almost $530 millions due to the use of Hot wallet.
Do not use hot wallet to keep all the amount in it as it is prone to hacking.
Built a system with the top notch security, do not compromise with the security of your website as it is an cryptocurrency exchange platform.
- Savedroid ICO Scam($50 million)
What was Savedroid ICO?
The idea behind savedroid project was to help people save money through a bot that automatically invests and saves your cryptocurrencies. Imagine having a robot that automatically put some fixed amount in your savings account from the income you stated.
Why people invested in this scheme?
The team was looking promising as some of them has worked in fintech companies for 10 years. And this ICO enabled people to trade in any of the cryptocurrencies.
How much Savedroid scammed?
This ICO has scammed the investors with $50 million and on the website its written “Over and out”. This is one of the biggest exit scam that has been pulled off. But if we go with the recent news, the company claims that it was just a PR stunt that failed terribly.
Learnings to takeaway
This is by far the worst PR stunt that any company can pull out (if the news is right).
Never go with the paid site reviews about the ICO, always look yourself, thorough research is a must.
- Opair & Ebitz Scam ($2.9 million)
What is Opair & Ebitz ICO?
Opair and Ebitz ICO was two different ICO which was developed by the same mastermind named wasserman, Opair offered people a decentralised debit card system using its own token, XPO. whereas Ebitz was a clone of Zcash(a decentralised and open source cryptocurrency that provides strong privacy protection).
Why people invested in this scheme?
Opair was indeed a good project but the implementation was on stake and with more and more exciting new Blockchain technologies hitting the markets, people were understandably hopeful and without much doing the research they invested in this project.
How much Opair and ebitz scammed?
Both the ICO generated approximately 4 million USD.
Learnings to takeaway
From the start this project was bogus, it is always better to consult to expert about the project which is possible in the nearby future.
Thorough research on the team was one of the keypoint in this case.
This could have been avoidable by taking few measures into consideration.
These above mentioned ponzi schemes were mainly of exit ico scam that means the company is fraud rather than the people.There are more scams than you can think of that happens everyday by impersonating the identity of the CEO or by phishing, it is said that nearly $9 million a day is lost in cryptocurrency lost.In a recent finding by Bitcoin.com News, $1.36 billion worth of cryptocurrencies have been stolen by fraudsters during the first two months of 2018.
Now let’s take a look on a story of a man, indian origin, who fooled entire world with his newly invented coin i.e. Gainbitcoin, with which he generated almost 300 million USD and then ran away with all the money.
Amit Bhardwaj biggest scamster of 2018,
-Amit bhardwaj was one of the most important person who introduced bitcoin in indian market. Early life of Amit bhardwaj stated him as a software developer for infosys and then he got into entrepreneurial journey.
-In 2012, he started of with a company name highkart.com, a online retail company which accepts bitcoin. To gain investors, Amit bhardwaj often conducted seminars and events in various places,educating people about bitcoin, encouraging them to invest in cryptocurrency, making them learn how this all works etc.
-After this in 2016, He started with a new company called Amaze miners and blockchain research ltd and under which he established GB miners, Gainbitcoin, Coinbank and GB21.
-The scamming scheme was he made promise of a highly inflated 10% monthly return on Bitcoin investments for 18 months under multi-level marketing (MLM) schemes such as Bitcoin Growth Fund.
-When returns in Bitcoins became difficult to service, he forced payouts from Bitcoins to an in-house crypto token called MCAP with predictions that its price would grow 20-fold.
-MCAP was actually his invented coin which don’t hold the same value like bitcoin.
-After fooling 8000 people with this double money within two years fraud scheme, he flew away to dubai taking the lump-sum amount of $300 million.
A good investment
Whenever you invest your money in any project, you always make sure to invest your time first i.e. doing the overall research, getting to know what market it holds, how this is beneficial to you etc. so investing in cryptocurrency is nothing new, this is just like investing in a project that can actually provide you with profit. There are various influential people who trust this whole technology of blockchain and have invested in various ICO.If you noticed in most of the above mentioned scams, the primary key to avoid scam ICO is thorough research over the project that is known as due diligence.
These below points are always recommended when investing in Cryptocurrency
->Unrealistic Goal, always check whether the goal of the company can be achievable or is it just a fraud.
->Check the website, whether its a bogus and not reliable page or is it redirecting you to another page. Please check the website url properly before clicking and check overall website before sharing your details to that site.
->Whitepaper,the website must have a whitepaper and the investors should look into the whitepaper thoroughly before planning to invest.
->Team, take ample of time in checking the team, linkedIn profile and their previous project etc.
->Influential people, whether any top notch investors are associated with it or not.
Reviews from renowned websites or analysts
->Impersonator, beware of these type of malicious attackers who impersonate ones personality to theft the investors.
According to me, Investing in ICO can be a task but if you know what you are doing and vet project effectively then you can actually invest in the most profitable currency of all time. It is a good investment, just needs time and patience to understand and once you do, you are fine in the world of cryptocurrency.Every scam has its own repercussion on the upcoming project and it also hurts the reputation of blockchain projects and slows the mainstream adoption of a technology that could change the world. It is necessary to be aware of such scams and you can only do that by reading news, due diligence on that particular project and read well renowned person’s review on the project and you will sail this boat just fine.