Crypto Academy/ Season 3/ Week 6 / Homework Post for Professor @yohan2on | Crypto Scams and how to avoid them
Introduction
Good day everyone,
This week marks the 6th week of Season 3 Crypto Academy Course. I am happy to be one of the students in CryptoAcademy for this season. This homework post is for Professor @yohan2on who presented the lecture "Crypto Scams and how to avoid them" in the intermediate class. He has really done a great job. In the light of this, I will be answering the questions he posted in his lecture below.
1. What are Crypto scams? Make your research on any Cryptocurrency scam. (Attach a few references to the news surrounding that scam crypto project)
What is Crypto scams?
As we have scam in businesses, so also it is in cryptocurrency. Crypto scams are nothing but fraudulent schemes or tricks used by dishonest people to cheat crypto investors out of their fund in their cryptocurrency wallet over the internet. The dishonest people or scammers are always on the go in finding new and quick deceitful way to steal money from cryptocurrency investors and they do this in so many ways. The ways by which they carry out their fraudulent schemes are highlighted below.
Creation of Fake Cryptocurrency Application:- There are many fake crypto and blockchain Exchange Apps out there created by scammers solely to cheat investors out of their money. Scammers do create these Apps similar to the original App to deceive cryptocurrency Investors, especially those with little or no knoweldge of original Crypto App or blockchain exchange App. Because many of these Apps designed are similar to the original App, Investors find it difficult to recognise it, and as such, many investors had lost their fund in their wallet. Investors who login in and supply their sensitive information to their crypto wallet are often the victim of scammers.
Fake Email:-Another way scammers use to get crypto investors' money is through email. Many investors have lost their money by clicking fake link sent to their email by scammers. They would send email containing their fake link to investors telling them to do some things. They would pretend to be sending the mail from the original crypto of the investors and threat investors to do some tasks as soon as possible to secure their fund in their wallet. The best way to avoid this kind of scam is to know the original website of any crypto you are using. Also, crosschecking the link sent to one's email at every point in time to the original exchange will exempt investors from the peril of scammers.
Fake Website:- Cryptocurrency transaction are done either on the App or website. Crypto investors cannot do without website. Their transactions are done on the crypto Website. Scammers often create fake website to dupe crypto investors. Imposters do create website very similar to the original website to get access to the investors wallet. These kind of websites are designed in such a way that investors will not recognise it. For example, they may change number or letters from the original crypto website, and this may not be easily notice by the investors. Additionally, imposters may use the same website as the original one, but in this case the one created by imposters will not be secured. Every secure website must have a small padlock at the top of the website. It is then advisable to check website very well before crypto investors supply their details in such platform. An example of a secure website is uploaded below.
Pump and Dump Scheme : This is another method scammers use to get people money. In this case, they would try to create fake coins, they will inflate the price of the coins to make it real so as to get investors. They would share positive but fake news about the coins. They may do the ICOs or IDOs and even Airdrop of the coins to make it real to the community. When they eventually get investors, and they see that many have invested huge lot of money in it, they then dump the coin and run away with the money. The best way to avoid this is to invest in promising cryptocurrency.
Fake news from Social Media :- Scammers also use the power of social media to scam people and collect their money. They often impersonate public figures on social media and then broadcast fake messages to people. Because many people trust some public figure, scammer often get many people from this mean. The best way to avoid this method scammers use is to verify every information you receive even from people you know. You can never tell, they might have hacked their account. It does not take long time for them to hack people's account. So, always verify.
Fake Mining or contract App/Website:- Scammers also create fake mining app and promise users specific coins as they use the app to do some activities. An example of Fake contract website is gram free website. They tell every user to do some contract work and that they will pay them when they reach 500gram. The coin is called gram. I also did this and I was able to accumulate 500gram. But guess what? It was a big scam.
My Research on Scam Cryptocurrency
There are many scam cryptocurrencies. One of them that I participated in is called The Chinese Coin (LCF) I heard about this coin in the year 2017. Below is the WhatsApp group created by my upline.
The news about this cryptocurrency was that it will compete with Bitcoin. The organizers promised to give $500 which is 1000 LCF to every one who register. Also, to qualify for team leader, one has to recruit 20 members. The Chinese government and the Rothschild family are believed to be in partnership to launch this cryptocurrency. The $500 they promised to give every new member will be use by members to purchase goods online. They incorporated this to make this cryptocurrency e-currency. They believe by doing this, the coin will gain value and that there will be wide adoption of this coin.
There was not official website for this course. The registration was done offline by collecting the following data;
• Name
• Phone number
• Identity card and
• Address.
Many people registered for this coin. Many invested in it. Later on, they asked us to be registering on one website for pre-launch. Many people registered, I also registered as well and invited my people to join the platform.
The supposed organizers later released a message warning the general public against the spread of this cryptocurrency. See below the press realesed by Rothschild family.
From the above picture, we could see that the LCF coin was a scam cryptocurrency, and since then, we never hear about Chinese coin and many who invested lost their money in the process.
2. To what extent have Crypto scams affected the Crypto space?
Crypto scams are affecting the world of cryptocurrency. Many people who could have joined the world of cryptocurrency are afraid to join because of the news of crypto scams. Also many people who have joined crypto world and were effective in the usage of it before are now reluctant in using it.
Additionally, crypto scam has affected the growth of some cryptocurrency. Some new innovation that should have come to the limelight through some cryptocurrency are nowhere to be found because of the accident encountered through scams. Most notable example of this is the "$55M DAO Attack" Ethereum experienced in June, 2016. The project was funded by teeding 50 projects up. Because of the attack, investors started withdrawing their fund and many people lost their fund durimg this attack.
More so, some countries are not enjoying every part of the crypto features because of the scams attached. For example, in Nigeria where i come from, goverment has banned the use of buying cyptocurrency with fiat money especially on the exchange platforms. The only way we transact in some of the exchange platform in Nigeria is through Peer-to-Peer (P2P)trading. And there could be issue to P2P at times.
In addition, new people find it difficult to know real crypto. Many people who are just coming into the world of cryptocurrency are confused because of many fake website created by scammers to cheat people. Consequently, many prefer not to join than to join and lose money.
Crypto scams has also put comma in the lives of genuine investors and traders of cyptocurrency. Community do not believe most crypto trader and investors. They believe traders or invertors are scammers.
3. Will regulations in Crypto add value to the Crypto space?
There is always a purpose for everything. Everything created has it purpose to fulfil. For example, man was created to have dominion over everything and fulfil the mandate of God. Vehicle was created to transport people from one place to another. The purpose of a bulb is to illuminate the house. So also, crypto has it purpose and it has kept on actualizing it purpose over the years. The use of cryptocurrency in every part of the world is increasing every day and people are consistently trading and doing cool transaction with crypto.
Cryptocurrencies are designed to be decentralized system which means they are not regulated or control by government, commercial institutions or any third party. Allowing crypto to be regulated will then twist its purpose or destroy the purpose for which it is created. Although crypto regulation may work to solve some crypto issues, especially the issue of scam and fraudulent trick but I believe the disadvantages of regulating crypto will outweigh the advantages. Hence, crypto regulation will not add tangible value to crypto space.
I believe there is no value to be added to crypto by regulating it. The government and some institutions are clamoring for crypto regulation because they want to have control and dominate the world of crypto which will be against the purpose of cryptocurrency. Additionally, we have seen so many countries that have banned the use of fiat money to buy cryptocurrency on exchange platform. Some of this countries claim they want to regulate crypto but the otherwise is what they are doing.
I want to believe that regulating crypto will do more harm than good. For example, early this year. Nigeria government tried to regulate the use of crypto in Nigeria. The government banned crypto users from buying and selling their asset on exchange platform directly by using the fiat money. So many people were afraid and thought they will lose their fund. The only escape route for us now in Nigeria is the use of Peer-to-Peer platform on crypto exchange. Many people still dont trust the use of P2P as a way of buying or selling crypto. Therefore, this is having a great effect on the world of crypto.
More so, we heard of China cryptocurrency ban. China did this in order to promote its own central bank digital currency. This act has made it difficult for crypto people in China to do transaction. Additionally the likes of Thailand, UK, Canada, Italy also took step against the one number one crypto exchange platform, Binance. This action caused fear, uncertainty and doubt and many crypto investors started withdrawing their fund from different exchange platform. Hence the fall of many cryptocurrency in the month of May 2021.
Conclusion
Crypto Scams is really affecting the world of crypto. Many people who are new to cryptocurrency, and the old generation are finding it difficult to join the world of crypto because of the crypto fradulent news all around.
As at present, the best way for investors to protect themselves from being scam is to know the details of the crypto they are investing in. Additionally, being careful at all times and good attention to details will help traders or investors to know fake websites, apps and to detect scam emails and fake news.
To wind it up, I have able to learn the meaning of crypto scams, different forms of crypto scams and how to avoid them. Special thanks to professor @yohan2on who took us on this journey.
Thank you for readingWritten by : @msquaretk
Cc:- @yohan2on
Hi @msquaretk
Thanks for participating in the Steemit Crypto Academy
Feedback
This is good content. Well done with your research on Crypto Scams.