Crypto Scam- Lending Exchange Coins
I thought it maybe a good time to review some of the scams that existing in cryptoland. Considering how bad the overall crypto market is I would think some of you would be tempted to find a get rich quick investment in hopes to maybe recover some losses from other investments. I sure feel like that. Yet reflecting on some of my past mistakes will keep my in check.
The main reason cryptocurrency got my attention was the magnitude of returns I was hearing. Bitcoin was worth ~$3000 when I started investing in crypto. The thought of making a quick buck was on my mind. Not sure how others feel but the sense I had at the beginning of investment led me to several bad choices. For new comers the following mistakes I write about can hopefully teach new comers to avoid doing what I did.
Bitconnect
When I first wanted to learn more about cryptocurrency I found a lot of youtube videos on the subject. Videos that had most views would pop up on the relevant search. There I found videos of people advertising Bitconnect. Without fully understanding how the coin worked many users explained that it did not matter as long as the money was coming in and boy did it sound great. Lend Bitconnect coin on their platform and earn daily interest. The interests were massive, talking about 200% and up within a year of investment. People were able to pull money out when ever they felt like it, but the coins that were lend had a specific holding period. With so many people on youtube praising it and the platform over a year old it seemed legit.
Of course there were the naysayers and the doubters. They too made video reviewing Bitconnect and explaining their case as to why Bitconnect was a scam. Well in the end it was a scam. There was no real trading platform that yield massive amount of interest. Basically when Bitconnect did not have enough to distribute in their ponzi scheme it closed shop. At the time coincidentally there were some US state courts that handed Bitconnect cease and delist letters. Well Bticonnect blamed the court's letters that made them shutdown their lending program. Although the coin is still trading today in retrospect of were its all time highs were the Bitconnect coin (BCC) the coin is worth almost nothing.
The coin's all time high was around $450 but it is now barely worth fractions of that. Certainly painful if one bought in at its peak.
The returns Bitconnect promised was unsustainable. In the end the small crypto investment I had put into Bitconnect were automatically exchanged to worthless BCC coins. Even though the creators of BCC were halting their lending platform.
Big take away here is that rate of returns have to be fundamentally sound. When something sounds too good to be true it probably is. At the time when Bitconnect closed I was not able to get my BCC out and exchange for BTC. Yet within a week BCC was below $3.
When investing think logically that if a coin can create such high returns there must be a really good reason. Take Ethereum for example, it went from fractions of a cent to over $1,000 at its peak because it can perform smart contracts. No one could have predicted Ethereum to rise so high in price. Not even its creator as he sold a lot of this stake when the coin was still in double digit figures. Vitalik Buterin Sells Part Of His Stash
So why would one believe BCC could create big returns just because it advertises it? Promises from strangers are never sound promises.
Hextracoin
Another lending coin that was promoted a lot on Youtube while I was doing research on crypto was Hextracoin. The coin similar to BCC allow users to earn interest for lending their coins on their platform. At the time ICOs were hot and I had I had the feeling of not wanting to miss out similar to what had happened with BCC.
Initial Coin Offerings were luring in a lot of new money and so was Hextracoin. There was a hextracoin ICO but it was nearly impossible for me to buy any coins.
In the end I had my bitcoin stuck in the Hextracoin platform for over a month and had to lose some btc due to heavy transaction fees. The allure of missing out of the next profitable coin was too tempting. When ever there is a time limit to investing into something always do your due diligence. Missing out on something feels better than losing it all.
As of this week hextracoin website is down. Whether it is an error or update I am not sure but there is no connection what so ever to the coin with the usually webpage. To investors of the coin it is another harsh lesson to swallow.
When investing in cryptocurrency do not always expect fast and big returns on investments. Investments that have long term potential are ideal.
Thanks for reading.
Date of Post: 3/31/2018
Past Posts:
Cryptocurrency my Portfolio
CoinLib.io Website Review
ASIC mining Ethereum
Smartcash Smartrewards in Two Days!
Free Manna Cryptocurrency
great post, I'm all about helping people to avoid being ripped off and despite it being about crypto (spit sound effect), I'll resteem it to the 5 real people who actually read my posts lol.
Thanks for dropping by. ;)
I like the sound effect.
he he
Once the coin hits a high point, the players will start selling off their coins, but not all of them at once. this signals the dumping process is about to finish. It can happen in a matter of seconds or be dragged out over hours. Players will sell small amounts of coins as fast as they can without dragging the price .
Good example of pump and dump. That definitely is a scam to avoid. Thanks.
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The biggest enemies of the cryptomarket are the peoples greed of the cryptomarket itself.
Lots of the cons which were introduced from mid 2017 are just useless but combine this with the Fomo and greed of people and you have a winner.
I’m not going to claim that will not happen to m, but I did read the whitepapers of 80% of the coins I do have in my portfolio! Still will one of these could vaporize but at least I know how to blame, namely myself.
I’m did jump on he cryptos end 2017, so my port is in deep red figures. But I can keep the faith, cause I know the use cases of my coins and do follow them.
I am not that far behind you with the losses. Lets hope for better days ahead and continue accumulating as much crypto as we can. Thanks.
It's not lending exchanges that are scams, at least not necessarily. A scam can be implemented in many guises. For example: SALT is a lending coin - but it's honest. The ones to watch out for are the MLM (Mulit-Level Marketing) coins. In THEORY they could be honest, but I have yet to find an honest MLM. Look at, for instance Dascoin. It's not a lending coin, but it is MLM. Investors LOVE it, just like Bitconnect, and I have taken serious fire in the past for calling it a scam. But I would be EXTREMELY surprised if I am wrong.
Hmmm. Perhaps I should do a post on how to spot scams.
Yes SALT and ETHLend are honest, but coins that literally have no solid purpose should be avoided even if returns are there because it is likely temporary. The way SALT and ETHLend do their lending is different from bitconnect. bitconnect basically lend to unknown entity while the good ones are peer to peer. Still could be a scam but the purpose is clear.
Yes make a post about how to avoid scams as we can all learn from each other. What I picked up as one safe way is to sign up with the specific coin's community on discord, reddit or slack. Discussing with the developers and watching how they work gives you insider view if a coin has the potential to be worth more in the future. Thanks.
Agreed.