Yesterday a friend called out of the blue to ask for advice regarding a new, revolutionary cryptocurrency. He was at a conference (quite a high end location) where some of people were presenting a new blockchain. Now I know him for quite a while and I know he's not the guy to get inflamed fast, so I listened to him carefully.
2 minutes later I was like: "Wherever you are right now, get a firm grip of your wallet and RUN! Run for you life! You're in the middle of a massive scam!".
The "revolutionary coin" was DasCoin. Those of you familiar with OneCoin probably already know about it.
What's The Difference Between A Scam And A Legit Cryptocurrency?
Lately, riding the wave of the rising cryptos, a few scams have been spotted, some of them becoming so large (and toxic) that they had to be banned from certain countries (like OneCoin in China). If you didn't make your homework, if you don't know how a blockchain works, what's the potential ROI and what are the risks, then it's relatively easy to get fooled. In this article I'll try to draft a few basic filters you should apply for any new, "revolutionary" project you get exposed to.
But before moving forward, the main difference between a legit crypto-currency and a scam is: getting paid for recruiting new members. We'll detail further but if there's any red flag that you should be looking at, in every presentation, is this one: are you getting paid primarily to recruit new members? Then you're in a blockchain-camouflaged Ponzi scheme type of scam.
Now, let's write that bullshit list.
1. There is no real product, only words about "the blockchain" and you get paid to recruit new members
If you don't get something really consistent, down to earth, from their technical presentation, then you're being fed bullshit. What's consistent, down to earth? Well, for ZCash, that would be "private transactions", for Steem would be "speed, social media website on top of it" and for Ethereum would be "a platform for building other apps on top of it".
If the only "product" of the company is to get paid when you recruit new members, then you're in trouble.
These is by far the most sensitive point that gets exploited (using the wood language of revolutionary blockchain) and it's very easy to get fooled. Especially since all of the above legit currencies have been accused of being scams at some point in their history. Eventually, they proved to be legit, solid businesses, whereas OneCoins and its clones are still shady.
2. You have to buy upfront "packages"
For $500 invested, you get the Gold package. For $2000 invested, you get the Diamond package. This smells like MLM / Ponzi from a mile away. The goal is to get you hooked and to incentivize you to recruit new members, because you are paid when you bring in new members. These packages are usually blocked in some form of "share" that will yield results in the medium future.
Do NOT mistake these "packages" with ICOs. Again, there is such a thin line between these concepts and people are very easily fooled.
3. You are not getting tokens, but "certificates" (or "licenses")
That's also very common amongst blockchain scams. There's no real token. Or if there is, it's absolutely worthless. So instead of giving you real tokens for your money, you get some for of "license" to operate on behalf of that company, license which gives you the right to... of course, recruit new members.
4. No public team of developers (or fake lists)
If there is no list of developers, or no public names and faces behind the project, then you're in trouble. Usually it may mean that there isn't really a blockchain out there. Just words.
5. No product related roadmap
If there is no product related roadmap, then you're in a business which is based on accumulating new members. Usually, these companies are throwing at people roadmaps based on the number of members: "if we get to x thousands members in y months, then you'll be rewarded z amount of cash". Again, no real product.
6. Massive off-line promotion, via conferences, events
This smells again like MLM / Ponzi, from a mile. If the revolutionary coin is promoted via a tour of conferences, usually in high-end locations, but there's no update of the product, no update of the roadmap, just incentives to buy the package and to recruit new members, then you're being scammed. The buying decision is much stronger when you have real life peer pressure and events are the best way to enforce that peer pressure. I've witnessed quite a few MLM events and I know how it works.
7. No sign of it in coinmarketcap
Please, pretty please, with sugar on top, use coinmarketcap diligently. If you hear about a new coin, see if it's there, somehow. If it's not yet out, of course, coinmarketcap is useless, but if it's already launched it has to be there. If it's not, you're in trouble.
8. Googling "[insert coin here] scam" returns thousands of pages
There are a few places where you can search for scam reports, one of them being bitcointalk.org, but any Google search about "[insert coin name] scam" should give you an idea. Do your homework, folks. A search will cost you a few minutes, whereas a $500 "investment" will cost you far more than $500 (time, opportunities, self-esteem).
Have you ever been subject to such an offer? How did you react? Do you have any other points to add to those above? Feel free to comment, I'd love to know your opinion.
image source: Pixabay
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
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