Anatomy of a Crypto Scam
Posted February 22, 2021
Where’s it headed? Will it crash? Will it last?
Should I buy some? Should I buy more?
Those are all questions I’ve gotten in the past few days from all corners.
I’ll show you what I suggest in a moment.
First, here’s what you should know before you do ANYTHING involving cryptocurrencies.
Scammers Are Everywhere!!!
There are tons of bad actors in this industry.
The motto of crypto applies here: “Don’t trust, verify!”
And it’s easy to see why.
The hype can get out of control. People are looking for the next bitcoin because they heard a few teenagers made millions.
What most don’t realize is anyone can create their own cryptocurrencies in minutes. With just a tiny bit of commitment, a scammer could create the mirage of having the “next bitcoin” in just a few weeks.
And he wouldn’t have to spend a penny of his own money.
On several big blockchains (like Ethereum), you can create a token with just a few clicks.
(For fun, I did it a while back. CrookedCoin. It’s nothing but digital dust now.)
Anyone can do it. It’s not even that difficult. It’ll get easier as time goes on, too.
You can give your token a cool name. You can give it a fancy logo. You can create a billion tokens out of thin air.
You can send out press releases about how your coin is going to be bigger than bitcoin.
And here’s the thing…
Scams Are Often Hard to Spot
Many (not all!) crypto ‘journalists’ who need to pump out fresh content every day (and want to break the next big thing) will publish whatever you give them.
ESPECIALLY if you do their jobs and basically write the article for them.
(Some, I’m sure, will publish several articles if scammers slyly promise them thousands of free coins they just created out of thin air.)
Anyone can make crazy and bold claims about what their project will be able to do. Even if they know it won’t. (I know. Shocker!)
And some people -- enough people -- will believe it because most people, unfortunately, don’t care about the tech. And they don’t care to look deeper.
They care about one thing: “Number go up.”
With enough savvy maneuvering, scammers can get on a few small exchanges to list their coin.
(Smaller or scammy exchanges will list it, especially if the coin makers give them enough tokens for free.)
Though being on small exchanges means very little, it tends to add legitimacy. It could even prompt bigger exchanges to list them, too.
From there, it doesn’t take much hype to get rolling.
People will see the coin is low -- maybe less than a penny -- and will think it’s “cheap.”
They think that if they can buy 1,000,000 of that coin it would just have to go to a dollar for them to make a million.
A few naive souls will throw in $5,000… $10,000… or $15,000. Some maybe even more.
Then, those people will hype the coin for the scammers. They want other people to get in after them, after all.
When it gets enough money in it... that’s when the scammers sell. And then they retire on a beach in Cabo and leave everyone else holding the bags.
This is how people get scammed.
And it’s not just from cryptos that start as scams.
Some projects start out honest. But things go south. Or there’s infighting. Or they end up getting corrupted by greed.
Then, the developers run with the money.
It happened in 2018 with many projects. It will happen again.
But that doesn’t mean you shouldn’t learn about cryptocurrencies.
On the contrary.
Cryptos, in some form, will likely become the future of the Internet, so it’s worth knowing a little bit about them.
Plus, there are a few really great projects out there that will change the world. And right now they are, in fact, relatively “cheap.”
You just have to learn how to spot them. And then sit tight and be right.
Good vs. Bad
Good cryptocurrency projects create decentralized fixes for centralized systems. So, instead of the value getting sucked to the top, it’s spread out throughout the network. (Think Big Tech.)
In this way, cryptocurrencies can fulfill the original promises of the Internet: meritocratic, decentralized, and free.
Bad crypto teams:
- Don’t have a clear long-term vision
- Are only in it for the money
- Focus solely on the price
- Lean on the hype
- Can’t explain their tech to a CEO or a five-year-old beyond just incomprehensible word salad
Good crypto teams:
- Solve a BIG problem and focus on that specifically
- Don’t care about the short-term price
- Don’t care about hype
- Have a clear roadmap
- Have strong partnerships
- Can explain their technology on a high-level (to CEOs) and simply (to a 5-year-old)
That said, here’s what I suggest people do when they ask me:
I tell them to listen to the experts and make up their own minds.
For the past couple of days, I’ve been researching a free event with some heavyweights in the crypto space.
It happens TOMORROW.
I wanted to make sure you caught wind of it, too.
The Digital Currency Summit
I can’t vouch for everyone at this event, but I can tell you that you’ll pick up some gems.
(As always, do your own due diligence and keep in mind the characteristics of a GOOD project.)
At this event, you'll discover:
*How to keep your crypto safe from hacks and scams in 2021.
*How to limit your risk to just 2% - 10% on any given trade.
*How to get your crypto working for you and actually earn passive income just by holding.
*Brand-new tools, apps, wallets, and hardware to take your crypto experience to the next level.
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Just check out this partner link for all of the details:
Managing editor, Laissez Faire Today