Initial Coin Offering Scams
Welcome to the sixth part of the Cryptocurrencies for Dummies series. We are going to be discussing cryptocurrency scams in this edition. It's important to remember that the cryptocurrency market is unregulated. Therefore, you have to be careful in this space where there's no regulation. First of all, the free market allows for great financial opportunities. But since there are no regulations protecting people, scams and ponzi schemes are rampant. So everyone must be careful and watch for the different types of scams out there.
The most common type of scam is involved in initial coin offerings. First of all, we should try to figure out who these scammers target. The scammers tend to target new investors without much experience who are hunting for high risk high return coins. Therefore the scammers market their ICO's to this crowd. Their advertising consists of promised high returns, too good to be true promises, and celebrity endorsements. These claims are false and that's why investing in initial coin offerings can be so risky. This is especially true for new investors who don't know how to spot scams. Luckily you have this series to help spot potential scams in the market.
The warning signs for an initial coin offering scam are clear. If you see claims that are too good to be true then turn around. The scammers will set up the initial coin offering with lots of fancy advertisements and false promises. Next they collect the funds from unwary investors on their website. Finally they are able to run off with the money from the investors.
Scams like this are a large problem for the cryptocurrency market. Earlier this year the Securities and Exchanges Commision created a fake Initial Coin Offering. Howeycoin was the name of their fake cryptocurrency offering. While the signs that the offer was fake and too good to be true were there, people still tried to invest. When potential investors tried to click "buy" they were redirected to the Securities and Exchanges Commission's website. Their goal was to educate people about spotting initial coin offering scams. I think this was a pretty good idea and a good way to spread awareness without hindering the market. Check out the link below to their setup if you're interested in seeing their fake ico.
More Cryptocurrency Scams and Ponzie Schemes
During the beginning of 2018 one of the biggest scams in cryptocurrency played out. Bitconnect was and is a ponzi scheme that promised a percent return on people's money every day. This scheme caused thousands of people to lose their savings, and hundreds of millions of dollars in total. Bitconnect would pay you-tubers and other media operators to refer thousands of new investors. The primary investors would receive a portion of the money from the newer investors which fueled the fast growth of the fake platform. This ponzi scheme badly burnt many new investors.
You must watch out for many forms of cryptocurrency scams. While investing it's important to always do your own research. Check for the signs of scams and know when to walk away. Eventually with more experience you will easily spot these scams. Check out this post from Inspired e-Learning to learn more about the different types of scams.
Check out the Inspired e-Learning Blog Post
There's one main theme to almost all these posts. It's extremely important to do your own research. Because, you will be better and safer when armed with more knowledge. You must also be careful with the emails you open. Phishing scams are very common nowadays. Phishing is a way that hackers will steal your passwords and funds with fake emails. This blog post from Kaspersky provides more information about phishing and how to spot it.
If you're knowledgeable and safe you will do well. Cryptocurrency scams are very common but easy to spot. If you have any questions or suggestions I would love to hear them from you guys. All upvotes and resteems are deeply appreciated for the series.
This content was created by me for use on http://www.fiducator.com and @kennynneken .