As the traffic across cryptocurrency subs starts to spike again, it's clear that there is an influx of both new and returning users. I wanted to take a few moments to highlight some of the most common scams in the crypto space to help keep you and your investment safe.While not all projects who fall into these categories are scams it is important to be aware of the issues and proceed with caution. Many legitimate projects can have frequent partnerships for example, but, its important to examine them closely.Google Docs/Surveys:One of the scams that commonly swoops up a number of victims is the common "help with this survey". Usually the attacker poses as student or someone doing research and asks a series of questions about your crypto holdings.There are two attack vectors here:Google docs can be connected to multiple Google apps and include things like Google App script which can be leverage in spam attacks, malicious redirects, or to trick you into downloading malware.Google Forms, which is used for surveys, has the ability to let the admin check the box "collect user emails" on their survey. In this case, even without entering your email address Google Forms will provide the email address of any Google account you are actively logged into on Google, Gmail or in the Chrome Browser. This allows attackers to specifically identify you (possibly even your real identity) as well as use your email in future phishing attacks.To help prevent this type of attack on our subreddit, we don't allow Google Doc surveys, even from legitimate requesters. Surveys would need to be approved by moderators and use platforms that are non-email collecting and not connected to scripting apps (such as SurveyMonkey).Pump and Dump Groups:Are "Pump and Dump Groups" profitable? Yes.But, they are profitable for the people running them. Not for you.Pump and Dump groups (often branding themselves as professional crypto "signal" groups) claim that they have awesome "technical analysis" skills and will pick winners. They'll show you charts of all these great trades they've made.Many are free groups on Discord, but some will even ask users to pay (claiming this is what makes them "legitimate").The truth is, there is no insight that these groups have. They look for small market cap coins and buy in themselves. They then announce it to the pump group where everyone starts to buy in and the price skyrockets due to low liquidity. During this time the group admin sells their holdings.To those who got in early enough, a little bit of profit is made. But, their profit and the profit of the admin actually comes from the rest of the group who is stuck 'holding the bag'.To the rest of the group, its easy to feel "oh man that was a great call, if only I had got in earlier" and they repeat the process.Signals, insights and even TA are psuedo-science at best. If anyone had it figured out in a way that would work more than 51% of the time, the modern economy would be even more broken than it currently is.The best you can do is use actual trading signals as input on top of your own research to make investing decision and avoid shady pump and dump groups. (After all, if someone really unlocked the magical analysis to help make 30%+ returns on all of their trades, why the hell would they need your $100 to share their signals? They'd be too busy sipping Mai-Thai's on their private yacht!)ICOs:Are some ICOs legitimate? Yes.Are most ICOs legitimate? No.Most ICOs have no product, a team incapable of building the product their pitching, and are proposing to build something that industry doesn't even need.But, unless you are an expert in that industry, or an experienced venture capital/private equity investor you likely don't have the skillsets to evaluate those gaps.So ICOs make flashy websites, name drop the places where all their talented engineers used to work (likely as interns) and do whatever they can to convince you to buy their token.It's far too easy to make those sites, last year, someone even made an AI driven parody website that shows you how easy it is to generate ICO sites. (https://ift.tt/2XhlG1d - every time the page is reloaded it is a new fake ICO).Even ICO rating services are all "pay-to-play" and should be ignored.In a world with IEOs and Token Sale Management tools, there are very few (some - but, very few) valid reasons to do an ICO.IEOs don't guarantee a project is any more legitimate, especially on some lower tier exchanges, but at least their is an additional level of vetting.ICOs were sketchy to begin with, but, given they are no longer the standard distribution method in the industry you should be even more skeptical of them.Fake Partnerships:Some cryptocurrencies have the idea that if they just keep on appearing in the news you'll cave and buy them and they can keep everyone happy.Reddit and Twitter are constantly inundated with cryptocurrencies claiming they have a 'big partnership' with 'brand x'.These usually equate to:One local division of the brand, had a low-to-mid level regional manager trial the blockchain product while the bulk of the company had no idea.The company is using a fork of the blockchain for their own private stuff which will never impact the public price.The blockchain got into an incubator or accelerator program run by that company.The blockchain competed in a startup contest or tech contest with or by that company.The blockchain is a customer of that company. (i.e. We run on Amazon AWS, therefore we list Amazon as a partner for helping to provide security to our nodes!).You should be skeptical when projects produce frequent partnership announcements.On our sub, we only allow partnerships that are announced via the official company website and not via third-parties or the blockchain projects site/community. This helps to curb a small portion of these issues, but, you still need to do your own research in-depth to understand the nature of these partnerships.Volume/Transactions:The last major common scam is volume/transactions.Many projects like to "paint the tape" and "wash trade" which are methods of manipulating the trades of their token to look like there are lots of buyers and sellers at an increasingly high-price, when in actuality there are very few. Many exchanges are complicit in this because they feel the higher volume makes them look legitimate as well.Do not rely on steady price increase, or high-volume to tell you if a project is legitimate, especially when it is only highly traded on low tier exchanges or if all of its volume is highly concentrated to specific exchanges.The other volume issue is transactions. Blockchain projects love to brag about the number of transactions they do per day, the number of wallets they have or the number of tx/s they can process.At the end of the day, any project worth their weight in salt can write a script to spam transactions to the network at almost no loss, and they can mass produce wallets quite easily.Plus, since every blockchain processes "transactions/operations" differently it's extremely hard to compare these directly.Many projects will claim that this is mass adoption, or that they clearly have the highest user base or most real world use cases because of these results. You should always take them with a grain of salt and do further research.When projects are truly the most-used, or biggest in their field they don't brag about it, because they don't need to. They have become the de facto representative of that industry. If someone is telling you they are the best, the most used, etc it is usually puffery designed to bolster their position.
Submitted June 28, 2019 at 08:07PM
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