What we can do to stop crypto scams (a collection of ideas)
If we want to move towards mass adoption, we as a community should take more responsibility to prevent scams or help others avoid scams. The latter is especially hard to achieve, because it is hard to control who beginner investors interact with. Furthermore, some people may not want to listen to well intended advice because they are in denial about their investment being a scam. These reasons are why rooting out all scams from our industry is going to be an impossible task.
However, we can still make a serious effort to tackle this issue from many fronts. If we don’t self-regulate like SEC commissioner Hester Peirce asks of us, regulators will come in with choking legislation that will take away innovative freedoms, low barriers of entry, and profit potential. If we don’t want that to happen, we have to do everything in our power to try to neutralize the strong grip that scammers have on crypto.
This article should serve as an introduction to the discussion, in which we will share some ideas to prevent scams. However, we would certainly like to hear your ideas and explore solutions to make it a safer space for all kinds of participants. Cleaning up the crypto world for new investors could allow more money to flow into our ecosystem. We are convinced that a big hurdle preventing mainstream adoption is the plague called crypto scams.
- First of all I believe that every crypto related site, company, or service should have a comprehensive and free education section. Each website should also have very clear and visible encouragements for visitors to learn from the educational material.
- Crypto educators and courses should devote a significant portion of their educational content the topic of crypto scams and how people can identify, recognize, and avoid them.
- Each crypto community should value integrity and try to watch each other’s backs. Make sure members feel comfortable enough to ask questions when they are trying to figure out whether or not an investment is a scam. By helping each other out, we can already prevent a lot of harm.
- Crypto communities should try to have active moderators that scan discussions for potential scams and scammers. If tools are available to screen new members for the usual red flags, make use of those. Instead of censoring opinions you disagree with, focus on stopping scams — this is the truly important fight.
- More veteran community members can take it upon themselves to teach inexperienced users how to spot obvious scams and also to ask for opinions/advice when they encounter a less obvious scam.
- Refer members to the best educational material about cryptocurrencies and about crypto scams. Preferably make such material easily accessible and available in a central place within the community’s platform.
- Make sure that everybody knows the best course of action when they encounter scammers in the community (i.e. contact a moderator).
- It would be amazing if everyone could also report the scammers that they have successfully identified to the hosting platform (such as Facebook so they can deal with those accounts as well)
If you can’t tell, we are convinced that crypto communities on social media can play a key role in combating scams. We know that there are already many communities that try to maintain high ethical standards in terms of integrity. We want to thank those groups and encourage them to continue to operate on that higher level while looking for areas of improvements whenever possible.
We would also like to encourage crypto community members to target less reputable communities and start reporting scammers that are in those communities. Oftentimes, communities that aren’t properly managed and moderated are filled with scam promotions.
Bottom line: if every honest crypto community member would report 1 scammer per day, the purge would already be massive.
Research aggregation tools
- One solution is community driven auditing such as CryptoCanary. Strong communities with high ethical standards can combine their aggregate intelligence and effort to scrutinize crypto projects to discover their potential red flags. This combined effort and pool of knowledge can be a great resource for other investors to find out about potential dangers involved with various projects.
- Another solution is for credible, knowledgeable, and influential reviewers to investigate projects. Besides community driven auditing, reviews can also be done by those in the space that research projects professionally. Whenever they find projects that investors should be warned about, there should be a place where their reviews are compiled so that people can find them easily. Also it is important that these reviews are done by credible people from the industry, so there is less risk that they made the review to shill or spread FUD.
- A service could be introduced that consists of independent/unbiased audits done by firms specializing in cryptocurrency. Such auditing firms would issue certificates based on audits that inquire about a team’s financials, technical progress, etc. These certificates could help increase investor confidence so that projects can benefit from participating with the audit. If more teams and projects voluntarily undergo these audits and investors avoid projects that aren’t audited (in general), this could greatly improve the industry without involving regulators too much.
Do your diligence when it comes to auditing prospective advertisers, and also consider turning off third party advertising (i.e. Google Ads) if scams are being promoted on there. In other words: avoid exposure of scams to your audiences as much as possible, even if that means less revenue.
What do you think about these ideas? If it inspires only one other person to implement one idea of the above, we would already be ecstatic. Of course, we hope it inspires more people to work together to eliminate all of these parasites from our industry, so that we can gently pave the way for mainstream adoption somewhere down the road.
If you have some ideas yourself, please don’t hesitate to share them here with us. Also, we would love if you could help us improve CryptoCanary. You can join our early adopters Telegram group or also email us at firstname.lastname@example.org if you have any questions/comments. We hope to see you around!