HackerNoon.com
Published in

HackerNoon.com

The Art of Dodging Cryptocurrency Scammers

Spotting “Scam Coins” in a World Where Coin Market Cap lists over 2,000 tokens.

What I imagine scammers look like in person.
I made a fake ICO website during the ICO mania in 2017, it never launched or accepted funds. It’s just how a nerd with too much time pokes fun at something.

How to Know if a Cryptocurrency or ICO is a Scam

A quick note before diving into these. Trust your gut; every time I think to myself, “This might be a scam”, it ends up being a scam. If it seems to good to be true, it is. There’s no such thing as free money in this world.

“When looking at cryptocurrencies, both tokens and coins, it’s important to look beyond the hype. Disregard price talk, rumors, and other baseless information. Instead, look at the cryptocurrency’s core; the fundamentals. Is the token/coin currently used and in demand, is it centralized (and if so, what is stopping the issuer/controller from malicious activity? Is the team reputable?), is the technology itself and tokenization idea strong, or has blockchain just been attached as a buzzword? These are some of the questions you need to ask yourself, not only to spot scams, but to spot /good/ projects.” — Joakim Hjønnevåg, Co-Founder & CMO @ ERCSwap

Anonymous Teams

Not all coins with anonymous teams are scams, but most scams have anonymous teams. A quick aside, I love the ideological foundation Bitcoin and blockchain were birthed from, I think that teams should be able to remain anonymous, hell no one but the CIA knows who Satoshi is and Bitcoin is (and always has been) the highest volume coin on the market. That being said, if we want mass adoption, we need compromise from all parties involved.

Half-Assed White Paper

A venture capitalist wouldn’t invest in a startup that had a business plan on loose-leaf paper, why would you invest in a cryptocurrency with a white paper that looks like it was thrown together in a few hours?

Lack of Transparency

This is mainly in regards to the Initial Coin Offering, but also extends past the ICO into how the company runs the business in the long run — “long run” being as long as it takes to make an exit with their stolen funds.

Lack of Community

This is a tough one because unfortunately, scammers are really good at building community. It’s easy to get people excited around a pipe dream because it’s just that- a pipe dream. If it doesn’t seem feasible, it probably isn’t. It’s much easier to rally excitement around something that’s just barely out of the grasp of comprehension than it is around something easy to understand. If anyone can understand it then what's so revolutionary, right?

Anything I’ve Missed?

If you have any thoughts on avoiding scammers in the space, please leave a comment below! Happy to add your thoughts in the article.

--

--

Elijah McClain, George Floyd, Eric Garner, Breonna Taylor, Ahmaud Arbery, Michael Brown, Oscar Grant, Atatiana Jefferson, Tamir Rice, Bettie Jones, Botham Jean

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Reza Jafery

Ops @ PubDAO / Community @ Reflexer / Product @ Decrypt. Trying to change the rules and create a positive sum game.