How to identify a cryptocurrency scam, and why Skycoin isn’t one
At one time or another, almost every cryptocurrency project has been called a scam. Even Bitcoin was dismissed as a scam when it first emerged in 2009. And while it’s true that there are many disreputable crypto projects, the reality is these “scam” accusations typically emanate from one of three sources.
1. Someone involved with a competing project
2. Someone who wishes to drive down the price so they can accumulate coins cheaply
3. Someone with a grudge (perhaps an ex-employee or a banned user)
If you notice someone loudly denouncing a crypto project as a scam, then ask yourself which of these camps they fall into. Because you can be sure of one thing — they’re probably not saying it to help you or to protect you. Most likely, they’re simply looking out for their own interests.
Skycoin, like many crypto projects, attracts FUD (fear, uncertainty and doubt) from all three sources. Much of the Skycoin “scam” allegations originate from a series of articles posted on technology blog The Next Web. These articles cite Bradford Stephens, an external freelancer who was briefly hired by Skycoin in 2017 to assist with marketing. Stephens misrepresented himself as “Skycoin COO” through his secretary and through Skycoin’s Twitter account, to which he had temporary access. Stephens had a very limited understanding of the Skycoin project, and was subsequently fired for incompetence. The FUD generated by Stephens has since been thoroughly debunked.
The projects most likely to be scams are tokens and forks.
Tokens (as opposed to coins) are crypto projects that launch on somebody else’s blockchain — for example ERC20 tokens on the Ethereum blockchain or NEP-5 tokens on the NEO blockchain. It requires absolutely no blockchain expertise to create a token. Anyone can do it, in just a few minutes. So it’s very easy for scammers to quickly create a token and a fancy white paper, and then deceive naive investors into believing it’s a genuine project.
Forks are essentially copies of another blockchain, with a new name, and either a slight modification to the code or sometimes no significant changes at all. Again, it takes very little skill to fork a blockchain and to promote it along with a convincing-looking white paper. New forks and tokens pop up every day, and often the creators/developers are anonymous, which further increases the probability that these projects are scams.
In contrast, the projects least likely to be scams are those that demonstrate these characteristics:
1. Has developed its own blockchain
Building a working blockchain from scratch requires a great deal of time, effort and ability. It’s not something that can be done quickly by an unskilled scammer. A cryptocurrency that functions on its own dedicated blockchain is known as a coin (as opposed to a token).
Skycoin has developed its own blockchain with lightning fast, free, private, and infinitely scalable transactions. Not only that, but the Skycoin Fiber platform also enables other projects to launch their own ICOs (with coins, not just tokens) on their own dedicated blockchains, all built on Skycoin technology. By giving each ICO/project its own blockchain, Skycoin Fiber eliminates the contention for resources that occurs on other platforms like Ethereum, in which every project shares the same chain.
2. Has a known and visible team
The people developing and marketing the platform should be known, visible, and contactable. If you can see them out in the real world, giving interviews, attending events, and promoting the project, then the project is likely to be genuine. It’s also a good sign if they’re engaged with their community on social media (Telegram, Twitter, YouTube etc.).
Skycoin has over 100 employees. Skycoin’s lead developer, Brandon Smietana, has been involved in the cryptocurrency sector since its inception, having assisted with the early development and bug-fixing of Bitcoin. Brandon, who prefers to be known by his online handle, Synth, has appeared in countless interviews, and presented at dozens of blockchain conferences around the world (many of these videos are available on YouTube).
Other highly visible members of the team, who appear frequently in interviews and at conferences, include Daken Freeborn, Ed Vilderman, Danish Chaudry, and Drew MacGibbon. Synth and the wider Skycoin team are highly active on Twitter and Telegram, where they regularly engage with the rapidly growing Skycoin community, answer questions, offer development updates, help new users to configure their Skyminers and wallets, or provide guidance on how to develop new games and applications using Skycoin CX.
3. Has established longevity
Scammers want to take your money and run. A common scam is to launch an ICO, collect funds from initial investors, and then vanish with the cash. Often these scammers have developed nothing more than a token and a white paper, and any further development ceases once the scammers have absconded with the money (this is known in crypto as an ‘exit scam’).
However, if a platform is still around and being actively developed after several years, then it’s likely to be a genuine project.
Skycoin has been in development since 2011, with the first commit to GitHub being published in 2013. The Skycoin GitHub consists of more than 40 repositories. Measuring GitHub activity over the past 12 months (based only on the main Skycoin repo), Cryptomiso places Skycoin at rank 16 out of 755 cryptocurrencies, and CoinCodeCap places Skycoin at rank 8. These rankings would be even higher if all 40+ Skycoin repos were measured. This shows that even seven years after its inception, Skycoin is still a very actively developed project.
4. Has a working product
Many tokens and forks have no working product. They’re not used for anything other than trading with each other on exchanges. On the other hand, genuine blockchain projects have working products that you can actually see, use, and in rare cases, touch.
This is where Skycoin truly stands out from the crowd, with a vast multitude of working products, both hardware and software-based. Skycoin is one of only a small handful of crypto projects that design, manufacture and deploy their own range of hardware. Some of Skycoin’s working products are listed below.
2. Software wallets — elegantly designed desktop/mobile wallets for Windows, Mac, Linux, iOS and Android
3. Hardware wallets — highly secure, and available at a fraction of the price of competing Trezor/Ledger/KeepKey models
5. Coin Hours — earned by holding Skycoin in a wallet, and used to purchase services on the Skycoin ecosystem
6. Skycoin CX — a comprehensive programming language for creating games, apps and smart contracts
7. Skycoin Fiber — a platform for launching ICOs whereby each project is given its own dedicated blockchain
8. Skywire — a global decentralized peer-to-peer mesh network of interconnected Skyminer hardware nodes
9. Antennas — due for release in Q1 2019, enabling Skywire nodes to connect wirelessly and bypass ISPs
11. KittyCash — a blockchain collectibles game that improves upon Ethereum’s infamous CryptoKitties game
Skycoin is not just a cryptocurrency. It’s a complete blockchain ecosystem that makes many other crypto projects obsolete — hence it attracts a substantial amount of FUD and “scam” accusations from competing projects.
Most other crypto projects focus on just one thing. Some specialize in fast or free transactions. Some are privacy coins. Some are game/application development platforms. Some are platforms for launching ICOs. Others claim to offer a decentralized Internet service. But Skycoin does all these things and much more.
Skycoin has been in development for over seven years, has already created a large number of working products, and the development team is incredibly active.
You may be wondering why you’re only hearing about this project now, when it’s been in development for such a long time. Unlike many crypto projects, Skycoin has been focused on building a robust and cohesive platform, rather than on promotional activity. It’s only in the past six months that marketing for Skycoin has really begun.
Skycoin’s first flagship application, Skywire, moves from testnet to mainnet this quarter, after which the number of deployed Skyminer nodes is expected to grow from thousands, to hundreds of thousand, and then to millions within a few years. Second generation plug-and-play Skyminers are in development, which will further accelerate adoption. Skyminer nodes are rewarded with payments in Skycoin and Coin Hours for providing bandwidth, storage, and computing power to other users of the Skywire network. Skywire also functions as a fast and secure VPN/proxy service.
But Skywire is just one of the many applications running on the Skycoin ecosystem.
As the year progresses, we will see more and more games and apps being developed and released on Skycoin CX, which also transitions to mainnet this quarter (meaning full integration of CX with the Skycoin blockchain). Several basic games have already been developed, but adoption will increase even more rapidly following the recent publication of books on CX development, and with CX education courses becoming available in colleges.
Not content with two mainnets, Skycoin is going for the hat trick. The Skycoin blockchain is currently running on protected masternodes, and the public launch of Skycoin’s groundbreaking consensus algorithm, Obelisk, will round out this years ‘triple mainnet’ for the Skycoin project. Obelisk makes Proof of Work and Proof of Stake consensus algorithms obsolete, and is the biggest breakthrough in blockchain consensus for the past decade.
Additionally, with the upcoming release of the eagerly awaited Skywire antennas, Skycoin’s prominence in the non-crypto world will explode as users start to install these highly visible antennas on their rooftops. Local businesses are expected to spring up, helping to install Skyminers and antennas as residents rush to access this new free decentralized Internet service, and say goodbye to their overpriced and unreliable legacy ISPs.
Skyminers and antennas are designed in a modular fashion, so they can be built by anyone, using readily available low-cost components. This ensures that even the poorest and most remote villages on earth can build the equipment necessary to join the world’s first global decentralized peer-to-peer mesh network. Skywire will bring cheap Internet access to parts of the world with little or no traditional communications infrastructure.
With mass adoption of Skywire, the Coin Hours economy will also take off. Coin Hours are earned at the rate of one Coin Hour per hour for every Skycoin held in a wallet. They are also earned by running a Skyminer node. A Coin Hours Bank and Coin Hours Exchange are due to launch this quarter, which will enable Coin Hours to be saved or traded for more Skycoin. An entire working economy will emerge around Coin Hours, with this currency being used to pay for resources on the Skywire network, pay for services within Skycoin games and apps, and even pay for real-world goods and services. Coin Hours will also be listed on mainstream cryptocurrency exchanges.
Speaking of exchanges, Skycoin is developing its own DEX (Decentralized Exchange). The SKYDEX will support the trading of Skycoin, Coin Hours, and Skycoin Fiber coins, as well as other leading cryptocurrencies such as Bitcoin and Ethereum.
Furthermore, John McAfee, the famous blockchain advocate who is running to become the next United States president, has selected Skycoin as his official technology partner. We can expect to see the merits of Skywire — freedom, decentralization and net neutrality — promoted heavily during his “McAfee2020” election campaign.
John McAfee isn’t the only big name to recognize Skycoin’s potential. Cryptocurrency exchange Binance lists Skycoin as one of their Gold Label projects, and has also established a strategic cooperation agreement with the Skycoin project. Furthermore, Skycoin technology has been recognized by the United Nations as a potential solution to world poverty, inequality and hunger.
Finally, if you enjoyed this article, and you’d like to get involved with the Skycoin project, then feel free to join the main Skycoin telegram group. You’ll find the community (known as SkyFleet) to be exceptionally friendly and helpful. Most of us are genuinely more interested in developing the world’s best blockchain ecosystem, than we are in engaging in the moon/lambo talk that dominates other crypto discussion groups. In fact, Skycoin has dozens of individual Telegram rooms, each devoted to different regions/countries, and to different aspects of this massive project.
And if you wish to be even more actively involved, then you can become part of the Skywire meshnet (and earn $SKY) by buying an official 8-node Skyminer directly from Skycoin.net. Or you can build your own basic single-node Skyminer for as little as $40. Or, if you’re a programmer, you can start creating your own blockchain games and applications using Skycoin CX.
Alternatively, you can simply invest in Skycoin, store your coins using a Skycoin hardware or software wallet, and accumulate the Coin Hours that are generated. But be warned, the Skycoin project is addictive. Once you step inside, you might find yourself irresistibly drawn into this complex and revolutionary blockchain ecosystem, until you inevitably become a fully fledged member of SkyFleet, running your own Skyminer node, developing applications on CX, and regularly discussing the many benefits of Skycoin with your family, friends and colleagues.