Image Courtesy The Mac Observer
Blockchain is proving to be more and more acceptable by the day in many economies around the globe. But with the tech’s main agenda being to bring up “independent currencies”, the existence of scammers and fraudsters is almost, if not inevitable.
Millions of people who have chosen to invest in blockchain have fallen victim to cryptocurrency scams losing massive sums of real money. Last year, losses from cryptocurrency-related crimes globally amounted to US$1.7 billion. let’s not forget the examples of cases that have emerged in Africa including Kenya and South Africa.
But what you can actually tell to be common with all these incidents is that many fraudsters rely on tried-and-tested Ponzi schemes that use the income from new participants to pay out returns to earlier investors.
Others who are savvier with blockchain tech may go for highly automated and complex processes that simply involve hacking through various platforms like Telegram. Even when a cryptocurrency plan is legitimate, fraudsters can still find a way to manipulate the currency’s value and the users eventually.
But all in all, one question remains; how do unsuspecting investors get attracted to cryptocurrency frauds in the first place?
This could be the most common method that crypto scammers tend to use. They do appeal to many investors by going for their greed, promising big returns for their investments that turn out to be nothing.
We would take the example of the Ponzi scheme that blew up in South Africa. Knowing that they were investing through bitcoin for some overnight returns, the locals had the scam blow up in their faces when the so-called “entrepreneur” just ran off with the victims’ money.
If you maybe look at the background, the locals probably never knew what they were getting themselves into. But with the sweet words “bitcoin” and “returns” thrown around, they most probably just signed up for it without thinking twice about it.
Other scammers tend to go for straight-up deception. This involves some going up to potential investors in the name of a totally non-existent cryptocurrency.
Others are based on impressing potential victims with jargon or claims of specialized knowledge. This is sometimes done by taking advantage of the frequent price fluctuations of various cryptocurrencies. They buy their own assets cheaply only to sell them to investors at crazily high prices.
Some scammers actually choose to stay for a while for their companies to be known about by the public. But to do that they tend to influence as many people as possible into thinking that their operations are actually legit. This is maybe through making themselves into sort of “celebrities” labelling themselves as “cryptocurrency gurus”.
Others even use actual celebrities through some clever edits in their campaign videos, for example, so people may actually be drawn to them. After all, if you want people’s attention, why not use famous celebs? All you’ve got to do is just be attentive to details other than just the superficial endorsements that may turn out to be absolute shams. An example is this. Dwayne “The Rock” Johnson had nothing to do with this endorsement.
In an environment like the current cryptocurrency market, potential investors should be very careful to research what they’re putting their money into and be sure to find out who is involved as well as what the actual plan is for making real money – without defrauding others.