Scams of all kinds feed on two ingredients to create their perfect storm; ignorance and greed. New technologies are not understood by most people, enabling scammers to twist the facts just enough to include some truth mixed with deception to fool many unaware people with false promises.
Greed replaces rational thinking especially for people in more desperate circumstances. People that are struggling for financial success often fall for the too-good-to-be-true stories because they want it to be true so bad. If any fault is to be found with most people, it is not for perpetuating a scam, but for not fully vetting the claims.
People must have a skeptical eye and demand proof instead of trusting everyone and believing everything they hear or read, especially on the Internet. They must be aware that deceptive people are actively looking for any way they can to take their money from them. Scams are often propagated within social circles based on trusted relationships, often in churches, with work associates and other social groups.
People ask the wrong question when presented with an opportunity. They too often look to the reputation of the presenter trusting that they would never try to cheat them. Instead they should ask what has been done to fully prove or disprove the opportunity claims. Many good people unknowingly perpetuate a scam due to an intentional or unintentional lack of objective independent research from unbiased third-party resources and experts.
Less scrupulous people may be perpetuating a known scam as a means of recouping money lost in a previous scam. There is no honor among thieves. Their only goal is to get in early on a new scam to be in the top group that cashes in on the masses that lose all their money when it all collapses… and they always collapse – guaranteed.
As personal circumstances become more dire, people become more desperate for their “ship to come in” to change their lives, so they think. Their lives are changed, but not in the ways they hoped. They end up spiraling in the wrong direction sometimes towards tragic ends including public disgrace, lost trust, squandered life-savings and even suicide. We saw it with the demise of Zeek Rewards that scammed people for $800M in 2013.
The best investment one can make is in their own knowledge and experience. I’m sometimes asked which cryptocurrency coin is the best to invest in. They’re surprised when I tell them they should not invest in any of them, but should first invest in themselves to be prepared to recognize good opportunities when they present themselves.
Cryptocurrency scams fall into two main categories. 1. Opportunities pretending to be cryptocurrency, and 2. Real cryptocurrencies with no real value creator.
OneCoin is the biggest cryptocurrency scam and it’s not even a real cryptocurrency. Honest OneCoin investors that become educated on the true principles of cryptocurrency recognize that OneCoin is the exact opposite of a real cryptocurrency. The fundamental principles of cryptocurrency include Decentralization, Privacy, Unlimited Use, Controlled Supply, and Transparency with a public ledger called a blockchain and publicly disclosed source code for anyone to verify.
OneCoin is controlled by a central company and has no decentralized network like every real cryptocurrency, OneCoin investors are told they must give up their personal information and privacy to withdraw their OneCoins unlike every real cryptocurrency, OneCoin investors cannot freely use their coins with anyone, anytime, anywhere, in any amount like every real cryptocurrency, OneCoin just increased its money supply by 57 times from 2.1B to 120B on October 1, 2016 showing no supply limits like every real cryptocurrency, and OneCoin has no public blockchain, no wallets to download and store OneCoins, and no public source code for verification like every real cryptocurrency.
People that study the history of money and understand the problems that cryptocurrency solves by empowering people to take back control of their monetary system from irresponsible governments and central banks, are appalled at OneCoin’s proposition to trust them instead. Really? A private Bulgarian company operating in secret with no proven track record and founded and run by known convicts? I don’t think so.
OneCoin is an illegal Ponzi scheme promising unrealistic returns on investment that only come from new investor’s money. OneCoin has cleverly limited coin withdraws to prolong the Ponzi scheme. A careful examination by any cryptocurrency expert of the OneCoin videos by their founder, Dr. Ruja Ignatova, reveals that she knows very little about cryptocurrency technology. Dr. Ruja Ignatova, Nigel Allen the previous President, and their global master distributor Sebastian Greenwood have all been involved with multiple previous proven scams including BigCoin the predecessor to OneCoin. The devastation that will ensue when OneCoin collapses with billions of invested dollars will far out-weight that of Zeek Rewards.
I’ve personally educated and enlightened some OneCoin investors on the principles of real cryptocurrency only to be told by them that they now see that OneCoin will eventually collapse, but that they are making too much money to walk away from it. Yikes! One was a good Christian Pastor that chose to sell his integrity (birthright) for a “bowl of porridge” as did Esau in Genesis 25-27 of the Bible. One can only imagine the level of denial present to enable these otherwise good people to sleep at night.
Most cryptocurrency scams are of the second type, a real cryptocurrency coin, but lacking a true value creator. The technical part of creating a cryptocurrency is the easy part. Anyone can create a cryptocurrency coin with the help of a cryptocurrency programmer on the Internet for less than the price of 1 Bitcoin. You can have your new cryptocurrency coin up and running in a couple days.
The real challenge is building a market for the coin with an ecosystem to use the coin for real value exchange. Very few cryptocurrency coins can answer the question, “How do you deliver value to the marketplace to drive buyer demand with a user benefit?” Why would anyone buy and use your coin? Almost all 3,534 cryptocurrency coins listed on http://www.cryptocoincharts.info have no real value. They are traded only for speculative purposes and are often the target of pump-and-dump schemes by their founders and early coin holders.
Prices are easily manipulated on the public exchanges by traders trading among themselves to create a false rise in the price. Unsuspecting observers see the rising price and jump on the potential windfall, only to be left holding the bag when the pumpers sell (dump) their coins at the higher prices. The process is repeated over and over again. It’s not new to cryptocurrency, but has been common-place for decades with penny stocks.
MLM Cryptocurrency coins developed and promoted by network marketing companies are especially susceptible to scams. The story goes like this… “Buy our coin now while it is private and cheap, and when the coin goes public the price will sky-rocket and you will be rich”. Unfortunately they never tell you how they will create value. They typically sell coins directly or indirectly through mining services or token conversions.
Networkers are ideal targets for cryptocurrency scams due to their lack of technical knowledge about cryptocurrency and due to their financially driven motivations. Networkers actually don’t really need to dump coins, they just pump the story and make money from all the recruiting bonuses.
The fallacy presented by networkers is that the price will go up because there will be so many coin holders. Or the price will go up because there will be a network of merchants accepting the coin. The problem with these scenarios is that they both create seller demand. All the coin holders are seeking a payday when they can sell their coins. Having merchants to purchase from with your coins also only creates seller demand. There is no good reason for people to buy the coin, to the contrary, only to sell it.
Network marketing done right is a highly effective distribution method for any product or service through social selling. Like any new technology, its use for evil purposes does not make the underlying method bad. Network marketing is actually the perfect marriage of peer-to-peer marketing with cryptocurrency’s peer-to-peer technology… when done right.
Buyer demand from value delivery is the only legitimate way to increase price over the long term. There is no magic with cryptocurrency. It is not unlike all publicly traded assets like stocks and bonds, precious metals, commodities and even real estate. When there is buyer demand the price goes up, and when there is seller demand the price goes down. It’s that simple.
So the real trick for a cryptocurrency coin is to deliver value to the marketplace to drive buyer demand with a benefit to the consumer. This is exactly what public companies must do to increase the price of their stock. Ethereum did it with their own internal currency, the Ether coin. Ethereum provides a development platform for blockchain applications. Programmers pay Ethereum for the processing power that they consume in Ether coins. It’s actually a brilliant strategy to drive buyer demand for the Ether coin. This was reflected earlier this year when the Ether coin went from $0.50 to $21.50 in less than 6 months. That’s a good example of real value delivery.
Very few cryptocurrency coins have figured this out. Other industry solutions like Nexxus Rewards are entering the market with true value creators that help merchants get and keep new customers and process payments for all top cryptocurrency coins, and they help consumers buy and sell with other consumers using cryptocurrency.
Cryptocurrency scams are not really technical in nature, but play on human nature. You’ve probably seen typical scams played-out over the Internet for years targeting naive people. I wonder how many people are still falling for their promised inheritance from a Nigerian prince, or the romantic advances from a beautiful young Russian model looking for her true love. It must be working because I keep seeing them. They only need to trick a small percentage of people to cash in, and technology makes it easier to find them.
In the same way that you must protect your family, physical property and possessions with locks on your doors, community watchdogs, child protection, self-defense, identity theft monitoring, etc. you must also protect yourself from cryptocurrency scams. Scammers are so cleaver that they don’t need to steal your wallet from your pocket, when they can persuade you to hand it over to them.
Cryptocurrency is wonderful with all the attributes of cash and the additional capability of electronic transfer. It is an unstoppable grass roots movement that will create trillion dollar industries and reshape human culture. It will empower the people to take back control of their monetary system and eliminate the intrusion and control of corrupt governments and banks from fiscal irresponsibility. It will eventually enjoy transaction volumes approaching and surpassing that of Visa and MasterCard. We are on the forefront of mainstream cryptocurrency adoption. The mainstream public will only start using cryptocurrency when they understand what it is and how they can benefit from using it. Cryptocurrency is in its infancy – it is where personal computers were in the 1980s with green screens and floppy drives. We will see it mature and improve to be easier and safer to use, and we will see killer apps emerge giving people a good reason to buy and use cryptocurrency.
In the meantime, educate yourself on the principles of cryptocurrency and become knowledgeable and experienced so that you can recognize true cryptocurrency opportunities when they cross your path. Cryptocurrency success happens when preparation meets opportunity.