The world of cryptocurrencies is often associated with promises of huge profits. What is less well known is that it is also a risky territory, in which it is easy to lose enormous sums for failure to act in a wise manner.
You will also be interested
[EN VIDÉO] How to protect your IP address? What is an IP address, what is it used for and above all, how can we protect it to prevent malicious software from stealing our data?
The universe of cryptocurrencies is usually associated with huge capital gains. It is not uncommon to hear about a currency which saw its price suddenly take off, leading those who had invested in it to earn substantial sums. These stories that we hear here and there may turn heads and inspire some to invest their precious savings in cryptocurrency projects.
However, it is advisable to be careful. Some projects can be profitable for a few months, then collapse afterwards. It just so happens that new currencies appear regularly or applications and that infatuation for one can temper interest in a previous one. And in matter of cryptocurrency, the offer is bloated. Anyone who has invested excessively in a project could very well end up in deficit when they want to recover their investments. Another point: some DeFi (decentralized finance) applications may have been poorly programmed and therefore pave the way for a pirate wishing to hijackmoney invested.
As much risk factors, so. However, be aware that there are also pure scams. Projects without any real consistency, mounted artificially in order to take advantage of the interest in this sector. Here are a few examples.
Artificial ICOs
For the record, we generally speak of ICO (Initial Coin Offering) for the operation of launching a new currency. The team that conducts an ICO appeals to investors to buy a large number of tokens (units) of their currency. The advantages of the new token are set out in a White Paper.
On May 17, 2018, Wall Street Journal (WSJ) posted the results of an investigation into the matter. Out of 1,450 ICOs analyzed by this newspaper, no less than 270 had been identified as fraudulent. The whole represented 1 billion dollars cheerfully invested in empty projects, without a future. Thus, the company LoopX had managed to raise the equivalent of 4.5 million dollars before disappearing.
The WSJ notably noticed that 111 of the White Papers were mostly cut and paste from other projects. On others, the identity of the alleged team was spurious – the protagonists’ visuals had been retrieved from websites of photographs copyright free. The SEC (the American equivalent of the French Stock Exchange Commission) took this situation very seriously and imposed 1.8 billion fines on various ICO officials deemed fraudulent.
Disappearance of the access key to monetary reserves
Other situations may exist. Thus, it must be remembered that access to an account is protected by a ” private key »Encryption, a series of 256 tamper-proof binary digits. The flip side is that if this key is lost, access to this reserve becomes impossible. And that’s what would have happened with a exchange Canadian (marketplace) called Quadriga CX. In December 2018, its founder, Gerald Cotten succumbed to an inflammatory disease while in India. His widow, Jennifer Robertson then said that he was the only one to know the access key to the accounts. Some 76,000 customers were then unable to recover the $ 169 million they had invested. In fact, an investigation whose findings were released in June 2020 found that much of this volume monetary policy was fraudulent anyway.
A fraudulent currency highlighted by influencers
You would think that there are influencers above all suspicion and that their advice might be enough to authenticate a given solution. However, we had with BitConnect an example of scam which had received the help of major influencers, of whom we did not know then that they were paid by this platform.
At the height of its boom, in the year 2017, BitConnect was touted as a fast lane to fortune with reported earnings of up to 480% per year. When BitConnect collapsed in early 2018, six investors who lost a total of $ 771,000 took legal action. It then appeared that BitConnect was a Ponzi scheme: the first to arrive were paid by part of the contributions of the new entrants. The concern is that several YouTubers had spent dozens and dozens of hours extolling the merits of this currency. Among them we find:
- Craig Grant, one of the big promoters of Bitcoin and whose channel had more than 100,000 subscribers at the time;
- Cyptonick (200,000 subscribers) who had posted more than 2,500 promotional videos;
- Trevon Brown (a.k.a Trevon James) had produced some 600 videos;
- Ryan Maasen, who was quick to erase its contents.
The Youtubers who had pocketed a commission to extol the merits of BitConnect had to answer for justice.
Beware of chimeras
We could easily cite many other scams of the same type. What to remember If someone comes to you to brag about a new currency or a fabulous new cryptocurrency application, you should be cautious. There are certainly great opportunities that arise from time to time, but knowing how to exploit them is a matter of wise experts, ready to devote hours to scrutinizing the clues on their computers. In most cases, newbies will benefit from staying away from promises. chimerical.
Interested in what you just read?
.
fs2