Crypto Scam or Economic Opportunity?
Trust is one of the essential elements of every exchange process. This core concept is expressed in various ways when cryptocurrency is the subject of discussion. Even a national currency that’s well-regulated and stable depends, to some extent, on the faith citizens have in their money.
A strong belief in the value of money, represented by notes and coins, is necessary. All parties involved in a transaction must believe in the currency’s worth, and must proceed with the idea of money being accepted in exchange for goods or services.
Less stable currencies and uncertain economic activity have weakened this belief, as does the lack of gold or other precious metals as support for a nation’s money. Technology has allowed people to create their own medium of exchange, cryptocurrency, which is basically digital money using cryptography to keep track of transfers and purchases.
For the past decade, the level of interest in various cryptocurrencies has risen and fallen in what many have called a “learning curve.” There are now hundreds of alternatives to the original, open-source Bitcoin from 2009, a number that’s grown rapidly as more people took interest in this decentralized medium of exchange.
Recent studies of the “crypto” world show scams and theft now account for billions of dollars in losses in the U.S. alone during 2018. Scams take various forms, including fraudulent “initial coin offerings,” (known among users and aficionados as ICOs), as well as hacks exchange hacks and the age-old Ponzi scheme. This last crypto scam method usually takes the form of a company or group introducing an ICO that raises millions of dollars in cryptocurrency value, only to have the individuals “disappear” with the funds.
Problems such as these have caused a precipitous drop in cryptocurrency value in the last year. Bitcoin dropped from a value of almost 20,000 U.S. dollars to about 20% of that currently. Another popular currency, Ether, experienced a value drop of more than 90% in the past 12 months.
DasCoin Cryptocurrency lunched in 2017 is a multi level marketing (MLM) company now, which deals in digital currency, calling itself “currency of trust” helping people invest safely. New laws, regulations, and guidelines for crypto use has helped reduced these losses, as the “industry” focused on stopping fraud, tax evasion, and money-laundering. Energetic, knowledgeable hackers and thieves have found ways to use a victim’s own mobile devices to enter a person’s crypto wallet or exchange account. Unscrupulous individuals have also established “shadow” companies and have discovered ways to launder money through an exchange set up for just that purpose.
Millions Locked Away
One recent issue with a specific cryptocurrency arose when the founder died, taking with him the only password to access the currency vault. Dozens of stories have appeared in traditional media and online, explaining that more than $190 million in deposits seem to have disappeared when the CEO of Canada’s Quadriga CX died without giving the password information to any survivors.
This may prove to be something other than a crypto scam, as the company and an outside auditing firm become involved. But, the most common way to conduct such a scam is to introduce an ICO intended to be fraudulent from the start. Even some of the trusted currencies have been attacked in this manner.
Veterans of the crypto world believe lack of due diligence on the part of “newbies” is at the heart of many problems, as they hurriedly execute their purchases and transfers, and don’t ask the hard questions all investors should ask.
Be sure you understand what “hot” wallet is, and what a “cold” wallet is. Back up your private keys to ensure access and protect it as well. Veterans also advise invest in different types of wallets and in different crypto coins. Be extremely careful with public Wi-Fi trading as well.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes.