That crypto project looks catchy? Here are some red flags!
One of the ways scammers take money from ignorant crypto enthusiasts is through pyramid schemes. Going down memory lane, you’d remember a lot of them making waves in different countries. Notable in Nigeria were the likes of MMM, Twinkas, Paydoubler, MMM United, etc.
Although most of these platforms made use of native currencies, we had a couple of them afterwards adopt bitcoin as a transactional currency to rob Peter and Pay Paul.
Aside from greed, one of the reasons ignorant crypto enthusiasts fall for crypto scams as such is because they lack understanding of what a genuine blockchain project should and should not offer. They cannot spot the red flags on these projects simply because they don’t know them.
We’ll take a look at some signs that will help you identify crypto scams and pyramid schemes:
Promise of high yields: this is the first thing you should take note of as a red flag. Most of these platforms offer massive weekly or monthly ROI that sounds unreasonable just to lure inexperienced investors. Even blockchain projects that offer staking rewards stay within a range of 8-20 percent per annum (per annum). You’d notice that traditional investing instruments such as treasury bills, fixed deposits, or even dividend-paying stocks don’t offer high yield ROI. You’d be better off staying away from high-yield investment schemes.
Guaranteed profits: as far as crypto or even stock trading is concerned, there are no guaranteed profits. Financial markets are highly volatile and can never be predicted with 100% accuracy. Although staking (an exception) offers guaranteed returns in the number of tokens/ coins, this is not to say you will be profitable fiat-wise as the value of cryptocurrencies fluctuate heavily.
Viral marketing on social media: these scam projects are usually willing to spend lots of money marketing on social media platforms with bold slogans and catchy images of Lambo.
Zero or vague information about the project team: if you’re struggling to find info on the internet or the project’s website about the founder or team, that’s enough reason to stay away. The same thing applies if you can’t find a sufficient description of what the project offers (eg. What exactly they will be doing with your money) on their website or whitepaper. One classic example of a crypto scam is plus token. Note that a lot of these crypto scam projects hide under the guise of AI/ BOT trading, mining, etc.
Most of these dubious schemes will pay you for the first few months just to attract a lot more victims. Of course, if you make money for the first two months, chances are you’re going to tell a friend or family. They sustain these bubbles by paying old investors with new investor funds.
Wear some latex! (Protect yourself)
One simple way to protect yourself from crypto scams is by doing a proper Google search on the project. Add the word “scam” to your search – eg, plus token “scam”. The results you will find might save you a fortune.
Also, take some time to look out for the red flags outlined above.
Cheers!
Miracle Nwokwu
Writer & Founder – Bitville.