By Now, If You’re Getting Scammed In the Crypto Space, You Deserve It.

I tend to think of myself as an empathetic person. I find it generally easy to relate to other people and their feelings, issues, and emotions. There is one thing, however, that has in recent months exhausted whatever supply of empathy I have. That thing? Cryptocurrency scams — rug pulls, pump and dumps, whatever you may call them, they are nothing that we haven’t seen before as a society. Sure, it may be in a new medium (cryptocurrency), but the basic principle hasn’t changed at all. And if anything, the crypto space has just made pulling off these types of schemes that much easier.

In my last article, I talked about a crypto token based off the extremely popular show ‘Squid Game’. The (anonymous) developers capitalized perfectly on the hype surrounding the show, and made off clean with over $3.3 million while those who had invested their money were left holding the bag.

And when I say I have zero empathy for these people, that’s not quite true. I do, in fact, feel for these people. I can relate to the excitement, the hype, and as well the FOMO that comes with seeing seemingly everyone online having made six- or seven figures from small, unknown crypto tokens. It’s perfectly understandable that people are still falling for these things.

However — while it may be understandable, that does not necessarily mean that it is excusable, and this is where my frustration comes in. With the way that information can rapidly and widely spread on the Internet, it’s easier than ever to do research on the “get rich quick” gurus, “investment opportunties”, and crypto meme tokens and altcoins (sometimes referred to affectionately as ‘shitcoins’). By reading up on similar programs and schemes, it becomes easier and easier to spot them in the wild — the people who run these aren’t known for their creativity or ingenuity, rather they rely on ignorance and strong emotional responses in order to draw in victims. My point is: in today’s day and age, there should be no reason that someone should not be able to educate themselves on personal finance and the types of scams that are out there.

That said, it is true that oftentimes people don’t take the time to educate themselves on these subjects not because they don’t want to, but simply because they aren’t aware of them. It’s a bit of “you don’t know what you don’t know”. And that’s part of the reason I started writing here on Medium. I’ve been fortunate enough to be in a position where I’ve acquired a decent amount of knowledge and experience in the world of personal finance, and I want to do my part and help share my knowledge and experiences with those who may not be as knowledgeable.

With that in mind, below are a few guiding principles I’ve come up with based on my knowledge and experiences that will help you recognize and avoid crypto scams when you come across them:

  1. Is it being promoted heavily on social media by influencers and personalities without experience or credibility in finance/crypto?

There are a couple great YouTube channels I follow that are centred around exposing and educating people on these kind of things. A video posted just today by Spencer Cornelia is a perfect illustration of what the first principle is all about.

In the example above, we see an Instagram influencer who brands herself as the “Crypto Queen”. If you come across something like this, take a look at the profile of the person promoting it. What kind of content do they produce? Are their pictures related to the things they are promoting? Or is their content completely unrelated? Influencers are marketers at the end of the day — they are very rarely the brains behind the products and services they promote. They get paid to support (on a surface level) these things, but will almost never have their own money invested in the project.

2. Is there a valid use case for this token that can actually deliver value?

When analyzing a crypto token, reflect on the fundamentals behind it: what is the objective of the token? What does it actually do? Is it supported by a viable business model (e.g. Ethereum), or is it based purely on hype and marketing? If the latter, that is a very good sign to stay far, far away.

3. Do your spidey-senses tingle at this project?

You intuition is your best friend in these situations. Don’t just look at the price and the hype of a token, go further and do some more research. What does the project’s website look like (if they have one — if not, red flag!): is it well-designed and laid out, with a lot of information about the developers, goals, and business case? Is there a white paper available? Is the site riddled with basic spelling and grammar mistakes that might be indicative of something slapped together for pennies just to try and fool potential buyers? What is the discourse like online — are there in-depth discussions happening on major forums and media (e.g. Reddit, YouTube), or is every mention of the projet seemingly variations of “To the Moon!” and accompanying rocket and fire emojis?

4. Does the disclaimer “This is not financial advice” appear anywhere?

The disclaimer “This is not financial advice” is rampant online these days in content related to investing and finance. It’s used by people with little to no experience or authority in these fields as a “CYA” (cover your ass) so that if people come back to them after losing their money they can go “Well, I clearly stated that this was NOT financial advice, just my opinions/what I’m doing, etc.” even though it is blatantly obvious that their content is promoting the project as an investment opportunity and encouraging their audiences to invest. Not every instance of this phrase is nefarious, however, as I for example will use it when I’m talking about personal finance. It’s important to be fully transparent with your audience, and if you are not a licensed professional to make it very clear that you are not, and that what you discuss is based on your own knowledge and experiences, and that your audience should do their own research and consider multiple perspectives before making financial decisions.

5. Lastly, why are you considering investing in this project?

This is possibly the most important part of investing into cryptocurrency. Ask yourself why you are considering getting into a project: is it because you came across it from a reputable source and are convinced of the value in its fundamentals and business case? Is it due to FOMO after missing out on other cryptos that spiked? Is it because your favourite influencer or personality made a post promoting it? I’ll give you a hint: only one of the reasons above should be considered a valid reason to put your money into a project.

Bonus: Do you UNDERSTAND what you’re about to invest into?

It’s as simple as that. Can you accurately explain it, and why it has value, to somebody else? Knowledge is power — cheesy, perhaps, but nonetheless a very true statement. Informed decisions are the best decisions, and the least likely to leave you holding the bag and losing your hard-earned money.

And there you have it! A few of the principles I use when I’m looking at crypto projects. I hope that this has been of some help to you, I’m always happy to answer any questions to the best of my abilities, so leave a comment below with any questions you may have, or share your tips and tricks — something I may have not considered or covered in this article.

Happy analyzing!



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