Written in front: This article is a response from Tyler Winklevoss, one of the founders of cryptocurrency exchange Gemini, on Qora. Someone asked what the routine of a cryptocurrency scam looks like? How to avoid being deceived? In his response, Tyler pointed out that many early Bitcoin holders became rich because of the rise in the price of the currency, and many behind the scenes of digital currency scams used this to attract innocent investors to invest a lot of money. In fact, the routine of the cryptocurrency scam is not different from the ordinary Ponzi scheme. As for how to prevent being cheated, Tyler made a few suggestions in the article.
Following is Tyler's reply:
- “Agriculture + Blockchain”: from farm to table, from sowing to inclusive finance
- The market does not have a reason to be bullish, so quietly watch the main force save itself
- Gavin Wood: Cosmos is not enough to trust, not enough to expand
- Peter Tell's layout of bitcoin mining, Layer1 company finalized $50 million in Series A financing
- Xinhua News Agency: Resolutely crack down on the "coupling evil roads" and guide the application of blockchains to "open the main entrance"
- Litecoin will implement MimbleWimble technology? Charlie Lee: Currently Lightning Network is not compatible with MW technology
Fascinated by cryptocurrencies? Want to take a share of the bitcoin bull market in 2017?
Many people answered yes to both questions-and for good reason.
After all, Bitcoin prices have experienced roller coaster-like fluctuations since 2017, and it doesn't matter for those who held Bitcoin in its early days.
Ten years ago, Bitcoin was almost worthless. A historical chart shows that in 2010, a user named SmokeTooMuch tried to sell 10,000 Bitcoin for only $ 50, but could not find a buyer.
Until 2011, the price of bitcoin had just exceeded $ 1, so if you had a little bit of bitcoin before that, the biggest difference in value you have seen in the past two years is more than 3000 times (300000% as a percentage) .
Since December 2017, Bitcoin has been swinging between a low of more than 3,000 U.S. dollars and a high of less than 20,000 U.S. dollars. For anyone who has 10,000 Bitcoins in 2010, it has It doesn't matter.
This is not the difference between the rich and the poor, it is the difference between the rich and the super rich.
In short, those who entered the bitcoin world from the beginning and held bitcoin are, at least in theory, now super rich.
(Some analysts say that Satoshi Nakamoto, the publisher of Bitcoin, has so far remained anonymous, and mined about 1 million Bitcoins in the early days; apparently, these Bitcoins have not been spent.)
ICO threshold is too low
Based on this idea, many people who set up scams find that promising a "new cryptocurrency that can be added early" is a great way to trick people into hard-won savings. These scammers are usually very eloquent and proficient in cryptocurrency and blockchain terminology.
The concept often promoted by such cyber fraudsters is the initial coin offering, or ICO.
This new term is similar to an IPO (initial public offering). IPO is a stock market term, where a private company goes public by selling shares on the open market.
An IPO can give investors the opportunity to realize rapid returns. For example, if the immediate market demand for new shares is high, investors can quickly sell new shares; or, in the long run, investors can also hold a well-known Earn money on the company's early stocks.
But even the IPO of a large and well-known company cannot guarantee that your investment will increase, and this is a market ecology that is strictly regulated in most countries.
Not everyone can initiate an IPO; what positive news your company has to announce and what potential negative requirements you must disclose in advance are very strict rules; before the IPO, what can you say to the media and who can Say, when to say wait, these are all controllable.
Unlike IPO rules, in many countries, ICOs are either hardly regulated or not regulated at all.
In simple terms, the marketing of an ICO can be done without any existing products, prototypes, stocks, patents, intellectual property, etc. In fact, they have everything except a cool name and a funky website. No need.
Unfortunately, it is surprisingly easy for fraudsters to obtain "investments"-for example, they can use some fake evaluations and carefully selected pictures to prove that the value of other cryptocurrencies has benefited early participants.
Old wine in new bottles
Some cybercriminals may be carefully laid out to make a website showing that their new "currency" is steadily increasing in value, based on some unexplained "mining and trading" activity, and perhaps "real-time transaction logs."
They may even “dividend” regularly to early investors to “prove” that the product is performing well.
For example, you can log in and see a page that shows that the $ 10,000 you originally invested is already worth $ 47,578-this site may even encourage you to "get back" some "benefit", but this process is likely to be affected Some kind of investment term limit that limits you to all the benefits at once.
Of course, if you have invested $ 10,000 and the scammer allows you to cash in now, such as the "bonus" of $ 178.56, just a few weeks later, you may feel that you are living in a dream …
… but in the unregulated ICO and cryptocurrency investment field, there may be little legal protection to ensure that the $ 178.56 you withdraw is really your income, not a small part of your own money.
Some early adopters may actually get more in return than they put in-so they are happy to publicly declare that "they really make money" may indeed be true, at least they think so.
But there may be no legal or operational safeguards that can convince you that those few lucky people actually make money through the cryptocurrencies they believe they have bought.
You know, a few lucky people may just get a return directly from the funds invested by subsequent investors, which means that the value-added products they thought they invested in did not exist at all.
This is a typical pyramid or Ponzi scheme, named after an early scammer named Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi, who is better known as Charles Ponzi.
The most recent offender was Bernard Lawrence Madoff, who was sentenced to 150 years in prison in 2009 and made billions of dollars in Ponzi schemes. According to information provided by Wikipedia, his release date is 2139-provided that he will live an additional 20 years because of good performance and that he can live above 200 years.
So what can we do to stop ICO scammers from getting money from innocent victims?
One of those things is finding, arresting, convicting and imprisoning those who commit such scams. The good news is that the US Department of Justice is willing and able to do so.
The U.S. Department of Justice announced this week that Maksim Zaslavskiy was sentenced to 18 months in jail, and U.S. lawyer Richard P. Donoghue said it was "old fashioned scam disguised as cutting-edge technology." The US Department of Justice explains the scam implemented by Zaslavskiy:
"In July 2017, Zaslavskiy referred to RECoin as 'the first real estate-backed cryptocurrency', and subsequently referred to Diamond as an 'exclusive and tokenized member pool' hedged by diamonds. In fact, Zaslavskiy Neither real estate nor diamonds, the certificate he issued to investors was worthless. Zaslavskiy also lied that REcoin had a 'team of lawyers, professionals, brokers and accountants' who would put REcoin ICO Of the proceeds are invested in real estate, and 2.8 million tokens of REcoin have been sold. "
After reading this description, it seems that anyone investing in the Zaslavskiy scam should see through them immediately, because there is nothing to support except the scammer's own unsubstantiated statement.
But when you criticize the victims of this type of criminal activity and think that they are easy to trust others and have shortsightedness, you must remember that successful cryptocurrencies such as Bitcoin have essentially nothing to support, only their blockchain-that is, distribution Digital ledger. This ledger is maintained by users of a network who pay the cost of electricity to confirm or verify transactions on the blockchain.
With that in mind, a cryptocurrency uses the same encryption technology on its digital transaction books, but it is believed that there is support for investors who actually use their funds to buy real estate.
After all, if Bitcoin can (and has) made early adopters rich without real estate at all, then why shouldn't a similar plan with some real-world value guarantee be a better investment?
What should I do?
We are not investment advisers, so we cannot comment on the value or other aspects of cryptocurrency investments.
The problem with the RECoin scam that made Zaslavskiy sentenced to 18 months in prison is that it's not an investment at all-it's just a tower of lies through which it sounds modern, blockchain-based, cryptocurrency Description to achieve technical enhancements.
Watch out for the promise made by any network plan that a properly regulated investment will not be allowed to do so. Generally speaking, investment regulations exist to control unrealistic and unachievable requirements, so any plan to try to circumvent such controls in unregulated areas must be skeptical.
Don't be fooled by cryptocurrency terminology and websites that look great. Anyone can build a website that looks credible, including live charts, community support, and an online comment system. The advent of open source websites and blogging tools has made it cheap and easy to create content that looks professional-but these tools cannot stop crooks from providing them with fake data.
Consider asking someone with an IT background that you know and trust. Find someone who is not involved in the plan, and he must have no particular interest in the plan. Be wary of suggestions for those who are already participating (or claiming to be) in the program. They may be childcare or early winners, holding money from later investors
If it sounds incredibly good, then it is likely to be fake. This suggestion applies to ICOs, a special online offer, a new online service, a survey to win prizes, and even just the old "free stuff" routine. Take the time to understand exactly what you are signing up for.
If in doubt, don't provide any information or you will definitely lose money!